Financial Analysis

Commitments and Contingencies In the normal course of business, the Company is subject to proceedings, lawsuits and claims. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. Consequently, the Company is unable to ascertain the ultimate aggregate amount of monetary liability or financial impact with respect to these matters as of June 30, 2026. These matters could affect the operating results of any one financial reporting period when resolved in future periods. The Company believes that an unfavorable outcome with respect to these matters is remote or a potential range of loss is not material to its consolidated financial statements. Significant increases in the number of these claims, or one or more successful claims that result in greater liabilities than the Company currently anticipates, could materially and adversely affect its business, financial condition, results of operations or cash flows.

CommitmentsAndContingenciesDisclosureTextBlock

Long-Term Debt O n July 27, 2022, the Company amended and restated its Credit Agreement by entering into the Amended and Restated Credit Agreement (as further amended, restated, extended, supplemented, modified and otherwise in effect from time to time, the A&R Credit Agreement), with each other Loan Party (as defined in the A&R Credit Agreement) part y thereto, each lender from time to time party thereto, and U.S. Bank Na tional Association, as Administrative Agent, L/C Issuer and Swing Line Lender (each as defined in the A&R Credit Agreement). The A&R Credit Agreement matures on July 27, 2027 and is secured by a pledge of stock of substantially all of the Companys subsidiaries and a lien on substantially all of the personal property assets of the Company and its subsidiaries. Among other things, the A&R Credit Agreement: (i) increased the credit facility from $100.0 million to $125.0 million; (ii) eliminated the term loan and principal amortization components of the credit facility; (iii) removed the Companys capital expenditure covenant; (iv) enhanced flexibility for certain covenants and restrictions; and (v) lowered the spread of the Companys cost of borrowing and transitioned from the London Interbank Offered Rate (LIBOR) to the Secured Overnight Financing Rate (SOFR) plus a margin of 1.50% to 2.50% per annum, based upon the consolidated total lease-adjusted leverage ratio. The A&R Credit Agreement was subsequently amended on December 21, 2023 an …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

Stock-Based Compensation In May of 2023, the Companys stockholders approved the 2023 Stock Incentive Plan (the 2023 Plan). The 2023 Plan authorizes the grant of non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units (RSUs), performance share units and incentive bonuses to employees, officers, non-employee directors and other service providers, as applicable. As of June 30, 2026, approximately 0.3 million share-based awards were available to be granted under the 2023 Plan. In July of 2024, the Companys Board of Directors adopted the 2024 Inducement Plan (the Inducement Plan). The Inducement Plan provides for the potential grant of options, stock appreciation rights, restricted stock and restricted stock units, any of which may be performance-based, and for incentive bonuses, which may be paid in cash or stock or a combination thereof, for certain newly hired employees. As of June 30, 2026, 37,982 share-based awards were available to be granted under the Inducement Plan. The following table shows total stock-based compensation expense (in thousands): Fiscal Quarter Ended Two Fiscal Quarters Ended June 30, 2026 July 1, 2025 June 30, 2026 July 1, 2025 Stock-based compensation expense $ 1,145 $ 728 $ 1,930 $ 1,518 Capitalized stock-based compensation expense $ $ 7 $ $ 18 …

DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock · excerpt; the full note is in the filing

Fair Value Measurements The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and all other current assets and liabilities approximate fair value due to their short-term nature. The carrying amounts of borrowings approximate fair value as the line of credit borrowings vary with market interest rates and negotiated terms and conditions are consistent with current market rates. The fair value of the Companys revolving line of credit borrowings are measured using Level 2 inputs. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis Assets recognized or disclosed at fair value in the condensed consolidated financial statements on a non-recurring basis include items such as leasehold improvements, property and equipment, operating lease assets, goodwill and other intangible assets. These assets are measured at fair value if determined to be impaired. Adjustments to the fair value of assets measured at fair value on a non-recurring basis as of June 30, 2026 and July 1, 2025 are discussed in Note 7, Restaurant Impairments, Closure Costs and Asset Disposals. …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

Income Taxes The following table presents the Companys provision for income taxes (in thousands): Fiscal Quarter Ended Two Fiscal Quarters Ended June 30, 2026 July 1, 2025 June 30, 2026 July 1, 2025 Provision for income taxes $ 20 $ 21 $ 27 $ 44 Effective income tax rate (0.5) % (0.1) % (0.4) % (0.2) % The effective tax rate for the second quarter and first two quarters of 2026 and 2025, reflects the impact of the previously recorded valuation allowance. For the remainder of fiscal 2026, the Company does not anticipate material income tax expense or benefit as a result of the valuation allowance recorded. The Company will maintain the valuation allowance against deferred tax assets until there is sufficient evidence to support a full or partial reversal. The reversal of a previously recorded valuation allowance will generally result in a benefit from income tax. On July 4, 2025, the United States Congress enacted H.R.1, commonly known as the One Big Beautiful Bill Act, which introduces a wide range of tax reform measures. These include extensions and modifications of key provisions from the Tax Cuts and Jobs Act, as well as changes to rules allowing accelerated tax deductions for qualified property and research expenditures. The legislation includes multiple effective dates, with certain provisions that took effect in 2025 and others phased in through 2027. The Company has evaluated the provisions of the legislation and does not expect the adoption or implementation of these …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

Leases Supplemental balance sheet information related to leases is as follows (in thousands): Classification June 30, 2026 December 30, 2025 Assets Operating Operating lease assets, net $ 114,220 $ 126,319 Finance Property and equipment 4,709 6,373 Total leased assets $ 118,929 $ 132,692 Liabilities Current lease liabilities Operating Current operating lease liabilities $ 26,077 $ 26,257 Finance Accrued expenses and other current liabilities 1,793 1,877 Long-term lease liabilities Operating Long-term operating lease liabilities 112,050 126,924 Finance Other long-term liabilities 3,690 5,020 Total lease liabilities $ 143,610 $ 160,078 Sublease income recognized in the Condensed Consolidated Statements of Oper ations was $0.5 million and $0.7 million for the second quarters of 2026 and 2025, and $1.0 million and $1.5 million for the first two quarters of 2026 and 2025, respectively. Supplemental disclosures of cash flow information related to leases are as follows (in thousands): Fiscal Quarter Ended Two Fiscal Quarters Ended June 30, 2026 July 1, 2025 June 30, 2026 July 1, 2025 Cash paid for lease liabilities: Operating leases $ 9,527 $ 10,691 $ 19,129 $ 21,437 Finance leases 540 619 972 1,243 $ 10,067 $ 11,310 $ 20,101 $ 22,680 Right-of-use assets obtained in exchange for lease liabilities: Operating leases $ 4,397 $ 1,021 $ 4,833 $ 2,341 Finance leases 93 4,687 $ 4,397 $ 1,114 $ 4,833 $ 7,028 …

LesseeOperatingLeasesTextBlock · excerpt; the full note is in the filing

"Recently Adopted Accounting Pronouncement In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The ASU includes amendments requiring enhanced income tax disclosures, primarily related to standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The Company adopted ASU No. 2023-09 prospectively during the year ended December 30, 2025. Recently Issued Accounting Pronouncement In November 2024, the FASB issued ASU No. 2024-03, ""Disaggregation of Income Statement Expenses (Subtopic 220-40)."" The ASU requires public entities to disaggregate, in a tabular presentation, certain income statement expenses into different categories, such as purchases of inventory, employee compensation, depreciation, and intangible asset amortization. The guidance is effective for fiscal years beginning after December 15, 2026, with early adoption permitted, and may be applied retrospectively. The Company is currently evaluating the impact of adopting the new ASU on its consolidated financial statements and related disclosures." …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

Revenue Recognition Revenue Revenue consists of sales from restaurant operations, franchise royalties and fees, and sublease income. Revenue from the operation of company-owned restaurants is recognized when sales occur. Revenue from sales made through third-party delivery services are recognized upon the transfer of food to the guest, excluding the delivery fee. Revenue from sales made through the Company website or mobile app are generally recognized including delivery fees. The Company reports revenue net of sales tax collected from customers and remitted to governmental taxing authorities. Gift Cards The Company sells gift cards which do not have an expiration date, and it does not deduct non-usage fees from outstanding gift card balances. The Company recognizes revenue from gift cards when the gift card is redeemed by the customer or the Company determines the likelihood of the gift card being redeemed by the customer is remote (gift card breakage). The determination of the gift card breakage rate is based upon Company-specific historical redemption patterns. The Company has determined that approximat ely 15% of gift ca rds will not be redeemed and recognizes gift card breakage ratably over the estimated redemption period of the gift card, which is approximate ly 24 months. G ift card liability balances are typically highest at the end of each calendar year following increased gift card purchases during the holiday season. As of June 30, 2026 and December 30, 2025, the c …

RevenueFromContractWithCustomerTextBlock · excerpt; the full note is in the filing

Segment Reporting The Companys Chief Operating Decision Maker (CODM) is the senior executive team that includes the President and Chief Executive Officer and the Chief Financial Officer. The Company has one reportable operating segment. The one reportable segment derives its revenue from company-owned restaurants and franchise owned restaurants. No guest accounts for 10% or more of the Companys revenues. The Companys CODM uses income (loss) from operations to evaluate performance and make key operating decisions, such as deciding the rate at which we invest resources into the segment. The following table presents selected financial information with respect to our single reportable segment regularly reviewed by our CODM (in thousands): Fiscal Quarter Ended Two Fiscal Quarters Ended June 30, 2026 July 1, 2025 June 30, 2026 July 1, 2025 Revenue: Restaurant revenue $ 124,801 $ 123,781 $ 246,241 $ 245,107 Franchising royalties and fees, and other 2,236 2,652 4,582 5,120 Total segment revenue 127,037 126,433 250,823 250,227 Less: Cost of sales 31,019 32,860 61,912 65,153 Labor 36,737 39,279 73,147 78,675 Occupancy 10,165 11,393 20,519 22,887 Other restaurant operating costs 25,372 24,414 51,084 50,070 General and administrative 13,857 12,404 26,371 25,214 Depreciation and amortization 5,900 7,139 11,881 14,229 Pre-opening 69 220 Restaurant impairments, closure costs and asset disposals 5,527 13,653 8,261 14,944 Total segment expenses 128,577 141,211 253,175 271,392 Segment loss fro …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing