Income Taxes

12 Months Ended

Dec. 26, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The components of income tax expense are as follows:

	Fiscal Year Ended
in thousands	December 26, 2024		December 28, 2023		December 29, 2022
Current expense:
Federal	$	40,764	$	29,737	$	73,463
State	8,574		12,092		16,489
Total current expense	49,338		41,829		89,952
Deferred expense (benefit):
Federal	1,024		24,792		(78)
State	(2,831)		(1,070)		(2,447)
Total deferred (benefit) expense	(1,807)		23,722		(2,525)
Income tax expense	$	47,531	$	65,551	$	87,427

The following is a summary of the differences between the total income tax expense as shown on the financial statements and the income tax expense that would result from applying the federal statutory tax rate of 21% for the fiscal years ended December 26, 2024, December 28, 2023, and December 29, 2022 to income before income taxes:

	Fiscal Year Ended
in thousands	December 26, 2024		December 28, 2023		December 29, 2022
Computed “expected” income tax expense at statutory rate	$	53,215	$	65,421	$	80,984
State income taxes, net of federal income tax benefit (1)	4,538		8,824		11,744
Permanent differences:
Excess tax benefit related to stock-based compensation awards	(10,769)		(8,748)		(3,762)
Other	3,013		1,714		874
Total permanent differences	(7,756)		(7,034)		(2,888)
Provision to return	(1,005)		578		183
Federal tax credits	(2,277)		(2,019)		(1,535)
Uncertain tax positions	810		—		(848)
Other, net	6		(219)		(213)
Income tax expense	$	47,531	$	65,551	$	87,427

(1)     Includes state excess tax benefits related to stock-based compensation awards for fiscal years 2024, 2023, and 2022 of $2.1 million, $1.8 million, and $0.8 million, respectively.

The tax effects of temporary differences that give rise to significant portions of the deferred income tax assets and (liabilities) are presented below:

	Fiscal Year Ended
in thousands	December 26, 2024		December 28, 2023
Deferred tax assets:
Lease liabilities	$	375,909	$	362,958
Accruals not currently deductible for tax purposes	24,011		20,072
Inventories	11,552		10,596
Other intangibles	8,292		6,289
Stock-based compensation	7,559		10,039
Gift card liability	1,682		3,109
Other	1,853		2,918
Total deferred tax assets	430,858		415,981
Deferred tax liabilities:
Right-of-use assets	(332,596)		(322,033)
Fixed assets	(116,400)		(113,130)
Intangible assets	(27,358)		(27,493)
Other	(5,254)		(6,286)
Total deferred tax liabilities	(481,608)		(468,942)
Net deferred tax liabilities	$	(50,750)	$	(52,961)

The Company utilized no tax-effected state net operating losses in fiscal years 2024 and 2023. As of December 26, 2024, approximately $1.0 million of tax-effected state net operating losses were available to reduce future income taxes. The state net operating losses expire in various amounts beginning in fiscal 2033.

In assessing the realization of deferred tax assets, including net operating losses, management considered whether it is more likely than not that some portion or all the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers taxable income in prior carryback periods, future reversals of existing taxable temporary differences, tax planning strategies, and future taxable income exclusive of reversing temporary differences and carryforwards in making this assessment, and accordingly, has concluded that no valuation allowance is necessary as of December 26, 2024 or December 28, 2023.

The Company files income tax returns with the U.S. Federal government and various state jurisdictions. Prior tax years beginning in fiscal year 2021 remain open to examination by the Internal Revenue Service. Foreign, state, and local income tax returns are generally subject to examination for a period of three to five years after filing of the respective returns.

The following is a reconciliation of the beginning and ending balance of unrecognized tax benefits for the periods presented:

	Fiscal Year Ended
in thousands	December 26, 2024		December 28, 2023		December 29, 2022
Unrecognized tax benefits balance at beginning of fiscal year	$	—	$	—	$	1,073
Additions based on tax positions related to the current year	334		—		—
Additions for tax positions of prior years	476		—		—
Reductions for tax positions of prior years	—		—		(1,073)
Unrecognized tax benefits balance at end of fiscal year	$	810	$	—	$	—

As of December 26, 2024, there were $0.8 million of unrecognized tax benefits that, if recognized, would affect the Company’s effective tax rate, while there were no such unrecognized tax benefits as of December 28, 2023. The Company’s policy is to classify interest and penalties related to unrecognized tax benefits in income tax expense. The Company did not recognize interest expense related to unrecognized tax benefits during fiscal years 2024, 2023, or 2022.