INCOME TAXES

12 Months Ended

Dec. 25, 2024

INCOME TAXES

INCOME TAXES

10. INCOME TAXES

The provision for income taxes is based on the following components (in thousands):

	December 25,		December 27,		December 28,
For the Years Ended	2024		2023		2022
Current income taxes:
Federal	$	8,945	$	6,572	$	2,366
State		3,517		1,846		1,112
Total current		12,462		8,418		3,478
Deferred income taxes:
Federal		(2,105)		(29)		2,958
State		(752)		935		1,642
Total deferred		(2,857)		906		4,600
Tax provision for income taxes	$	9,605	$	9,324	$	8,078

The provision for income taxes differs from the amount computed by applying the federal income tax rate of 21.0% for fiscal 2024, 2023 and 2022 as follows:

	December 25,		December 27,		December 28,
For the Years Ended	2024		2023		2022
Statutory federal income tax rate applied to earnings before income taxes and extraordinary items	21.0	%	21.0	%	21.0	%
State income tax expense (net of federal benefit)	6.1		6.4		7.7
Change in valuation allowance	—		(19.3)		—
State credit expiration	—		19.1		—
TRA expense (income)	—		0.1		(0.3)
162(m)	0.7		0.6		0.5
WOTC Credit	(0.4)		(0.7)		(0.9)
Stock option exercises	0.1		0.1		0.3
Deferred tax liability true up	—		(1.1)		—
Other	(0.3)		0.5		(0.3)
Total	27.2	%	26.7	%	28.0	%

As of December 25, 2024, the Company had no federal and less than $0.1 million state NOL carryforwards. These State NOLs expire beginning 2029. The utilization of NOL carryforwards and state enterprise zone credits may be subject to limitation under section 382 of the Internal Revenue Code of 1986 (the “Code”) and similar state law provisions. 

Deferred income tax assets and liabilities are recorded for differences between the financial statement and tax basis of the assets and liabilities that will result in taxable or deductible amounts in the future based on enacted laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

The Company has evaluated the available evidence supporting the realization of its gross deferred tax assets. After evaluating all of the positive and negative evidence, including the Company’s continued income from operations, the Company concluded that it is more likely than not that its deferred tax assets except for certain state credits will be realized. As of December 25, 2024, the Company had no valuation allowance. During fiscal 2023, the Company released the corresponding valuation allowance since the ten-year carryover period for California Enterprise Zone credits expired at the end of fiscal 2023. In fiscal 2022, the Company recorded a valuation allowance of approximately $0.5 million, against its deferred tax asset resulting from certain tax credits that may not be realizable prior to the time the credits expire.

On July 30, 2014, the Company entered into the TRA. The TRA calls for the Company to pay its pre-IPO stockholders 85% of the cash savings that the Company realizes in its taxes as a result of utilizing its NOLs and other tax attributes attributable to preceding periods. The TRA charge expense (benefit) is a permanent add-back to the Company’s taxable income. In fiscal 2024, 2023 and 2022, TRA resulted in less than $0.1 million of income, $0.1 million of expense and $0.4 million of income, respectively, in each case as a result of the amortization of interest expense related to the total expected TRA payments and changes in estimates for actual tax returns filed and future forecasted taxable income. In fiscal 2023 and 2022, the Company paid $0.3 million and $0.4 million, respectively, to its pre-IPO stockholders under the TRA.

Further, on May 29, 2024, the Company terminated most of the obligations under the TRA, with respect to any payments or obligations owed to the FS Equity Partners V, L.P. and FS Affiliates V, L.P. (together, the “Sellers”) thereunder in exchange for a payment to the Sellers of $0.4 million. As of December 25, 2024, there was no remaining obligations owed on the Company’s consolidated balance sheets.

The Company’s deferred tax assets and liabilities as of December 25, 2024 and December 27, 2023 are summarized below.

	December 25,		December 27,
	2024		2023
Deferred assets:
Capital leases	$	69	$	62
Accrued vacation		466		470
Accrued workers’ compensation		2,099		2,352
Accrued payroll		5		—
Net operating losses		5		5
Fixed assets		2,981		2,705
ROU liabilities		51,160		50,735
Other		7,893		5,560
Total deferred tax assets		64,678		61,889
Deferred liabilities:
Goodwill		(5,961)		(5,938)
Trademark		(16,808)		(16,740)
Prepaid expense		(1,012)		(1,128)
ROU assets		(45,790)		(45,445)
Fixed assets		(1,128)		(1,470)
Other		—		(46)
Total deferred tax liabilities		(70,699)		(70,767)
Net deferred tax liability	$	(6,021)	$	(8,878)

The net deferred tax asset/(liability) amounts above as of December 25, 2024 and December 27, 2023 have been classified in the accompanying consolidated balance sheets as noncurrent assets/(liabilities) and are as follows (in thousands):

	December 25,		December 27,
	2024		2023
Noncurrent:
Assets (Liabilities) - state	$	336	$	(416)
Liabilities - federal		(6,357)		(8,462)

As of December 25, 2024 and December 27, 2023, the Company had no accrual for unrecognized tax benefits. Consequently, no interest or penalties have been accrued by the Company. The Company believes that no significant changes to the amount of unrecognized tax benefits will occur within the next twelve months. The Company is subject to taxation in the United States and in various state jurisdictions.

The Company is no longer subject to U.S. examination for years before 2021 by the federal taxing authority, and for years before 2020 by state taxing authorities.