INCOME TAXES

12 Months Ended

Dec. 31, 2025

INCOME TAXES

INCOME TAXES

10. INCOME TAXES

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

	December 31,		December 25,		December 27,
	2025		2024		2023
Current tax expense
U.S. Federal	$	6,569	$	8,945	$	6,572
U.S. State and local		3,117		3,517		1,846
Total current tax expense		9,686		12,462		8,418
Deferred tax expense (benefit)
U.S. Federal		1,254		(2,105)		(29)
U.S. State and local		149		(752)		935
Total deferred tax expense (benefit)		1,403		(2,857)		906
Total income tax expense
U.S. Federal		7,823		6,840		6,543
U.S. State and local		3,266		2,765		2,781
Total income tax expense	$	11,089	$	9,605	$	9,324

The table below provides the updated requirements of ASU No. 2023-09, Improvements to Income Tax Disclosures for fiscal 2025, 2024 and 2023. The provision for income taxes differs from the amount computed by applying the federal income tax rate of 21.0% for fiscal 2025, 2024 and 2023 as follows (amounts in thousands):

	December 31,				December 25,				December 27,
	2025				2024				2023
	Amount		Percent		Amount		Percent		Amount		Percent
U.S. federal statutory tax rate	$	7,891	21.0	%	$	7,411	21.0	%	$	7,324	21.0	%
State and local income taxes, net of federal income tax effect (1) (2)		2,580	6.9			2,157	6.1			2,185	6.3
Tax credits										—	—
WOTC credit		(164)	(0.4)			(163)	(0.5)			(295)	(0.7)
Nontaxable or nondeductible items
Stock option exercises		62	0.2			32	0.1			33	0.1
Nondeductible stock compensation expense		27	—			54	0.2			166	0.5
162(m) nondeductible executive compensation		614	1.6			6	—			194	0.6
Other		13	—			142	0.4			84	—
Changes in unrecognized tax benefits		—	—			—	—			—	—
Other adjustments		—	—			—	—			—	—
Deferred tax liability true up		66	0.2			—	—			(381)	(1.1)
Other		—	—			(34)	(0.1)			14	0.0
Effective tax rate	$	11,089	29.5	%	$	9,605	27.2	%	$	9,324	26.7	%

(1) State taxes in California made up the majority (greater than 50 percent) of the tax effect in this category.

(2) During fiscal 2023, the ten-year carryover period for California Enterprise Zone credits expired, and the Company released the corresponding valuation allowance.

	For the Fiscal Years Ended
Income Taxes Paid (Net of Refunds Received)	December 31, 2025		December 25, 2024		December 27, 2023
U.S. Federal	$	5,955	$	7,541	$	6,174
State:
California		3,766		2,720		1,503
Other		9		90		44

Total $ 9,730 $ 10,351 $ 7,721

As of December 31, 2025, 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 will be realized. As of December 31, 2025 and December 25, 2024, the Company had no valuation allowance.

The Company’s deferred tax assets and liabilities as of December 31, 2025 and December 25, 2024 are summarized below (in thousands).

	December 31,		December 25,
	2025		2024
Deferred assets:
Capital leases	$	75	$	69
Accrued vacation		482		466
Accrued legal		128		—
Accrued workers’ compensation		1,973		2,099
Accrued payroll		6		5
Net operating losses		5		5
Fixed assets		2,759		2,981
ROU liabilities		51,187		51,160
Other		7,297		7,893
Total deferred tax assets		63,912		64,678
Deferred liabilities:
Goodwill		(5,962)		(5,961)
Trademark		(16,812)		(16,808)
Prepaid expense		(1,051)		(1,012)
ROU assets		(45,631)		(45,790)
Fixed assets		(1,880)		(1,128)
Total deferred tax liabilities		(71,336)		(70,699)
Net deferred tax liability	$	(7,424)	$	(6,021)

The net deferred tax asset/(liability) amounts above as of December 31, 2025 and December 25, 2024 have been classified in the accompanying consolidated balance sheets as noncurrent assets/(liabilities) and are as follows (in thousands):

	December 31,		December 25,
	2025		2024
Noncurrent:
Assets - state	$	187	$	336
Liabilities - federal		(7,611)		(6,357)

As of December 31, 2025 and December 25, 2024, the Company had no accrual for unrecognized tax benefits. Consequently, no interest or penalties have been accrued by the Company. 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 2022 by the federal taxing authority, and for years before 2021 by state taxing authorities.