REVENUE FROM CONTRACTS WITH CUSTOMERS

12 Months Ended

Dec. 31, 2025

REVENUE FROM CONTRACTS WITH CUSTOMERS

REVENUE FROM CONTRACTS WITH CUSTOMERS

15. REVENUE FROM CONTRACTS WITH CUSTOMERS

Revenue Recognition

Nature of products and services

The Company has two revenue streams, company-operated restaurant revenue and franchise related revenue. See Note 2 “Summary of Significant Accounting Policies” for a description of the revenue recognition policies.

Franchise and franchise advertising fee revenue

Franchise revenue consists of franchise royalties, initial and renewal franchise fees, license fees due from franchisees, IT support services, IT pass through fees related to IT hardware or software and rental income for subleases to franchisees. Franchise advertising fee revenue consists of advertising contributions received from franchisees.

Disaggregated revenue

The following table presents the Company’s revenues disaggregated by geographic market for the years ended December 31, 2025, December 25, 2024 and December 27, 2023:

	December 31, 2025		December 25, 2024		December 27, 2023
Greater Los Angeles area market	71.9	%	72.0	%	71.3	%
Other markets	28.1	%	28.0	%	28.7	%
Total	100	%	100	%	100	%

Contract balances

The following table provides information about the change in the franchise contract liability balances during the year ended December 31, 2025 and December 25, 2024 (in thousands):

December 27, 2023	$	6,997
Revenue recognized		(625)
Additional contract liability		358
December 25, 2024	$	6,730
Revenue recognized		(1,150)
Additional contract liability		573
December 31, 2025	$	6,153

The Company’s franchise contract liability includes development fees, initial franchise and license fees, franchise renewal fees, lease subsidies and royalty discounts and is included within other accrued expenses and current liabilities and other noncurrent liabilities within the accompanying consolidated balance sheets. The Company receives area development fees from franchisees when they execute multi-unit area development agreements. Initial franchise and license fees, or franchise renewal fees, are received from franchisees upon the execution of, or renewal of, a franchise agreement. Revenue is recognized from these agreements as the underlying performance obligation is satisfied, which is over the term of the agreement.

The following table illustrates the estimated revenue to be recognized in the future related to performance obligations that are unsatisfied as of December 31, 2025 (in thousands):

Franchise revenues:
2026	$	552
2027		540
2028		523
2029		495
2030		470
Thereafter		3,573
Total	$	6,153

Changes in the loyalty rewards program liability included in other accrued expenses and current liabilities on the consolidated balance sheets were as follows (in thousands):

	December 31, 2025		December 25, 2024
Loyalty rewards liability, beginning balance	$	844	$	687
Revenue deferred		2,667		2,181
Revenue recognized		(2,405)		(2,024)
Loyalty rewards liability, ending balance	$	1,106	$	844

The Company expects all loyalty points revenue related to performance obligations unsatisfied as of December 31, 2025 to be recognized within one year.

Gift Cards

The gift card liability included in other accrued expenses and current liabilities on the consolidated balance sheets was as follows (in thousands):

	December 31, 2025		December 25, 2024
Gift card liability	$	5,559	$	5,100

Revenue recognized from the redemption of gift cards that was included in other accrued expenses and current liabilities at the beginning of the year was as follows (in thousands):

	December 31, 2025		December 25, 2024		December 27, 2023
Revenue recognized from gift card liability balance at the beginning of the year	$	863	$	1,059	$	1,064

Contract Costs

The Company does not currently incur costs to obtain or fulfill a contract that would be considered contract assets under Topic 606.