SEGMENT REPORTING

12 Months Ended

Dec. 31, 2025

SEGMENT REPORTING

SEGMENT REPORTING

17. SEGMENT REPORTING

Operating segments are defined as components of a company that engage in business activities from which it may earn revenue and incur expenses, and for which separate financial information is available and is regularly reviewed by the chief operating decision maker ("CODM") to assess the performance of the individual segments and make decisions about company resources such as personnel and working capital to be allocated to the segments.

The Company derives revenue from three primary sources: (1) company-operated restaurant revenue, (2) franchise revenue, which is comprised primarily of franchise royalties and, to a lesser extent, franchise fees and sublease rental income, and (3) franchise advertising fee revenue. All significant revenues relate to retail sales of food and beverages through either company-operated or franchised restaurants.

The Company determined that it has one operating segment and one reportable segment which is reflected in the Company’s current organizational and management structure. The accounting policies of the segment are the same as those described in Note 2 “Summary of Significant Accounting Policies.”

The Company’s CODM is the Chief Executive Officer who manages the Company’s operations on a reportable segment basis. The Company’s CODM reviews its operations and financial performance at a consolidated level by comparing actual results to budgeted figures and prior year results. This approach allows the CODM to assess whether the Company’s operating segment is meeting its financial goals, identify trends and make more informed decisions about resource allocation and performance targets.

When evaluating the Company’s financial performance, the CODM regularly reviews total revenues, segment expenses and consolidated net income as reported on the Consolidated Statements of Operations as well as non-GAAP measures such as restaurant contribution margin and Adjusted EBITDA to allocate Company resources and assess the performance of the Company. Segment asset information is not used by the CODM to assess performance and allocate resources.

The table below is a summary of the segment net income, including significant segment expenses for the years ended December 31, 2025, December 25, 2024 and December 27, 2023 (in thousands):

	December 31, 2025		December 25, 2024		December 27, 2023
Total revenue	$	490,046	$	473,008	$	468,664
Less:
Food and paper costs		100,083		100,725		108,250
Labor and related expenses		127,258		127,179		127,244
General and administrative expenses		50,258		46,270		42,025
Franchise expenses		47,762		42,307		38,404
Occupancy expenses		32,551		30,792		31,318
Other operating expenses(1)		73,835		68,488		69,753
Depreciation and amortization		15,966		15,717		15,235
Other segment expenses(2)		288		362		(3,357)
Total operating expenses		448,001		431,840		428,872
Income from operations		42,045		41,168		39,792

Interest expenses, net		4,470		5,899		4,811
Provision for income taxes		11,089		9,605		9,324
Income tax receivable agreement (income) expenses		-		(20)		103
Total segment net income	$	26,486	$	25,684	$	25,554

(1) Other operating expenses are comprised of utilities, repairs and maintenance, advertising, credit card processing fees, delivery service provider fees, restaurant supplies and other restaurant operating costs.

(2) Other segment expenses include loss (gain) on disposal of assets, gain on recovery of insurance proceeds, property, equipment and expenses, (gain) loss on disposition of restaurants and impairment and closed-store reserves.