Restructuring

12 Months Ended

Dec. 29, 2024

Restructuring and Related Activities [Abstract]

Restructuring

16. Restructuring

International Restructuring

In December 2023, the Company announced international transformation initiatives (“International Transformation Plan”) designed to evolve our business structure to deliver an enhanced value proposition to our International customers and franchisees, ensure targeted investments and efficient resource management, and better position our largest markets, including the UK, for long-term profitable growth and brand strength. During the fourth quarter of the year ended December 31, 2023, the Company commenced approved initiatives under the International Transformation Plan related to

establishing new regional hubs across APAC (Asia Pacific), EMEA (Europe, Middle East and Africa), and Latin America that will be led by experienced general managers and their teams.

During the first quarter of 2024, the Company commenced the next phase of the International Transformation Plan, which involved strategic restaurant closures and divestitures in the UK. The purpose of this plan is to optimize the Company’s restaurant portfolio in the UK and improve overall profitability by closing unprofitable locations and enhancing profitability across the remaining portfolio of Company-owned restaurants. This resulted in the closure of 43 underperforming UK Company-owned restaurants and 30 franchised locations during 2024. Due to indicators of potential impairment associated with the UK Company-owned and franchised restaurant closures, the Company performed impairment analyses throughout the year and determined that the carrying amount of the assets related to the closing UK restaurants were not recoverable. For the year ended December 29, 2024, we recognized impairment charges of $11.7 million for the amount by which the carrying value exceeded the estimated fair value of the asset groups. Fair values were determined based on the income approach, specifically a discounted cash flow model, primarily using estimated sublease income considering market rental rates. Management judgement is involved in determining the estimated fair value and includes uncertainties that under different assumptions and circumstances could drive material changes in the fair value determination.

During the second and third quarters of 2024, the Company also completed the refranchising of 60 formerly Company-owned restaurants to primarily existing franchisees, which resulted in a loss on sale of $1.7 million. We have completed substantially all of the strategic restaurant closures in the UK market and the Company’s efforts have turned towards growth opportunities and mitigating closure-related costs as we complete the optimization of the portfolio.

The following table summarizes restructuring related costs recorded for the years ended December 29, 2024 and December 31, 2023, respectively (in thousands):

	2024		2023
Long-lived asset impairment charges	$	11,664	$	—
Loss on franchisee notes receivable	1,744		—
Loss on refranchising Company-owned restaurants	1,745		—
Professional services and other related costs	8,599		677
Employee termination costs, net (a)	390		1,501
Lease terminations and other lease related costs (b)	3,131		—
Total international transformation costs, net	$	27,273	$	2,178

(a) Includes noncash reversal of $0.1 million related to the forfeiture of unvested stock-based compensation awards during the year ended December 29, 2024.

(b) Includes $1.1 million in connection with early lease terminations and $2.1 million related to our existing leases for closed stores.

The Company has incurred total restructuring related costs of $29.5 million since commencement of the International Transformation Plan, all of which were included in General and administrative expenses in the Consolidated Statements of Operations. Total estimated pre-tax costs associated with the International Transformation Plan are approximately $30.0 million to $35.0 million (inclusive of the cumulative $29.5 million incurred through the fourth quarter of 2024), all of which will be recorded within our International segment, and we expect to incur the remainder of these costs in 2025.

The following table presents changes in the balance of accrued expenses relating to approved initiatives, which are recorded in Accrued expenses and other current liabilities in the Consolidated Balance Sheets (in thousands):

	Employee severance		Professional services and other related costs		Lease terminations and other lease related costs		Total
Balance as of December 31, 2023	$	1,227	$	556	$	—	$	1,783
Charges	480		8,599		2,073		11,152
Payments	(1,574)		(6,820)		—		(8,394)
Balance as of December 29, 2024	$	133	$	2,335	$	2,073	$	4,541