Restructuring

3 Months Ended

Mar. 30, 2025

Restructuring and Related Activities [Abstract]

Restructuring

9. Restructuring

International Restructuring

In December 2023, the Company announced international transformation initiatives (the “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 fiscal 2023 and 2024, the Company implemented 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.

During 2024, the Company commenced the next phase of the International Transformation Plan, which involves strategic restaurant closures and divestitures in the UK in order to optimize the Company’s UK restaurant portfolio and improve overall profitability by closing unprofitable locations and enhancing profitability across the remaining portfolio of Company-owned restaurants. Execution on this phase resulted in the closure of 43 underperforming UK Company-owned restaurants and 30 franchised locations during 2024. As of March 31, 2024, indicators of potential impairment existed specific to the pending UK Company-owned restaurant closures, and as such the Company performed a recoverability test and determined that the carrying amount of the related asset groups were not recoverable. As a result, we recognized impairment charges during the three months ended March 31, 2024 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 2024, the Company also completed the refranchising of 60 formerly Company-owned restaurants to primarily existing franchisees. We have completed substantially all of the strategic restaurant closures in the UK market and the Company’s efforts are turning towards growth opportunities and mitigating closure-related costs as we complete optimization of the portfolio.

The following table summarizes restructuring related costs recorded for the three months ended March 30, 2025 and March 31, 2024 (in thousands):

	Three Months Ended
	March 30, 2025		March 31, 2024
Professional services and other related costs	$	1,434	$	1,346
Loss on franchisee notes receivable	1,111		—
Lease terminations and other lease related costs	(365)		—
Long-lived asset impairment charges	—		7,554
Employee termination costs	—		643
Total international transformation costs	$	2,180	$	9,543
Stock-based compensation forfeitures on unvested awards	(45)		(20)
Total international transformation costs, net of stock-based award forfeitures	$	2,135	$	9,523

The Company has incurred total restructuring related costs of $31.6 million since commencement of the International Transformation Plan, all of which were included in General and administrative expenses in the Condensed Consolidated Statements of Operations. Total estimated pre-tax costs associated with the International Transformation Plan are approximately $33 million to $35 million (inclusive of the $31.6 million incurred through the first quarter of 2025), substantially all of which will be recorded within our International segment, and we expect to incur the remainder of these costs through 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 Condensed Consolidated Balance Sheets (in thousands):

	Employee termination costs		Professional services and other related costs		Lease terminations and other lease related costs		Total
Balance as of December 29, 2024	$	133	$	2,335	$	2,073	$	4,541
Charges	—		1,434		—		1,434
Payments	—		(2,892)		(452)		(3,344)
Balance as of March 30, 2025	$	133	$	877	$	1,621	$	2,631