DIN 10-K & 10-Q changes, risk factors and insider trading

Our business is affected by general economic conditions that are largely out of our control. Our business is dependent to a significant extent on national, regional and local economic conditions, and, to a lesser extent, on global economic conditions, particularly those conditions affecting the demographics of the guests that frequently patronize restaurants. If our customers' disposable income available for discretionary spending is reduced (because of circumstances such as job losses, credit constraints, higher housing costs, inflation, changes to tax regulations, energy costs, interest rates or other costs) or if the perceived wealth of customers decreases (because of circumstances such as inflation, lower residential real estate values, increased foreclosure rates, changes to tax regulations, the imposition of tariffs or other trade barriers, or other economic disruptions), our business could experience a decline in sales and/or customer traffic as potential customers choose lower-cost alternatives (such as quick-service restaurants) or other alternatives to dining out. The inflationary period experienced over recent years, which has been over 20% cumulatively since 2020, and potential future inflationary periods, could negatively impact consumers’ discretionary income and reduce the amount of income previously used for dining outside the home. Additionally, negative trends in the availability of credit and in expenses such as interest rates and the cost of construction materials could affect our and our franchisees' ability to maintain and remodel existing restaurants. Any decreases in customer traffic or average customer check due to these or other reasons could reduce gross sales at our and our franchised restaurants, resulting in lower revenues, royalty payments and other payments from franchisees. This could negatively impact the financial performance of our company-operatedcompany-owned restaurants and reduce the profitability of franchised restaurants, potentially impacting the ability of franchisees to make royalty payments owed to us when due and negatively impacting franchisees’ ability to develop new restaurants as may be required in their respective development agreements.

Our and our franchisees' failure to address cost pressures, including rising costs for commodities, labor, health care and utilities could adversely affect our franchisees and our revenues and results of operations. The success of our franchisees (and our success with companycompany-owned restaurants) depend significantly on the ability to anticipate and react to changes in the price and availability of food (such as the cost and supply of eggs, which may be impacted by avian flu), ingredients, labor, health care, utilities, fuel and other related costs. Our franchisees have experienced and continue to experience inflationary conditions with respect to most or all of these costs during fiscal 2024.2025.

•result in an event of default if we fail to satisfy our obligations under our debt or fail to comply with the financial and other restrictive covenants contained in our debt documents, whichsuch event of default could result in all of our debt becoming immediately due and payable and could permit certain of our lenders to foreclose on our assets securing such debt.

DuringUnder the six-yearterms term following issuance,of the outstandingSeries fixed-rate 2023 Class A-2 senior notes will accrue interest at a rate of 7.824% per year. During the seven-year term following issuance, the outstanding fixed-rate 2019 Class A-2-II senior notes will accrue interest at a rate of 4.723% per year. It is anticipated that the 20232023-1 Class A-2 Notes will be repaid or refinanced prior to June 2029 and the ClassSeries A-2-II Notes will be repaid or refinanced prior to June 2026. If these notes are not repaid or refinanced prior to these anticipated dates, under certain circumstances additional interest will accrue on these notes. Additionally, the fixed-rate 20232025-1 Class A-2 andNotes, 2019 Class A-2-II senior notes have scheduled quarterly principal amortization payments of $1.25 million and $1.5 million, respectively. Ifif we maintain a leverage ratio of less than or equal to 5.25x total debt to adjusted EBITDA, we may elect to not make the scheduled principal payments. From time to time, our leverage ratio has exceeded the 5.25x total debt to adjusted EBITDA ratio and we have made the required scheduled principal payments. If we are unable to refinance or repay amounts under the securitized debt prior to the expiration of the applicable six-five- or seven-yearsix-year term, our cash flow would be directed to the repayment of the securitized debt and, other than a weekly management fee sufficient to cover minimal selling, general and administrative expenses, would not be available for operating our business.

In the event that a rapid amortization event occurs under the indenture (including, without limitation, upon an event of default under the indenture or the failure to repay the securitized debt at the end of the applicable five- or seven-yearsix-year term), the funds available to us would be reduced or eliminated, which would in turn reduce our ability to operate or grow our business.

Our use of personal informationinformation, as well as our use of innovative technologies, is regulated by international, federal and state laws, as well as by certain third-party agreements. If our security and information systems are compromised or if our employees or franchisees fail to comply with these laws and regulations, and this information is obtained by unauthorized persons or used or disclosed inappropriately, or we leverage technologies in ways that are challenged by new or evolving legal standards, it could adversely affect our reputation and could disrupt our operations and result in costly litigation, judgments, or penalties resulting from violation of international, federal and state laws and payment card industry regulations. As privacy and information security laws and regulations change, we may incur additional costs to ensure that we remain in compliance with those laws and regulations. For example, we are subject to the California Consumer Privacy ActCCPA and Californiaother Privacystate Rightsprivacy Act,laws which require various disclosures, processes and protections to be implemented.implemented, and provide for a variety of consumer data privacy rights that require compliance investment and may limit our ability to use certain data or technologies. For further information regarding cybersecurity, see Item 1C - Cybersecurity.

In connection with the implementation of our corporate strategies, we may face risks associated with the acquisition of businesses,businesses and franchised restaurants, the integration of acquired businesses, and the growth and development of these businesses. In pursuing our corporate strategy, from time to time we may acquire other businesses or brands, as we did in December 2022 when we acquired Fuzzy’s. We may also acquire restaurants from our franchisees. There can be no assurance that we will realize the anticipated synergies or cost savings related to acquisitions or that they will be achieved in our estimated timeframe. In addition, continued integration efforts may result in material challenges. We may not be able to successfully integrate and streamline overlapping functions from past or future acquisitions, and integration may be more costly to accomplish than we expect. Furthermore, growth and development plans with respect to acquired businesses may not be achievable or may not be achieved in our estimated time frame. We could also encounter difficulties in managing our combined company due to its increased size and scope. Additionally, our efforts to reduce cost depend, in part, upon our ability to successfully refranchise acquired restaurants, which in turn, depend on our ability to select qualified and capable franchisees.

We and our franchisees are subject to complaints or litigation from guests alleging illness, injury or other food quality, food safety, health or operational concerns as well as claims related to social issues (e.g., allegations of discrimination), the Americans with Disabilities Act and other premises liability. We, through the operation of our companycompany-owned restaurants, and our franchisees, through the operation of franchised restaurants, are also subject to "dram shop" laws in some states pursuant to which we and our franchisees may be subject to liability in connection with personal injuries or property damages incurred in connection with wrongfully serving alcoholic beverages to an intoxicated person.

Development initiatives outside our core business could negatively impact our brands. Our business expansion into virtual brands, dual-branded restaurants, and non-traditional restaurant formats, including restaurants with a smaller footprint, and restaurants located in non-traditional locations and restaurants that operate on a delivery-only and/or ghost kitchen basis, could create new risks to our brands and reputation.

Risks Related to Our FranchisedFranchise Business Model

Restaurant development plans under development agreements may not be implemented effectively and developed restaurants may not achieve desired results. We rely on franchisees to develop Applebee's,IHOP, IHOPApplebee's and Fuzzy's restaurants. From time to time, our franchisees have failed to fulfill their commitments to build new restaurants in the numbers and within the timeframes required by their development agreements, and we expect that this will continue to varying degrees in the future. Restaurant development and the success of restaurants opened by our franchisees involve substantial risks, including the following:

•the demand for Applebee’s,IHOP, IHOPApplebee’s and Fuzzy's restaurants and the selection of appropriate franchisee candidates;

Factors outside our control may harm our brands' reputations. The success of our business is largely dependent upon brand recognition and the strength of our franchise systems. Our and our franchisees’ continued success is directly dependent upon maintaining a favorable public view of the Applebee's,IHOP, IHOPApplebee's and Fuzzy's brands. Negative publicity (e.g., crime, scandal, litigation, on-site accidents and injuries or other harm to customers, social issues and food-borne illness) at a single Applebee's,IHOP, IHOPApplebee's or Fuzzy's location can have a substantial negative impact on all restaurants within their respective system. Multi-unit food service businesses such as ours can be materially and adversely affected by widespread negative publicity of any type, including through social media, but particularly regarding food quality, food-borne illness, food tampering or preparation, obesity, discrimination or bias, injury or other health concerns with respect to certain foods and actions of our or our franchisees’ managers or employees, regardless of whether such claims are accurate or valid.

The risk of food-borne illness or food tampering cannot be completely eliminated. Any outbreak of food-borne illness or other food-related incidents attributed to Applebee's,IHOP, IHOPApplebee's or Fuzzy's restaurants or within the food service industry or any widespread negative publicity regarding the Applebee's,IHOP, IHOPApplebee's or Fuzzy's brands or the restaurant industry in general could harm our reputation. Even where such food-related incidents occur solely at restaurants of our competitors or within the industry, our business could be adversely affected by negative publicity about the restaurant industry generally. Our companycompany-owned restaurants and our franchisees may produce or receive through the supply chain sub-standard or non-compliant food or beverage products. In addition, our franchisees’ failure to comply with food quality and preparation requirements may subject us to potential losses, even when we are not legally liable for a franchisee's actions or failure to act. Although we maintain liability insurance, and each franchisee is required to maintain liability insurance pursuant to its franchise agreements, a liability claim could injure the reputation of all Applebee's,IHOP, IHOPApplebee's or Fuzzy's restaurants, whether or not it is ultimately successful.

We may experience shortages or interruptions in the supply or delivery of food and other products from third parties or in the availability of utilities. Our and our franchised restaurants are dependent on frequent deliveries of fresh produce, food, beverages and other products. Shortages or interruptions in food and beverage supplies may result from a variety of causes, including shortages due to climate change, adverse weather, labor unrest, labor shortages, political unrest, terrorism, pandemics, epidemics, outbreaks of food-borne illness, disruption of operation of production facilities, financial difficulties (including bankruptcy) of our distributors or suppliers or other unforeseen circumstances. For example, the current outbreak of avian flu may impact the cost and availability of obtaining eggs. Such shortages could adversely affect our and our franchisees’ ability to operate our restaurants and, in turn, affect our and our franchisees’ revenue and profits. Additionally, the inability to secure adequate and reliable supplies or distribution of food and beverage products could limit our ability to make changes to our core menus or offer promotional "limited time only" menu items, which may limit our ability to implement our business strategies. Our and our franchisees’ restaurants bear risks associated with the timeliness of deliveries by suppliers and distributors as well as the solvency, reputation, labor relationships, freight rates, prices of raw materials and health and safety standards of each supplier and distributor. Other significant risks associated with our suppliers and distributors include improper handling of food and beverage products and/or the adulteration or contamination of such food and beverage products. Disruptions in our relationships with suppliers and distributors may reduce the payments we receive from our franchisees or our pancake and waffle dry mix distributors or the profits generated by our company-operatedcompany-owned restaurants. In addition, interruptions to the availability of gas, electric, water or other utilities may adversely affect the operations of our and our franchised restaurants.

Changing health or dietary preferences may cause consumers to avoid Applebee's,IHOP, IHOPApplebee's and Fuzzy's restaurants in favor of alternative options. The food service industry as a whole rests on consumer preferences and demographic trends at the local, regional, national and international levels. Franchise development and system-wide sales depend on the sustained demand for our products, which may be affected by factors we do not control. New information regarding diet, nutrition and health and efforts by advocacy groups to influence consumer eating habits may negatively affect the demand for our food. Various additional factors such as: (i) the Food and Drug Administration’s menu labeling rules; (ii) nutritional guidelines issued by the United States Department of Agriculture and issuance of similar guidelines or statistical information by state or local municipalities; (iii) academic studies; or (iv) efforts by environmental, animal health and welfare and sustainability advocacy groups, may impact consumer choice and cause consumers to select foods other than those that are offered by Applebee's,IHOP, IHOPApplebee's or Fuzzy's restaurants. We may not be able to adequately adapt Applebee's,IHOP, IHOPApplebee's or Fuzzy's restaurants' menu offerings to keep pace with developments in consumer preferences, which may result in reduced royalty revenues from a decline in demand for our food and fewer guests visiting our restaurants.

The following discussion provides analysesa discussion of our results of operations and reasons for materialfiscal changes for 20242025 as compared to 2023fiscal 2024 and should be read together with the financial statements included in this Annual Report on Form 10-K. For a detailed discussion of year-to-yearour comparisonsresults betweenof operations for fiscal 20232024 and fiscal2023 2022,results, please refer to the applicable portion of “Management's Discussion and Analysis of Financial Condition and Results of Operations” contained in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31,29, 2023,2024. filedThis withItem the SEC on February 28, 2024, which7 is herebyorganized incorporatedas by reference.follows:

(b)“System-wide"System sales” are retail sales at IHOP, Applebee’s and Fuzzy's restaurants operated by franchisees and IHOP restaurants operated by franchisees and area licensees, as reported to the Company,Company inand additionrevenues to retail salesgenerated at company-operated Applebee's and Fuzzy'sCompany-owned restaurants. System-wide sales do not include retail sales of ghost kitchens. Sales at restaurants that are ownedoperated by franchisees and area licensees are not revenues attributable to the Company. An increase in franchisees' reportedsystem sales of franchised restaurants will result in a corresponding increase in our royalty revenue,revenues, while a decrease in franchisees' reported sales will result in a corresponding decrease in our royalty revenue. Unaudited reported sales for Applebee's and Fuzzy's franchise restaurants, Applebee's and Fuzzy's company-operated restaurants, IHOP franchise restaurants and IHOP area license restaurants for the years ended December 31, 2024, 2023 and 2022 were as follows:revenues.

(d)“Domestic same-restaurant sales percentage change” reflects the percentage change in sales of domestic restaurants in any given fiscal period, compared to the same weeks in the prior period, for domestic restaurantsperiod that have been operated during boththe periodscomparable thatprior areyear being comparedperiod and have been open for at least 18 months. BecauseDue ofto new restaurant openings and restaurant closures, the domestic restaurants open throughout both fiscal periods being compared may be different from period to period.

(eb)The franchise sales percentage change for 20242025 was impacted by the acquisition of 47 franchiseApplebee's restaurants in November 20242024, 10 IHOP restaurants in March 2025, and 12 Applebee's restaurants in May 2025 now reported as company-operated.company-owned.

Applebee’sIHOP’s system-widesystem domestic same-restaurant sales decreasedincreased 4.7%0.3% for the three months ended December 31,28, 20242025 and decreased 4.2%1.5% for the year ended December 31,28, 2024,2025, as compared to the same respective periods of 2023.2024. The decreaseincrease for the three months ended December 31,28, 20242025 was primarily due to a decrease in traffic, offsetdriven by an increase in traffic, partially offset by a decrease in average check. The decrease for the year ended December 31, 2024 was primarily due to a decrease in traffic, offset by an increase in average checkcheck, resulting from menuthe priceintroduction increasesof byour franchisees.new everyday value menu.

Based on data from Black Box Intelligence, a restaurant sales reporting firm (“Black Box”), Applebee'sIHOP domestic same-restaurant sales outperformed for the three months ended December 28, 2025 and underperformed for the twelve months ended December 31,28, 20242025 underperformedin the casualfamily dining segment of the restaurant industrycategory (excluding Applebee'sIHOP), as compared with the same respective periods of 2023.fiscal The2024. casualAccording to Black Box, the family dining segmentcategory experienced a higherdecrease in same-restaurant sales resulting from a decrease in customer traffic, partially offset by an increase in average customer check than Applebee's, contributing tofor the casualtwelve diningmonths segment'sended strongerDecember comp28, sales.2025.

Applebee'sIHOP's off-premise sales dollars for the three and twelve months ended December 31,28, 20242025 decreasedincreased by $6.4 million and $6.3 million respectively, as compared withto the same respective periods of 2023,fiscal 2024 primarily due to ourthe brand's focus on delivery servicepromotions partnersand performingcatering below our native channels.services.

IHOP’sApplebee’s system domestic same-restaurant sales decreased 2.8%0.4% for the three months ended December 31,28, 20242025 and decreasedincreased 2.0%1.3% for the year ended December 31,28, 2024,2025, as compared to the same respective periods of 2023.2024. MostThe ofdecrease for the declinethree inmonths bothended periodsDecember 28, 2025 was primarily due to a decrease in traffic, partially offset by an increase in average check. The increase infor averagethe checkyear ended December 28, 2025 was primarily due to an increase in average check resulting from menu prices,price increases, partially offset by the introduction of promotionaladditional value deals in the fourth quarter.offerings.

Total revenues for the three months ended June 28, 2026 increased $10.4$10.1 million,million largelycompared to the prior year quarter. The increase was driven by ana $11.9$19.1 million increase from thein company-owned restaurant revenues from restaurants acquired and opened since the firstsecond quarter of 2025. This increase was partially offset by a $1.3$7.8 million decrease in franchise revenuesrevenue primarily driven byfrom lower proprietary product sales due to timing, weakersales, international franchiseefranchise performanceperformance, and a decrease inless franchise termination fees recognized in the current periodperiod, asand compareda todecrease thein priorApplebee's yearsame period.restaurant sales change. In addition, franchise revenues weredecreased impacted byas a reduction in the numberresult of franchisedclosures restaurants due in part toand the acquisition of 12 Applebee's restaurants in MayFebruary 20252026 and 1248 Applebee's restaurants in FebruaryJune 2026. Total cost of revenues increased $13.3$11.1 million primarily due to the increase in company-owned restaurants.restaurants, partially offset by lower bad debt expense as compared to the prior year quarter.

Income before income taxes in the three months ended MarchJune 29,28, 20262026, decreasedwas largelylower due to a decrease in gross profit, increase in general and administrative expenses, increase in interest expense and an increase in closure and impairment charges. The increase in general and administrative expenses,expenses partiallyis offsetprimarily bydue ato decreaseour investment in closurecompany-owned and impairmentdual-branded chargesrestaurant initiatives, increased reorganization costs, and higher professional service fees from the gain on dispositionacquisition of assets.additional company-owned restaurants. The increase in interest expense is primarily the result of the refinancing of our 2025 Class A-2 Notes completed in June 2025 which resulted in increased principal and a higher interest rate. The increase in general and administrative expenses is primarily due to our investment in our dual-branded and company-owned restaurant initiatives. Closure and impairment charges decreasedincreased asprimarily a result of less one-time lease termination and lease asset impairment costs incurred in the current year as compareddue to the respective prior year period. Gain on dispositionimpairment of assets was related to the sale of land and building of two IHOP restaurants.trademarks.

(b) Included inFor the six months ended June 29, 2025, IHOP franchise restaurants closedclosures and IHOP company-owned restaurantsopenings opened areincluded 10 restaurants acquired by the Company in March 2025. Included in the Applebee'sApplebee’s franchise restaurants closedclosures and Applebee's company-owned restaurantsopenings opened areincluded 12 restaurants acquired byin May 2025 for the Companythree and six months ended June 29, 2025; 12 acquired in February 2026 for the six months ended June 28, 2026; and 48 acquired in June 2026 for the three and six months ended June 28, 2026.

As of MarchJune 29,28, 2026, we had 3544 dual-branded domestic IHOP and Applebee's restaurant locations. During the three months ended MarchJune 29,28, 2026, we had twothree existing company-owned Applebee's restaurants which added the IHOP brand, three existing Applebee's franchisesfranchised restaurants which added the IHOP brand, onetwo existing IHOP franchisefranchised restaurants which added the Applebee's brand, and twoone new franchisefranchised restaurantsrestaurant which added to both brands. This totaled 10 dual-branded domestic openings.

During the three and six months ended MarchJune 30,29, 2025, we had one existing IHOP franchisefranchised restaurant which added the Applebee's brand for a total of one dual-branded opening.

As of MarchJune 29,28, 2026, we had 37 dual-branded international IHOP and Applebee's restaurant locations. During the three months ended MarchJune 29,28, 2026, we had five new franchise restaurants which added both brands. This totaled 10one dual-branded international openings.opening and two dual-branded international closures.

As of MarchJune 30,29, 2025, we had 1920 dual-branded international IHOP and Applebee's restaurant locations. During the three months ended MarchJune 30,29, 2025, we had one existing Applebee's franchisefranchised restaurant which added the IHOP brand for a total of one dual-branded international opening.

The following table shows the effects of the domestic and international restaurant count methodology described above as of June 28, 2026 and June 29, 2025:

IHOP's system domestic same-restaurant sales remainedincreased flat1.5% for the three months ended MarchJune 29,28, 2026 as compared to the prior year period, due to an increase in average check partially offset by a decrease in traffic. IHOP's system domestic same-restaurant sales increased 0.8% for the six months ended June 28, 2026 as compared to the respective prior year period, due to an increase in average check partially offset by a decrease in traffic.

Based on data from Black Box Intelligence, a restaurant sales reporting firm ("Black Box"), IHOP domestic same-restaurant sales outperformed for the three and six months ended MarchJune 29,28, 2026 in the family dining category (excluding IHOP). According to Black Box, for the three and six months ended June 28, 2026 the family dining category experienced a decrease in same-restaurant sales resulting from a decrease in customer traffic, partially offset by an increase in average customer check.

IHOP's off-premise sales for the three and six months ended MarchJune 29,28, 2026 increased by $1.9$3.8 million and $7.1 million, respectively, as compared to the respective prior year periodperiods primarily due to the brand's focus on proven delivery promotions.

Applebee’sApplebee's system domestic same-restaurant sales increaseddecreased 1.9%1.8% for the three months ended MarchJune 29,28, 2026 as compared to the prior year quarter due to a decrease in traffic partially offset by an increase in average check. Applebee's system domestic same-restaurant sales remained flat for the six months ended June 28, 2026 as compared to the respective prior year period. The increaseThis was duethe toresult of an increase in average check partially offset by a decrease in traffic.

Based on data from Black Box, Applebee's domestic same-restaurant sales for the three and six months ended MarchJune 29,28, 2026 outperformedunderperformed the casual dining category (excluding Applebee's). Black Box reported the casual dining category experienced a same-restaurant sales increase for the three and six months ended MarchJune 29,28, 2026 driven by an increase in average customer check, partially offset by a decrease in customer traffic.

Applebee's off-premise sales for the three and six months ended MarchJune 29,28, 2026 increased $5.9$1.5 million and $7.3 million, respectively, as compared to the respective prior year periodperiods primarily due to limited time offers paired with delivery and digital promotions.

Fuzzy's system domestic same-restaurant sales increased 2.4%4.6% and 3.6% for the three and six months ended MarchJune 29,28, 20262026, respectively, as compared to the respective prior year period.periods. The increase was primarily due to an increasegrowth in average check resulting primarily from menu price increases, partially offset by a decrease in traffic.

OurFor the three months ended June 28, 2026 our total franchise segment profit decreased $2.6$2.1 million in the three months ended March 29, 2026 as compared to the sameprior respectiveyear period of 2025.quarter.

•IHOP franchise revenue decreased $1.7$0.9 million primarily due to a decrease in proprietary product sales, decreased performance of international franchisees and less fees related to franchisee terminations inand the current year. Thea decrease in proprietary product salessales, waspartially primarilyoffset dueby toa timing1.5% ofincrease salesin tofranchise ourdomestic distributionsame-restaurant partners.sales. The decrease in franchise termination fees was primarily due to fewer franchisee restaurant closures as compared to the respective prior year periodquarter. ofThe 2025.decrease in proprietary product sales was primarily due to changes to product offerings.

•Applebee’sApplebee's franchise revenue decreased $0.1$4.7 million primarily due to a decrease in franchise termination fees, a decrease in the number of franchise restaurants, and a decrease in same restaurant sales change. The decrease in franchise termination fees was due to fewer closures in the current year quarter. The decrease in the number of franchise restaurants duewas inthe partresult toof the acquisition of 12 Applebee’s restaurants in May 2025 and 12 Applebee's restaurants in February 2026.2026, The48 decreaseApplebee's was partially offset by a 1.9% increaserestaurants in franchiseJune domestic same-restaurant sales2026, and an increase in forfeited franchise fees due to restaurant closures.

•Fuzzy’sFuzzy's franchise revenue decreased $0.2$0.6 million primarily due to a decrease in royalty revenues and proprietary product sales as a result of a decrease in the number of franchise restaurants.restaurants and a decrease in forfeited development fees.

•Advertising revenue increaseddecreased $0.5$1.6 million due to a 1.9%1.8% increasedecrease in Applebee's domestic same-restaurant sales and a 2.4% increase in Fuzzy's domestic same-restaurant sales, partially offset by a decrease in the number of Applebee's and Fuzzy's franchise restaurants.restaurants, partially offset by a 1.5% increase in IHOP domestic same-restaurant sales.

Franchise expenses increaseddecreased as a result of the following:

•Applebee’sIHOP franchise expenses decreased $0.4$0.7 million primarily due to a decrease in the cost of proprietary product sales and a decrease in bad debt reservesexpense as compared to the respective prior year period of 2025.quarter.

•Fuzzy’sApplebee's franchise expenseexpenses increaseddecreased $0.2$3.3 million primarily due to anexpenses increaseincurred in the prior year quarter related to transaction costs of refranchising restaurants and bad debt reserves.expense.

•Advertising expenses increaseddecreased $0.5$1.6 million given the increasedecrease in advertising revenue.

In February 2026, theThe Company acquired 12 Applebee's restaurants from a franchisee.franchisee in February 2026 and 48 Applebee's restaurants from a franchisee in June 2026. As of MarchJune 29,28, 2026, the Company owned 86136 restaurantsrestaurants, which includes seven dual-branded restaurants, compared to 5870 restaurants as of MarchJune 30,29, 2025. The change in company-owned restaurant revenue and expenses for the three and six months ended June 28, 2026 is primarily driven by the increase in the number and timing of restaurants acquired since Q1the second quarter of 2025. Company-owned restaurant segment loss for the three and six months ended MarchJune 29,28, 2026 was primarily due to costs of transitioning the restaurants, including closures from remodeling activities.

Rental segment profitrevenues for the three and six months ended MarchJune 29,28, 2026 increaseddecreased as compared to the respective prior year period,periods, primarily due to aclosures. non-recurringRental impairmentexpenses of a lease asset infor the respectivethree and six months ended June 28, 2026 decreased as compared with the same prior year period.period primarily due to lease terminations.

Total general and administrative expenses for the three months ended MarchJune 29,28, 2026 increased $1.8$4.8 million, primarily due to anhigher increaseemployee-related costs associated with the expansion of company-owned restaurants and dual-brand operations, increased reorganization costs, and higher professional services from the acquisition of 48 Applebee's restaurants in employeeJune costs as we invest in training, development, and operations related to dual-branded and company-owned restaurants, partially offset by a decrease in professional service fees due to higher litigation expenses incurred in the prior year period.2026.

Interest expense, net, increased $4.1$4.2 million and $8.3 million for the three and six months ended MarchJune 29,28, 2026, respectively, primarily due to the refinancing of our 2025 Class A-2 Notes at a higher interest rate and an increased principal in June 2025, and a decrease toof interest income dueresulting tofrom reduced cash balances.

For the three and six months ended MarchJune 29,28, 2026, we recorded $0.8a $3.2 million oftrademark animpairment increase in reservescharge related to propertiesthe forstrategic whichrealignment we areof the lesseeinternational butmarket. have ceased usingFor the propertysix inmonths priorended periods.June This29, compares to closure and2025, other asset impairment charges for the three months ended March 30, 2025were primarily related to the impairment of an asset upon the closure of certain IHOP restaurants in March 2025.

Amortization of intangible assets primarily relates to Applebee's and Fuzzy's franchise rights.rights and the Fuzzy's tradename. Amortization increased $1.1$1.2 million and $2.2 million for the three and six months ended June 28, 2026, respectively, compared to the same respective prior periodperiods due to the reclassification of certain indefinite-lived intangible assets to finite-lived.finite-lived in the fourth quarter of fiscal 2025. In addition, in the current yearyear, the useful lives of certain finite-lived intangible assets useful lives were shortened.reduced.

The gain on disposition of assets for the three months ended MarchJune 29,28, 2026 is related to the gain on lease terminations. The gain on disposition of assets for the six months ended June 28, 2026 primarily relates to the sale of land and building on which two IHOP properties were located.

The effective tax rate for the three months ended MarchJune 29,28, 2026 was lowerhigher than the rate of the prior comparableyear periodquarter primarily due to ahigher highernon-deductible executive compensation partially offset by increased income tax deduction related to stock-based compensation resulting from an increase in our share price.credits.

Our total cash balances including restricted cash, net of revolving credit facility borrowings, at MarchJune 29,28, 2026 and December 28, 2025 were as follows:

In summary, our cash flows for the threesix months ended MarchJune 29,28, 2026 and MarchJune 30,29, 2025 were as follows:

CashNet cash provided by operating activities decreased $8.6$33.2 million during the threesix months ended MarchJune 29,28, 2026 compared to the same period of the prior year. ThisThe decrease was primarily attributabledriven by timing of marketing spend, higher payments related to the impact of performance planperformance-based compensation payments.and This was partially offset by a decreaseinterest, in income tax payments comparedaddition to thelower samesegment period of the prior year.profit.

InvestingNet cash used in investing activities usedwas net cash of $7.7$9.0 million for the threesix months ended MarchJune 29,28, 2026 compared to using net cash used of $1.9$5.1 million during the comparable prior period. The increase in cash used inwas investingprimarily activitiesattributable isto largelycapital drivenexpenditures byfor the remodels and constructionremodeling of the company-owned restaurantsrestaurants, partially offset by the net cash acquired from the acquisition of restaurants from franchisees, principal collections on notes and equipment receivables and proceeds from the sale of two properties.

CashNet flowscash used in financing activities increased $16.2$6.5 million for the threesix months ended MarchJune 29,28, 2026. The increase in cash used in financing activities was primarily due to $22.0$29.3 million in repurchases of common stock,stock repurchases, partially offset by a decrease in dividends paid.paid and the debt issuance cost.

We may voluntarily repay the Class A-2 Notes at any time; however, if repaid prior to certain dates we would be required to pay make-whole premiums. As of MarchJune 29,28, 2026, the make-whole premium associated with voluntary prepayment of the 2023 Class A-2 Notes was approximately $12.1$7.1 million and for the 2025 Class A-2 Notes was approximately $29.8$22.8 million. We also would be subject to a make-whole premium in the event of a mandatory prepayment required following certain rapid amortization events or certain asset dispositions.

During the threesix months ended MarchJune 29,28, 2026 and MarchJune 30,29, 2025, we declared and paid dividends of $2.5 million and $7.8 million on common stock as shown in Note 8 - Stockholders' Deficit, of the Notes to the Condensed Consolidated Financial Statements. On FebruaryMay 20,14, 2026, our Board of Directors declared a firstsecond quarter 2026 cash dividend of $0.19 per share of common stock, payable on AprilJuly 10, 2026 to the stockholders of record as of the close of business on MarchJune 18,24, 2026.

On FebruaryMay 17,14, 2022,2026, the Company's Board of Directors authorized a share repurchase program, effective April 1, 2022,program of up to $250$100 million (the "20222026 Repurchase Program") in addition to the Corporation’s existing share repurchase program, approved in February 2022 (together with the 2026 Repurchase Program, the "Repurchase Programs"). A summary of shares repurchased under the 2022 Repurchase Program,Programs, during the threesix months ended MarchJune 29,28, 2026 and cumulatively, is as follows: