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

Our business could be adversely impacted by increases in labor costs, including those increases triggered by regulatory actions regarding wages, scheduling and benefits; increased health care and workers’ compensation insurance costs; increased wages and costs of other benefits necessary to attract and retain high quality employees with the right skill sets and increased wages, benefits and costs and inflationary and other pressure on wages now being experienced. The growth of our business can make it increasingly difficult to locate and hire sufficient numbers of employees, to maintain an effective system of internal controls, and to train employees to deliver a consistently high-quality product and customer experience, which could materially harm our business and results of operations. Furthermore, we have experienced, and could continue to experience, a shortage of labor for restaurant positions, including due to concerns around and illnesses arising from COVID-19 and its various novel variants and other factors, which could decrease the pool of available qualified talent for key functions and require restaurants to operate on reduced hours. In addition, our wages and benefits programs may be insufficient to attract and retain the top performing employees especially in a rising wage market.

Additionally, the trend toward convergence in grocery, deli, delivery, and restaurant services is increasing the number of our competitors. For example, competitive pressures can come from deli sections and in-store cafes of major grocery store chains, including those targeted at customers who desire high-quality food and convenience, as well as from convenience stores and other dining outlets. These competitors may have, among other things, a more diverse menu, lower operating costs and prices, better locations, better facilities, more effective marketing, and more efficient operations than we do. Such increased competition could decrease the demand for our products and negatively affect our sales, operating results, profits, business and financial position, and prospects (collectively, our “financial results”).results.

Additionally, past reports linking nationwide or regional incidents of food-borne illnesses such as salmonella,pathogenic E.Salmonella, coli,E.coli, and listeriaListeria to certain products such as produce and proteins, or human-influenced illness such as hepatitis A or norovirus, have resulted in consumers avoiding certain products and restaurant concepts for a period of time. Similarly, reaction to media-influenced reports of avianAvian flu,Flu, incidents of “mad cow” disease, or similar concerns have also caused some consumers to avoid products that are, or are suspected of being, affected and could have an adverse effect on the price and availability of affected ingredients. Further, if we react to these problems by changing our menu or other key aspects of the brand experience, we may lose customers who do not accept those changes, and we may not be able to attract enough new customers to generate sufficient revenue to make our restaurants profitable.

We intend to grow Jack in the Box and Del Tacobusiness primarily through new restaurant development by franchisees, both in existing markets and in new markets. Development involves substantial risks, including the risk of:

We collect and maintain personal information about our employees and our guests and are seeking to provide our guests with new digital experiences. These digital experiences will require us to open up accessintegrate into our POS systems to allow for capabilities like mobile order and pay, third party delivery, and digital menu boards. The collection and use of personal information are regulated at the federal and state levels; such regulations include the California Consumer Privacy Act. We increasingly rely on cloud computing and other technologies that result in third parties holding significant amounts ofvarious customer, employee, and franchisee information on our behalf. There has been an increase over the past several years in the frequency and sophistication of attempts to compromise the security of these types of systems. If the security and information systems that we or our outsourced third-party providers use to store or process such information are compromised or if we, or such third parties, otherwise fail to comply with applicable laws and regulations, we could face litigation and the imposition of penalties that could adversely affect our financial performance. Our reputation as a brand or as an employer could also be adversely affected by these types of security breaches or regulatory violations, which could impair our ability to attract and retain qualified employees.

Comparisons under this heading refer to the 52-week periods ended September 29,28, 20242025 and OctoberSeptember 1,29, 2023,2024, respectively. Our MD&A consists of the following sections:

A comparison of our results of operations and cash flows for fiscal 20232024 compared to fiscal 20222023 can be found under Part II, “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended OctoberSeptember 1,29, 2023.2024.

Founded in 1951, Jack in the Box Inc. (the “Company”) operates and franchises Jack in the Box® and Del Taco® quick-service restaurants. As of September 29,28, 2024,2025, we operated and franchised 2,1912,136 Jack in the Box quick-service restaurants, primarily in the western and southern United States, including twothree in Mexico and two in Guam. As of September 28, 2025 we operated and franchised 576 Del Taco restaurants across 18 states. We derive revenue from retail sales at company-operated restaurants and rental revenue, royalties (based upon a percent of sales), franchise fees and contributions for advertising and other services from franchisees.

Company restaurant sales increaseddecreased $13.3$10.3 million, or 3.2%,2.4%, in 20242025 as compared with the prior year due to a decrease in transactions partially offset by an increase in the average number of restaurants, as well as an increase in average check. The following table presents the approximate impact of these items on company restaurant sales in 2024 (in millions):restaurants.

Same-store sales at company-operated restaurants remaineddecreased theby same3.7% in 2024fiscal year 2025 compared to a year ago. The following table summarizes the changes in company-operated same-store sales:

Food and packaging costs, as a percentage of company restaurant sales, decreased to 29.5%28.0% in 20242025 from 31.6%29.5% a year ago, primarilydue duemainly to a 2.0%1.8% impactbenefit from pricinga leveragenew andbeverage 0.2%contract fromwith commodityfunding deflation,retroactive to January 1, 2024, as well as menu price increases, partially offset by 0.2%commodity inflation and unfavorable menu item mix.

Commodity costs decreasedincreased in the current fiscal year by approximately 0.7%.4.2%. The greatest impacts were seen in produce,beef, beef,beverages, poultry, and poultry.eggs.

Payroll and employee benefit costs, as a percentage of company restaurant sales, increased to 31.5%33.8% in 20242025 compared with 30.8%31.5% a year agoago. There was an approximate 2.0% increase which was primarily due to a 0.7%the impact from wage inflation. Wage inflation offor the year was approximately 6.9%,7.6% and anwas increaseprimarily due to the wage increases required in groupCalifornia insurance,effective whichApril were1, partially2024 offset by a decrease in incentive compensation. New regulations, such asunder AB 1228, which went into effect April 2024, have raised labor costs, particularly given our high concentration of restaurants in California.1228.

Occupancy and other costs, as a percentage of company restaurant sales, increased to 17.3%18.7% in 20242025 from 16.7%17.3% a year ago primarily due to sales deleverage, higher securitycosts costs,for creditrent, card feesutilities, and other operating costs,costs partiallyincluding offsetdelivery by lower maintenance and repair. costs.fees.

Franchise rental revenues decreased $4.1$14.5 million, or 1.2%,4.2%, in 20242025 compared to the prior year, primarily due to a decrease in percentage rent of $8.5$16.5 million, driven by lower sales, partially offset by increaseshigher inlease minimumtermination rentfees of $3.3$2.7 millionmillion, and anhigher increasepass through property tax revenue of $2.5$1.1 million related to franchise lease terminations.million.

Franchise royalties and other decreased $8.9$7.1 million, or 4.2%,3.4%, mainly in connection with a $7.3 million termination fee paid by a franchise operator who sold his restaurantscompared to a new franchisee in the prior year,year asprimarily welldue asto lower royalty income driven by lower sales.

Franchise contributions for advertising and other serviceservices expensesrevenues decreased $2.4$11.6 million, or 1.1%5.3%, in 2024 primarilymainly due to lower sales driving marketing contributions resultinglower fromby a$8.9 decreasemillion inand franchiselower sales.digital and technology fees of $2.4 million.

Company restaurant sales decreased $150.6$71.4 million or 34.8%,25.3%, in 20242025 as compared with the prior year primarily due to a decrease in the refranchisingaverage number of 47 company-operated restaurants and the closing of 4 company-operated restaurants in fiscal 2024, as well as a decrease in same store sales compared to the prior year.transactions.

Same-store sales at company-operated restaurants decreased 1.3%2.4% in 20242025 compared to a year ago. The following table summarizes the increases (decreases) in company-operated same-store sales:

Food and packaging costs, as a percentage of company restaurant sales, decreased to 26.0%25.9% in 20242025 from 27.7%26.0% a year ago primarily due to amenu 1.9%price benefitincreases fromand pricingfavorable leverage.beverage funding, partially offset by commodity inflation and unfavorable menu item mix.

Commodity costs inflation was 0.2%4.1% in 2024.2025. The largest sources of inflation in the current year were due to dairybeef, poultry, and beverages, and was partially offset by favorability in pork, oil, eggs and cheese.beverages.

Payroll and employee benefit costs, as a percentage of company restaurant sales, increased to 36.7%38.6% in 20242025 compared with 34.0%36.7% a year ago primarily due to alabor 2.2%inflation impact fromof labor inflation.2%. Labor inflation was 9.7%7.1% in the current year. Additional regulations, such as AB 1228, which went into effect April 2024, have raised labor costs, particularly given our high concentration of restaurants in California.

Occupancy and other costs, as a percentage of company restaurant sales, increased to 23.3%24.4% in 20242025 from 21.7%23.3% a year ago primarily due to sales deleverage as well as higher rentcosts for IT, utilities, maintenance, and other operating expensescosts including utilitiesdelivery and information technology costs, partially offset by a change in the mix of restaurants due to refranchising.fees.

Franchise rental revenues increased $14.9$7.7 million, or 111.9%27.3% in 20242025 compared to the prior year, primarily due to higher rental income ofand $11.0pass millionthrough property tax revenue resulting from new subleases related to the 142 restaurants refranchised since the second quarter of 2023 and the 11 franchise-operated restaurants opened in fiscal 2025 and 2024.

Franchise supportroyalties and other costs increased $2.3$1.7 million, or 101.5%5.2% in 20242025 compared to the prior year, primarily due to higherrefranchising franchise development support costs, as well as additional overhead costs.activity.

Franchise contributions for advertising and other serviceservices expensesrevenues increaseddecreased $8.0$0.6 million, or 31.2%2.0% in 20242025 compared to the prior year, primarily due to higherlower IT support revenue, partially offset by increased franchise restaurantmarketing sales resulting from the 142 restaurants refranchised since the second quarter of 2023 and the 11 franchise-operated restaurants opened in fiscal 2024.contributions.

Depreciation and amortization decreased $2.5$1.5 million in 20242025 as compared with the prior year. The decreasesdecrease in depreciation areis primarily due to the refranchising of Del Taco restaurants since the prior year,restaurants, as well as certain Jack in the Box franchise assets becoming fully depreciated. These decreases were partially offset by increases for new technology assets placed in service and new company restaurant openings.

Advertising costs represent company contributions to our marketing funds and are generally determined as a percentage of company-operated restaurant sales. Advertising costs decreasedincreased $3.8$4.3 million compared to the prior year primarily due an incremental contribution to Jack in the Box brand advertising, partially offset by a decrease in company-operated restaurant sales at both brands in the current year which was primarily driven by Del Taco refranchising.year.

IncentiveShare-based compensation in 20242025 decreased by $10.4$5.2 million compared to the prior year primarily due to forfeitures as well as lower achievement levels compared to the prior year for the Company’s annualperformance incentiveshare plan.awards.

InsuranceIncentive costscompensation in 20242025 decreased $2.8by $3.9 million as compared to the prior year primarily due to positivelower developmentachievement factorslevels relatedcompared to workersthe compensationprior andyear generalfor liabilitythe claims.Company’s annual incentive plan.

Pre-opening costs associated with the opening of a new restaurant or the remodeling of an existing restaurant consist primarily of property rent and employee training costs. Pre-opening costs associated with the opening of a restaurant that was closed upon acquisition consist of labor costs, maintenance and repair costs, and property rent. Pre-opening expenses increased $4.2 million in 2025 as compared to the prior year due to new restaurant openings in certain markets.

During the third quarter of 2024, the Company identified triggering events that indicated the goodwill allocated to the Del Taco reporting unit might be impaired. The triggering events related to i) a recent negative trend in Del Taco same store sales, ii) lower margins due in part to lower sales and wagehigher increaseswages required in California effective April 1, 2024 under AB 1228 and iii) unfavorable changes in the economic environment specifically impacting our industry, including inflation and interest rates. As a result, the Company performed a quantitative test over the Del Taco reporting unit, noting that the fair value of the reporting unit was less than the carrying value, which resulted in an impairment of goodwill of $162.6 million.

Other operating expense, net increaseddecreased $14.0$2.4 million in 20242025 versusas compared to the prior yearyear. This decrease was primarily due to the decrease in gains on disposition of property and equipment of $8.4 million due to gains recognized in the prior year from a sale of Jack in the Box restaurant properties to franchisees who were leasing the properties from us prior to the sale. The change was also impacted by the increase inrestructuring, integration and strategic initiatives of $6.5$8.3 million inand thea current year, as well as an increasedecrease in restaurant impairment charges of $3.4$3.6 million relating to under-performing Jack in the Box and Del Taco restaurants. These decreases were partially offset by increased costs of closed restaurants of $5.5 million, a reduction in gain on acquisition of restaurants of $2.7 million, as well as higher net loss on disposition of property and equipment of $2.0 million due to lower proceeds in connection with disposals. Refer also to Note 9, Other Operating Expense, Net, ofin the notes to the consolidated financial statements for additional information.

In 2024,2025, gains on the sale of company-operated restaurants totaled $3.3$3.2 million and were mainly related to the refranchising of 4713 Del Taco restaurants. In the prior year, gains on the sale of company-operated restaurants totaled $18.0$3.3 million and were mainly related to the refranchising of 11147 Del Taco restaurants and five Jack in the Box restaurants. Refer to Note 4, Summary of Refranchisings and Franchise Acquisitions, of the notes to the consolidated financial statements for additional information.

The Company’s fiscal year is 52 or 53 weeks ending the Sunday closest to September 30. Fiscal years 2026 and 2025 each include 52 weeks. Our first quarter includes 16 weeks and all other quarters include 12 weeks. All comparisons between 2026 and 2025 refer to the 12 weeks (“quarter”) and 2840 weeks (“year-to-date”) ended AprilJuly 12,5, 2026 and AprilJuly 13,6, 2025, respectively, unless otherwise indicated.

Founded in 1951, Jack in the Box Inc. (the “Company”) operates and franchises Jack in the Box® quick-service restaurants. As of AprilJuly 12,5, 2026, we operated and franchised 2,1282,115 restaurants, primarily in the western and southern United States, including restaurants in Guam and in Mexico.

Company restaurant sales decreasedincreased $0.4$2.2 million, or 0.4%2.3% in the quarter and $2.2decreased $0.1 million, or 1.0%less than 0.1%, year-to-date compared to the prior year. The following table presents the approximate impact of changes in AUVs and the number of restaurants on company restaurant sales (in millions):

Food and packaging costs, as a percentage of company restaurant sales, increased 1.1%0.7% in the quarter and 2.7%2.1% year-to-date compared to the prior year, due mainly to commodity inflation, and unfavorable menu item mix, offset by menu price increases. The year-to-date increase was also due to a non-recurring benefit in the prior year from a new supply chain contract inwith theretroactive prior year.funding. Commodity inflation was 5.0%5.4% in the quarter and 6.3%6.0% year-to-date, with the greatest impacts in beef, tacos, produce and beverages.

Payroll and employee benefit costs, as a percentage of company restaurant sales, increaseddecreased 1.8%0.8% in the quarter and 1.9%increased 1.1% year-to-date compared to the prior year,year. The decrease in the quarter was due primarily due to athe changerollover of additional FUTA taxes in California in the prior year, partially offset by the impact of the mix of restaurants.restaurants Laborand labor inflation wasof approximately 1.5%1.8% in the quarterquarter. Year-to date, the increase was due to the impact of the mix of restaurants and 0.7%labor year-to-dateinflation forof the current year.1.0%.

Occupancy and other costs, as a percentage of company restaurant sales, increased 0.4%0.3% in the quarter and 0.8% year-to-date compared to the prior year. For the quarter and year-to-date periods, these increases were primarily due to sales deleverage and higher rent. Occupancy and other costs also increased in the quarter due to higher delivery sales driving higher third party fees.

Franchise rental revenues decreased $5.8$3.5 million, or 7.5%4.6% in the quarter and $14.2$17.7 million, or 7.7%6.8% year-to-date, compared to the prior year primarily due to lower percentage rent of $2.4$1.2 million and $8.4$9.6 million, respectively, driven by lower franchise restaurant sales,AUVs, and a decrease in rent revenue of $1.7 million and $3.9$5.4 million, respectively, due to fewer franchise restaurants. Lower lease termination fees of $2.9$0.6 million in the quarter and year-to-date$3.5 million year-to-date, also contributed to the decrease.

Franchise contributions for advertisingroyalties and other services revenues decreased $2.5$1.5 million, or 5.4%3.4% in the quarter and $9.1$9.0 million, or 7.9%5.8% year-to-date compared to the prior yearyear. mainly due to lower sales and aA decrease in the number of restaurants,restaurants drivingand marketingsales, contributionsdrove net royalties lower by $1.0$0.8 million and $0.8$0.5 million, respectively, forin the quarter,quarter and $4.7$2.6 million and $2.0$6.3 million, respectively, year-to-date. Franchise fees and other decreased $0.3 million in the quarter and $1.3 million year-to-date, primarily due to a decrease in early termination fees.

Franchise contributions for advertising and other serviceservices expensesrevenues decreased $2.4$1.9 million, or 5.0%3.9% in the quarter and $7.9$11.0 million, or 6.8% year-to-date compared to the prior year. TheFor the quarter and year-to-date periods, a decrease isin primarilythe duenumber toof restaurants, resulted in lower marketing contributions of $0.9 million and $2.9 million, respectively. Additionally, for the year-to-date period, lower sales anddrove fewermarketing restaurants drivingcontributions lower marketingby expenses.$4.5 million, and a change in technology providers resulted in a decrease of $2.2 million versus a year ago.

Depreciation and amortization for the quarter ended AprilJuly 12,5, 2026 increased $2.9$1.8 million in the quarter and $4.1$5.9 million year-to-date compared to the prior year period primarily due to increases for new technology assets placed in service and new company-operated restaurants.

Advertising costs mainly represent company contributions to our marketing fundsfund and are generally determined as a percentage of company-operated restaurant sales. Advertising costs increased $0.1$0.3 million in the quarter and $0.8$1.1 million year-to-date compared to the prior year, primarily due to an increase in expenses related to opting into third party delivery digital sponsorships, partially offset by a decrease in company-operated restaurant sales in the current year.sponsorships.

Share-based compensation increaseddecreased by $2.4$1.9 million in the quarter and $2.9increased $1.0 million year-to-dateyear-to-date, compared to the prior year, primarily due to lower forfeitures in the currenttiming year.of forfeitures.

Insurance increaseddecreased $0.1$0.7 million in the quarter and decreased $0.6$1.3 million on a year-to-date basis,year-to-date, compared to the prior year. The year-to-date decrease wasyear primarily due to lower costs for group insurance reimbursements received in the current year.insurance.

Included in the SG&A amounts above are incomeIncome from the transition services agreement (“TSA”) following the Del Taco sale of $0.6$1.5 million is included in the quarterfiscal and $1.5 million on a2026 year-to-date basisOther inamount 2026.above. The TSA period has sincehad concluded as of the end of the second quarter.quarter of 2026.

Other Operating Expenses,(Income) Expense, Net

Other operating expenses,(income) netexpense, net, is comprised of the following (in thousands):

For the year-to-date period, theother increaseoperating was(income) expense, net, decreased $0.8 million primarily due to $12.6an $18.2 million increase in gains from the sale of real estate, partially offset by $15.2 million for restructuring costs, proxy contest fees, professional fees for tax refund settlement, restructuring costs,settlement and other consulting fees for strategic initiatives, partially offset by $7.8 million of higher gains in the current year related to the sale of real estate.initiatives.

Interest expense, netnet, is comprised of the following (in thousands):

Interest expense, net, decreasedincreased $1.5less than $0.1 million in the quarter and $2.2decreased $2.1 million year-to-date compared to the prior year. Interest expense in the current year primarilyincludes due$1.3 tomillion loss on extinguishment of debt as a result of our refinancing transaction in the third quarter which was offset in the quarter and more than offset year-to-date by a decrease in interest expense from lower average borrowings.

For the secondthird quarter of and year-to-date fiscal year 2026, the Company recorded income tax expense of $4.8$12.3 million and $11.7$24.0 million, respectively, resulting in effective tax rates of 27.7%36.9% and 30.2%,33.3%, respectively. The effective tax rate for such periods differed from the U.S. statutory tax rate primarily due to the establishment of valuation allowance on cumulative interest deduction limitations from current and prior fiscal years and the nondeductible component of share-based compensation largelypartially offset by a favorable state refund claim settlement.settlement and nontaxable gains from the market performance of insurance products used to fund certain non-qualified retirement plans.

For the secondthird quarter of and year-to-date fiscal year 2025, the Company recorded income tax expense of $7.9$6.0 million and $21.2$27.3 million, respectively, resulting in effective tax rates of 27.6%20.9% and 29.1%,26.8%, respectively. The effective tax rate for such periods differed from the U.S. statutory tax rate primarily due to the nondeductible component of share-based compensation andlargely nondeductibleoffset lossesby nontaxable gains from the market performance of insurance products used to fund certain non-qualified retirement plans.

The results of operations from the sale of our Del Taco business has been reported as discontinued operations for all periods presented. For the secondthird quarter of and year-to-date fiscal year 2026, there were losses from discontinued operations, net of taxes of $2.3$0.9 million and $19.1$20.1 million, respectively, compared with $162.9$0.8 million and $160.2$161.0 million, respectively, for the secondthird quarter of and year-to-date fiscal year 2025. Refer to Note 4, Discontinued Operations, in the notes to condensed consolidated financial statements, for additional information regarding discontinued operations.

Our primary sources of short-term and long-term liquidity and capital resources are cash flows from operations and borrowings available under our creditVariable facility.Funding Notes. Based on current operating results and their impact on franchise profitability, cash flows from operations have been impacted and may continue to be impacted by franchisee payment delays and deferrals. Our cash requirements consist principally of working capital, general corporate needs, capital expenditures, income tax payments, debt service requirements, franchise tenant improvement allowance and incentive distributions, and obligations related to our benefit plans. We generally use available cash flows from operations to invest in our business and service our debt obligations.

As of AprilJuly 12,5, 2026, the Company had $69.4$71.8 million of cash and restricted cash on its condensed consolidated balance sheet and available borrowings of $95.3$54.6 million under its $150.0 million Variable Funding Notes. The Company continually assesses the optimal sources and uses of cash for our business. We review our balance sheet for any undervalued assets and pursue opportunities for capital sources, including the sale of our owned Jack in the Box properties.

Operating Activities. Operating cash flows decreased $44.0$61.6 million compared with a year ago primarily due to a decrease in working capital of $29.8$54.2 million, as well as lower net income, when adjusted for non-cash items, of $14.1$8.7 million. The change in working capital included thea decrease due to $35.0 million received in the prior year in connection with a supply chain contract, an increase of $12.8$18.7 million in franchise incentive disbursements in the current year, and a decrease in cash flows of approximately $11.0 million resulting from delayed payments from franchisees, including amounts subject to payment deferral arrangements, a portion of which we have reserved against. An increase in payments for restructuring and other non-core expenses including proxy contest fees, as noted in the Operating Results section of MD&A under Other Operating Expense (Income), Net also contributed to the decrease. These decreases in working capital were partially offset by alower decreaseincome tax payments, net of $23.0refunds millionreceived, inof income$37.1 and franchise tax payments in the current year.million.

The $5.3$16.2 million change in purchases of property and equipment is primarily a result of lower spending for restaurant information technology costs, partially offset by higher restaurant facility expenditures relatingdue to the beverageprior dispenseryear replacementrollout program.of Thea followingnew tablePOS summarizessystem, theand capitallower expendituresnew inrestaurant eachcosts periodas (ina thousands):result of our commitment to remaining asset-light by prioritizing new restaurant growth from franchisees.

Financing Activities. Cash flows used in financing activities increased by $75.5$185.5 million compared with a year ago, primarily due to ahigher $105.0debt payments of $740.2 million resulting from two debt prepaymentprepayments madetotalling $215 million and our refinancing transaction discussed below as well as payments for debt issuance costs of $13.1 million associated with the aforementioned refinancing. This activity is partially offset by $500.0 million of debt issued and $39.0 million of borrowings on our Variable Funding Notes. Additionally, there was a decrease in payments for dividends of $16.6 million and stock repurchases of $5.0 million in the current yearyear, usingas proceedswell from the Del Taco sale. The higher debt payments were partially offset by a decrease in dividend payments of $16.6 million,as rolling over a $6.0 million repayment in the prior year on the Variable Funding Notes, and a $5.0 million decrease in stock repurchases.Notes.

The quarterly principal payment on the2026 Class A-2 Notes — Interest and principal payments on the 2026 Class A-2 Notes are payable on a quarterly basis. Similar to our 2019 and 2022 Notes, the requirement to make quarterly principal payments is subject to certain financial conditions set forth in the Indenture. Quarterly principal payments may be suspended when the specifiedHoldCo leverageLeverage ratio,Ratio, which is a measure of outstanding debt to earnings before interest, taxes, depreciation, and amortization, adjusted for certain items (as defined in the Indenture), is less than or equal to 5.0x. Exceeding the leverage ratio of 5.0x does not violate any covenant related to the Class A-2 Notes. Subsequent to closing the issuance of the 2022 Notes, theThe Company has had a leverage ratio of greater than 5.0x and, accordingly, the Company resumedis making the scheduled amortization payments on its 2019, 2022 and 2026 Notes. The final maturity date of the 2026 Class A-2 Notes is May 2056, but, unless earlier prepaid to the extent permitted under the Indenture, the Anticipated Repayment Date of the Class A-2 Notes is May 2031. The Anticipated Repayment Date of the 2019-1 Class A-2-III Notes is August 2029, and the 2022-1 Class A-2-I Notes and Seriesthe 2019-12022-1 Notes.Class A-2-II Notes are February 2027 and February 2032, respectively. If the Master Issuer has not repaid or redeemed the Notes prior to their respective Anticipated Repayment Dates, additional interest will accrue pursuant to the Indenture.

Restricted cash — In accordance with the terms of the Indenture, certain cash accounts have been established with the Indenture trustee for the benefit of the note holders and are restricted in their use. As of AprilJuly 12,5, 2026, the Company had restricted cash of $26.3$25.5 million, which primarily represented cash collections and cash reserves held by the trustee to be used for payments of interest and commitment fees required for the Class A-2 Notes.

Covenants and restrictions — The Notes are subject to a series of covenants and restrictions customary for transactions of this type, including (i) that the Master Issuer maintains specified reserve accounts to be used to make required payments in respect of the Notes, (ii) provisions relating to optional and mandatory prepayments and the related payment of specified amounts, including specified make-whole payments in the case of the Class A-2 Notes under certain circumstances, (iii) certain indemnification payments in the event, among other things, the assets pledged as collateral for the Notes are in stated ways defective or ineffective and (iv) covenants relating to recordkeeping, access to information and similar matters. The Notes are also subject to customary rapid amortization events provided for in the Indenture, including events tied to failure to maintain stated debt service coverage ratios, the sum of gross sales for specified restaurants being below certain levels on certain measurement dates, certain manager termination events, an event of default, and the failure to repay or refinance the Class A-2 Notes on the applicable scheduled maturity date. The Notes are also subject to certain customary events of default, including events relating to non-payment of required interest, principal, or other amounts due on or with respect to the Notes, failure to comply with covenants within certain time frames, certain bankruptcy events, breaches of specified representations and warranties, failure of security interests to be effective, and certain judgments. As of AprilJuly 12,5, 2026, we were in compliance with all of our debt covenant requirements and were not subject to any rapid amortization events.

Dividends — The Company announceddiscontinued its dividend on April 23, 2025, that it will discontinue its dividend effective immediately andto direct a majority of those funds toward leverage reduction. As such, the Company did not declare any dividends during the current year.

Repurchases of common stock — The Company did not repurchase any shares of its common stock in fiscal 2026. As of AprilJuly 12,5, 2026, there was $175.0 million remaining under share repurchase programs authorized by the Board of Directors which does not expire.