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

Economic conditions in the United StateStates and international markets could adversely affect our business and financial results.

Our financial condition and results of operations are impacted by global markets and economic conditions over which neither we nor our franchisees have control. An economic downturn or recession, including deterioration in the economic conditions in the United States or international markets where we or our franchisees operate, or a slowing or stalled recovery therefrom, may have a material adverse effect on our business, financial condition or results of operations, including a reduction in the demand for our products, longer payment cycles, slower adoption of new technologies and increased price competition. Poor economic conditions have in the past adversely affected and may in the future affect the ability of our franchisees to pay royalties or amounts owed and could also disrupt our business and adversely affect our results. Inflationary pressures, and related increases in costs, including interest rates, commodity and labor expenses, as well as currency restrictions and changes in foreign exchange rates, have impacted and may continue to impact our franchisees their ability to pay royalties, open new restaurants or operate existing restaurants profitably.profitably, Asand weour franchisees’ ability to pay royalties and marketing fees. To navigate thissuch an environment, we may need to offer support for certain franchisees in the form of royalty relief, loans or other support, close unprofitable restaurants or markets, and/or consider other alternatives such as acquiring or purchasing franchised restaurants, QC Centers or operations in order to operate them until they can be refranchised. In addition, adverse macroeconomic conditions, unforeseen geopolitical events, and other business-related changes in circumstances outside of our control have required us to close restaurants in the past and impacted our ability to collect royalties and/or achieve our net unit development targets.

The global economy could be and has been negatively impacted by geopolitical and regional conflicts around the world, including the ongoing conflict in Ukraine. Furthermore, governments in the United States, UK, and European Union have each imposed export controls on certain products and financial and economic sanctions on certain industry sectors and parties in Russia. The Company has no company-ownedCompany-owned restaurants in Russia or Ukraine and haspreviously suspended corporate support for the market and its master franchisee in Russia, which operates and supplies all franchised Papa Johns restaurants there.Russia. The Company is unable to predict how long the current environment will last or if it will resume corporate support to impacted franchised restaurants. The Company also has franchise locations in Israel and a significant franchise presence in the Middle East. As a result of the recent conflict in Gaza, some of our franchisees in the Middle East have experienced boycotts and other disruptions in the past few years resulting in decreased development prospects, sales and profitability. The Company is unable to predict how long the current environment will last or the long-term impact toon these franchised locations.

In addition, our international business is subject to the risks of other geopolitical tensions and conflicts, including, for example, the ongoing conflicts described above and changes in China-Taiwan and United States-China relations. We have franchised restaurants located in China, South Korea, Israel andIsrael, the Middle East.East and in Latin America. Although we do not do business in North Korea, any future increase in tensions between South Korea and North Korea, such as an outbreak or escalation of military hostilities, or between Taiwan and China could materially adversely affect our operations in Asia or the global economy, which in turn would adversely impact our business. Likewise, an escalation of conflicts in the Middle East could materially adversely affect our franchisee operations in Israel, Jordan, Egypt and other countries in the Middle East. A continuation or escalation of the tensions between the United States and Venezuela could materially impact our franchise operations there or in the neighboring countries in Latin America and the Caribbean.

Our International operations are also subject to additional risk factors, including import and export controls, compliance with anti-corruption and other foreign laws, difficulties enforcing intellectual property and contract rights in foreign jurisdictions, the imposition of increased or new tariffs or trade barriersbarriers, consumer boycotts and potential government seizures or nationalization. We intend to continue to expand internationally, which would make the risks related to our International operations more significant over time.

Sales made by our franchisees in international markets and certain loans we previously provided to such franchisees are denominated in their local currencies, and fluctuations in the U.S. dollar occur relative to the local currencies. Accordingly, changes in currency exchange rates will cause our revenues, investment income and operating results to fluctuate. We have not historically hedged our exposure to foreign currency fluctuations. Our International revenues and earnings may be adversely impacted as the U.S. dollar rises against foreign currencies because the local currency will translate into fewer U.S. dollars. Additionally, the value of certain assets or loans denominated in local currencies may deteriorate. Other items denominated in U.S. dollars, including product imports or loans, may also become more expensive, putting pressure on franchisees’ cash flows. Our International and Canadian franchisees may also be impacted by tariffs or currency restrictions imposed by governmental authorities, which could impact their ability to pay for supplies and/or royalties in compliance with their franchise agreement. We have experienced situations with franchisees being subject to currency restrictions and unable pay royalties in U.S. dollars.

We rely on our Domestic and International suppliers, as do our franchisees, to provide quality ingredients and to comply with applicable laws and industry standards. A failure of one or more of our Domestic or International suppliers to meet our quality standards, or comply with Domestic or International food industry standards, could result in a disruption in our supply chain and negatively impact our brand and our results.

Social media platforms, including blogs, chat platforms, social media websites, and other forms of internet-based communications allow individuals access to a broad audience of consumers and other persons. The popularity of social media and other consumer-oriented technologies has increased the speed and accessibility of information dissemination, and could hamper our ability to promptly correct misrepresentations or otherwise respond effectively to negative publicity, whether or not accurate. The dissemination of proprietary Company or negative information, whether or not accurate, by customers, employees, social media influencers, artificial intelligence, and others via social media could harm our business, brand, reputation, marketing partners, financial condition, and results of operations, regardless of the information’s accuracy. The misrepresentation of our products or inaccurate claims by paid social media influencers could also expose us to legal risks.

We are also subject to the risk of negative publicity associated with shareholder proposals, campaigns, and other forms of shareholder activism, including publicity related to the Company’s actions regarding the environment, animal welfare, responsible sourcing, shareholder returns, and other corporate responsibility topics. Significant shareholder activism could distract management and create negative publicity for the Company. Despite our best efforts relating to corporate responsibility policies, initiatives and reporting, media reports and social media campaigns can create a negative opinion or perception of the Company’s efforts. Such media reports and negative publicity could impact customer or investor perception of our Company or industry and can have a material adverse effect on our financial results.

In addition, we could be criticized for the scope or nature of our corporateCompany responsibility initiativesgoals or goals, or for any revisions to these goals, which could lead to consumer boycotts or shareholder activism.performance. If our corporateCompany responsibility-relatedgoals data,or processesperformance and reporting failfails to meet investor, customer, consumer, employee or other stakeholders’ evolving expectations and standards, are incomplete or inaccurate, or certain groups or customers disagree with our corporate responsibilitymanagement initiatives or goals, or if we fail to achieve progress with respect to our goals on a timely basis, or at all, our reputation, brand, appeal to investors, employee retention, business, financial performance and growth could be adversely affected.

Our success increasinglysignificantly relies on the financial success and cooperation of our franchisees, yet we have limited influence over their operations. Our franchisees manage their businesses independently, and therefore are responsible for the day-to-day operation of their restaurants and compliance with applicable laws. The revenues we realize from franchised restaurants are largely dependent on the ability of our franchisees to maintain or grow their sales. If our franchisees do not maintain or grow sales, our revenues and margins could be negatively affected. Also, if sales trends worsen for franchisees, especially in emerging markets and/or high-cost markets, their financial results may deteriorate, which in the past has resulted in, and could in the future result in, among other things, required financial support from us, higher numbers of restaurant closures (which could cause us to miss our net unit development targets), reduced numbers of restaurant openings, franchisee bankruptcies or restructuring activities, delayed or reduced payments to us, or increased franchisee assistance, which reduces our revenues.

Our success also increasingly depends on the willingness and ability of our franchisees to remain aligned with us on current and future operating, promotional and marketing plans.plans, including favorable support of our Domestic system to approve certain marketing initiatives, products, and national promotions. If our Domestic franchisees do not agree to implement these actions or any franchise relations become adversarial in nature, the Company may not be able to adequately respond to the dynamic consumer environment, which in turn could hurt our business and operating results. Franchisees’ ability to continue to grow is also dependent in large part on the availability of franchisee funding at reasonable interest rates and may be negatively impacted by the financial markets in general or by the creditworthiness of our franchisees. Our operating performance could also be negatively affected if our franchisees experience food safety, compliance, or other operational problems or project an image inconsistent with our brand and values, particularly if our contractual and other rights and remedies are limited, costly to exercise or subjected to litigation. If franchisees do not successfully operate restaurants in a manner consistent with our required standards or applicable laws, the brand’s image and reputation could be harmed, which in turn could hurt our business and operating results.

Our success depends in part on our and our franchisees’ ability to recruit, motivate, train and retain a qualified workforce to work in our restaurants in an intensely competitive environment. We and our franchisees have previously experienced, and could continue toagain experience, a shortage of labor for restaurant positions due to job market trends, conditions, and immigration policies, which shortage has increasedpreviously and could again increase our and our franchisees’ labor expenses and could decrease the pool of available qualified talent for key functions. Increased costs associated with recruiting, motivating and retaining qualified employees to work in Company-owned and franchised restaurants have had, and may in the future have, a negative impact on our Company-owned restaurant margins and the margins of franchised restaurants. Competition for qualified drivers for both our restaurants and supply-chain function also continues to increase as more companies compete for drivers or enter the delivery space, including third party aggregators. Additionally, economic actions, such as boycotts, protests, work stoppages or campaigns by labor organizations, could adversely affect us (including our ability to recruit and retain talent) or our franchisees and suppliers. Social media may be used to foster negative perceptions of employment with our Company in particular or in our industry generally, and to promote strikes or boycotts.

We and our franchisees are also subject to federal, state and foreign laws governing such matters as minimum wage requirements, overtime compensation, benefits, working conditions, citizenship requirements and discrimination and family and medical leave and employee related litigation. Labor costs and labor-related benefits are primary components in the cost of operation of our restaurants and QC Centers. Labor shortages, increased employee turnover and health care mandates or rising health insurance premiums could increase our system-wide labor costs.

A significant number of hourly personnel are paid at rates at or slightly above the federal and state minimum wage requirements. Accordingly, the enactment of additional state or local minimum wage increases above federal wage rates or regulations related to exempt employees has increased and could continue to increase labor costs for our Domestic system-wide operations. A significant increase in federal or state minimum wage requirement could adversely impact our financial condition and results of operations, and the viability of our franchisees restaurants in certain markets.

Additionally, while we do not currently have a unionized workforce, certain employees of other companies in our industry have unionized. If a significant portion of our corporate or franchisee’s workforce were to unionize, labor costs could increase and our business could be negatively affected by union requirements that increase costs, disrupt business, reduce flexibility and affect the employer-employee relationship. Further, corporate or franchisees’ response to any union organizing efforts could negatively impact how our brand is perceived. We are also subject to potential vicarious liability, joint-employer liabilityliability, for issues that may occur with our franchise operations.

There can be no assurance that our allocation of our human capital will effectively meet the needs of our business and brands.brand. Further, our business is based on our and our franchisees’ ability to successfully attract and retain talented employees. Competition for delivery drivers and restaurant employees has increased as more companies compete for these employeesemployees, particularly as aggregator adoption and usage continues to increase requiring more labor. The market for highly skilled employees and leaders in our industry is extremely competitive. If we are less successful in our recruiting efforts, or if we are unable to retain management and other key employees, our ability to develop and deliver successful products and services may be adversely affected. Effective succession planning is also important to our long-term success. The departure of aone or more key executiveexecutives or employeeemployees and/or the failure to ensure an effective transfer of knowledge and a smooth transition upon such departure may be disruptive to the business and could hinder our strategic planning and execution.

We rely on information technology to operate our businesses and maintainenhance our competitiveness, and any failure to invest in or adapt to technological developments or industry trends could harm our business.

We rely heavily on information systems, including digital ordering solutions, through which a majority of our Domestic sales originate. We also rely heavily on point-of-sale processing in our Company-owned and franchised restaurants for data collection and payment systems for the collection of cash, credit and debit card transactions, and other processes and procedures. Our ability to efficiently and effectively manage our business depends on the reliability and capacity of these technology systems. In addition, we anticipate that consumers will continue to have more options to place orders digitally, both domestically and internationally. We planhave to increaseincreased investment spending to continue to invest in enhancing and improving the functionality and features of our information technology systems. However, we cannot ensure that our initiatives will be beneficial to the extent, or within the timeframes, expected or that the estimated improvements will be realized as anticipated or at all. Our failure to adequatelyinvest investeffectively in new technology, upgrade our technology systems, and adapt to technological developments and industry trends, particularly our digital ordering capabilities, could result in a loss of customers and related market share. In 2025, we released our new customer mobile app across the Android and iOS platforms. We also released a modernized website with enhanced mobile web experience. While we are monitoring performance across these platforms, we believe that the rollout of our new omnichannel platforms will lead to a more streamlined ordering journey and simplify the overall experience for our customers. We anticipate completing the full rollout of our new omnichannel platform and retirement of legacy platforms by the end of 2026. There is no guarantee that the rollout and retirement will be completed on the anticipated timeline, or at all, or that the new omnichannel platform will realize the expected benefits. We also plan to replace and upgrade our point-of-sale system over the next few years. Notwithstanding adequateeffective investment in new technology, our marketing and technology initiativesinitiatives, including the omnichannel platform, may not be successful in improving our comparable sales results. Additionally, we are in an environment where the technology life cycle is short and consumer technology demands are high, which requires continued reinvestment in technology that will increase the cost of doing business and will increase the risk that our technology may not be customer-centric or could become obsolete, inefficient or otherwise incompatible with other systems.

We rely on our International franchisees to maintain their own point-of-sale, mobile applications, and online ordering systems, which are often purchased from third-party vendors, potentially exposing International franchisees to more operational risk, including cybercybersecurity and data privacy risks and governmental regulation compliance risks.

Advances in technologies such as artificial intelligence or alternative methods of delivery, including advances in digital ordering technology and autonomous vehicle delivery, or certain changes in consumer behavior driven by these or other technologies and methods of delivery could have a negative effect on our business and market position. Moreover, technology and consumer offerings continue to develop, and we expect that new or enhanced technologies and consumer offerings will be available in the future. We may pursue certain of those technologies and consumer offerings if we believe they offer a sustainable customer proposition and can be successfully integrated into our business model. However, we cannot predict consumer acceptance of these delivery channels or their impact on our business. In addition, our competitors, some of whom have greater resources than we do, may be able to benefit from changes in technologies or consumer acceptance of alternative methods of delivery, which could harm our competitive position. The implementation and use of artificial intelligence technologies also present various risks and uncertainties, and thefailure deficienciesto incorporate artificial intelligence technologies into our business as successfully as our competitors could adversely impact us, as could any deficiencies, unreliability or other failures of artificial intelligence systemssystems, which could subject us to competitive harm, regulatory action, legal and financial liability and brand or reputational harm. There is also no guarantee that our investment in these technologies, including artificial intelligence and alternative methods of delivery, will deliver better business results, positive consumer experiences, or an adequate return on investment for the Company.

We have incurred and expect to continue to incur certain non-recurring corporate reorganization costs, including the ongoing restructuring and transformation of our internationalbusiness business,in connection with the International Transformation Plan, which was completed in the fourth quarter of 2025, and the Enterprise Transformation Plan, and these expenses have impacted and could continue to adversely impact our results of operations during the relevant period, reduce our cash position and/or result in an impairment risk related to these assets. For more information about restructuring and transformation of our business, see “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Recent Developments and Trends.” Additionally, if we do not realize the anticipated benefits from these measures, or if we incur costs greater than anticipated, our financial condition and operating results may be adversely affected. There is no guarantee that our planned investments will deliver better business results or an adequate return for the Company.

As a result of any corporate reorganization, we could face turnover in our restaurant support centers and international support teams that could distract our employees, decrease employee morale, harm our reputation, decrease productivity and negatively impact the overall performance of our corporate support teams. These or other similar risks, may adversely affect our business, results of operations and financial condition.

The success of our business depends on the effectiveness of our marketing and promotional plans.plans, including local and regional market efforts with our franchisees. We may not be able to effectively execute our national or local marketing plans, particularly if we experiencedexperience lower sales that would result in reduced levels of marketing funds. In addition, our financial results may be harmed if our marketing, advertising, and promotional programs are less effective than those of our competitors, who may have greater resources which enable them to invest more than us in advertising. We may be required to expend additional funds to effectively improve consumer sentiment and sales, and we may also be required to engage in additional activities to retain customers or attract new customers to the brand. Such marketing expenses and promotional activities, which could include discounting our products, could adversely impact our results.

Our growth strategy depends on our and our franchisees’ ability to open new restaurants and to operate them on a profitable basis. We expect substantially all of our International unit growth and much of our Domestic unit growth to be franchised units. Accordingly, our profitability increasinglysignificantly depends upon royalty revenues from franchisees. If our franchisees are not able to operate their businesses successfully under our franchised business model, our results could suffer. Additionally, we may fail to attract new qualified franchisees or existing franchisees may close underperforming locations. Planned growth targets and the ability to operate new and existing restaurants profitably are affected by economic, regulatory and competitive conditions and consumer buying habits. A decrease in sales, or increased commodity or operating costs, including, but not limited to, employee compensation and benefits or insurance costs, could slow the rate of new restaurant openings or increase the number of restaurant closings. Our business is susceptible to adverse changes in local, national and global economic conditions, which could make it difficult for us to meet our growth targets. Additionally, we or our franchisees may face challenges securing financing, or securing financing on favorable terms, finding suitable restaurant locations at acceptable terms or securing required Domesticdomestic or foreign government permits and approvals. Declines in comparable sales, net restaurant openings and related operating profits can impact our stock price. If we do not continue to grow future sales and operating results and meet our related growth targets or external expectations for net restaurant openings or our other strategic objectives in the future, our stock price could decline.

Our franchisees remain dependent on the availability of financing to remodel or renovate existing locations, upgrade systems and enhance technology, or construct and open new restaurants. The Company has provided, and may provide in the future, provide financing to certain franchisees and prospective franchisees in order to mitigate restaurant closings, allow new units to open, or complete required upgrades. If we are unable or unwilling to provide such financing, which is a function of, among other things, prevailing interest rates and a franchisee’s creditworthiness, the number of new restaurant openings may be lower or the rate of closures may be higher than expected and our results of operations may be adversely impacted. The elevatedElevated interest raterates environment has increasedincrease the cost of this financing to franchisees, which may make the financing less appealing to franchisees and increase the risk of defaults. To the extent we provide financing to franchisees, our results could be negatively impacted by negative performance of these franchisee loans, including franchisees defaulting on payment terms or being unable to repay loans.

Domestic restaurants purchase substantially all food and related products from our QC Centers. We are dependent on a sole supplier for all of our cheese made from mozzarella cheese domestically and substantially all of our mozzarella cheese internationally. We also depend on a sole source for our supply of garlic sauce, which constitutes a small percentage of our purchased food items. While we have no other sole sources of supply for key ingredients or menu items, we do source other key ingredients from a limited number of suppliers. WhileAlthough we strive to engage in a competitive bidding process for our ingredients, because certain of these ingredients, including meat products, may only be available from a limited number of vendors, we may not always be able to do so effectively. We may be subject to interruptions in supply or shortages of these items due to factors beyond our control or issues with our suppliers from time to time. Alternative sources of mozzarella cheese and other key ingredients or menu items may not be available on a timely basis or may not be available on terms as favorable to us as under our current arrangements.

IncreaseIncreases in ingredient and other operating costs, including those caused by weather, climate change and food safety, could adversely affect our results of operations.

We depend on the performance of suppliers, aggregators and other third parties in our business operations. In some cases, we rely on a relatively small number of third-party vendors to support these critical business processes and services. Third-party business processes we utilize include information technology, gift card authorization and processing, other payment processing, benefits, and other accounting and business services. We conduct third-party due diligence and seek to obtain contractual assurance that our vendors will maintain adequate controls, such as adequate security against cybersecurity incidents. However, there can be no guarantee that any controls implemented by our vendors will be effective, and the failure of our suppliers to maintain adequate controls or comply with our expectations and standards could have a material adverse effect on our business, financial condition, and operating results.

Although our Domestic franchisees currently purchase substantially all food products from our QC Centers, the only required QC Center purchases by franchisees are pizza sauce, dough and other items we may designate as proprietary or integral to our system. Any changes in purchasing practices by Domestic franchisees, such as seeking alternative approved suppliers of ingredients or other food products, could adversely affect the financial results of our QC Centers and the Company. In addition, any prolonged disruption in the operations of any of our QC facilities,Centers, whether due to technical, systems, operational or labor difficulties, destruction or damage to the facility, real estate issues, limited capacity or other reasons, could adversely affect our business and operating results. Planned infrastructure upgrades or investments in our QC Centers may result in unexpected disruptions, costs, delays or efficiencies. As a result of our increasing the domestic supply chain operating margin, we could experience a decline in our domestic supply chain sales or our franchisees may choose to source non-core products from other suppliers, which would impact the profitability of our QC Centers.

Our insurance programs for coverages such as workers’ compensation, owned and non-owned automobiles, general liability, property, cyber insurance, employment practices liability, and health insurance coverage provided to our employees are funded by the Company up to certain retention levels under our retention programs. Retention limits generally range up to $0.8 millionmillion, with even higher retention limits for certain types of coverage. These insurance programs may not be adequate to protect us, and it may be difficult or impossible to obtain additional coverage or maintain current coverage at a reasonable cost. We also have experienced claims volatility and high costs for our insurance programs. We estimate loss reserves based on historical trends, actuarial assumptions and other data available to us, but weactual mayresults notcould bediffer ablesignificantly tofrom accuratelythe estimateestimates reserves.under different assumptions or conditions. If we experience claims in excess of our projections, our business could be negatively impacted. Our franchisees could be similarly impacted by higher claims experience, hurting both their operating results and/or limiting their ability to maintain adequate insurance coverage at a reasonable cost.

Our outstanding debt as of December 29,28, 20242025 was $746.7$722.3 million, which was comprised of $400.0 million outstanding under our 3.875% senior notes due in 2029 (the “Notes”), as well as $200.0 million under our senior secured term loan (the “Term Loan”) and $346.7$122.3 million under our revolving credit facility (the “PJI Revolving Facility”) that forms a part of our amendedSecond Amended and restatedRestated creditCredit agreementAgreement dated as of March 26, 2025 (the “Credit Agreement”). We had approximately $253.3$477.7 million of remaining availability under the PJI Revolving Facility as of December 29,28, 2024.2025.

Furthermore, various risks, uncertainties and events beyond our control could affect our ability to comply with these covenants. Failure to comply with any of the covenants in our existing or any future financing agreements could result in a default under those agreements and under other agreements containing cross-default or cross-acceleration provisions, and could increase the costs or availability of credit for us. Such a default would permit lenders to accelerate the maturity of the debt under these agreements and to foreclose upon any collateral securing the debt. Under these circumstances, we might not have sufficient funds or other resources to satisfy all of our obligations. In addition, the limitations imposed by financing agreements on our ability to incur additional debt and to take other actions might significantly impair our ability to obtain other financing. We cannot assure you that we will be granted waivers or amendments to these agreements if for any reason we are unable to comply with these agreements or that we will be able to refinance our debt on terms acceptable to us, or at all.

The occurrence of a natural disaster, hostilities, a cyber-attack, social unrest, terrorist activity, outbreak of an epidemic, a pandemic or other widespread health crisis, power outages, severe weather (such as tornados, hurricanes, blizzards, ice storms, floods, heat waves, etc.) or other catastrophic events may disrupt our operations or supply chain and result in the closure of our restaurants (Company-owned or franchised), our restaurant support centers, any of our QC Centers or the facilities of our suppliers, and can adversely affect consumer spending, consumer confidence levels and supply availability and costs, any of which could materially adversely affect our results of operations.

We operate in 5150 countries globally and recognize that there are inherent climate-related risks wherever business is conducted. For example, as we noted above, the supply and price of our food ingredients can be affected by multiple factors, such as weather and water supply quality and availability, which factors may be caused by or exacerbated by climate change. While we believe our geographic diversity is likely to lessen the impact of individual climate-change related events on our financial results, our restaurants and operations may nonetheless be vulnerable to the adverse effects of climate change, which are predicted to increase the frequency and severity of weather events and other natural cycles such as wildfires, floods and droughts. Such events have the potential to disrupt our and our franchisees’ operations, cause restaurant closures, disrupt the business of our third-party suppliers and impact our customers, all of which may cause us to suffer losses and incur additional costs to maintain or resume operations.

We operate in an increasingly complex regulatory environment, and the cost of regulatory compliance is increasing. Our failure, or the failure of any of our franchisees, to comply with applicable U.S. and international labor, health care, food, health and safety, consumer protection, data privacy, franchise, anti-bribery and corruption, competition, environmental, and other laws may result in civil and criminal liability, damages, fines and penalties. Enforcement of existing laws and regulations, changes in legal requirements, and/or evolving interpretations of existing regulatory requirements may result in increased compliance costs and create other obligations, financial or otherwise, that could adversely affect our business, financial condition or operating results, and our franchisees. Increased regulatory scrutiny of food matters, online advertising, product marketing claims, mandatory fees, employment-related matters, and increased litigation and enforcement actions may result in increased compliance and legal costs and create other obligations that could adversely affect our business, financial condition or operating results. Governments may also impose requirements and restrictions that impact our business and franchisees. For example, some state and local governments have implemented laws and ordinances that restrict the sale of certain food and drink products, the type of packaging and utensils that may be used, or the manner in which mandatory fees are disclosed to consumers. In addition, the newcurrent administration has implemented changes and discussed imposingfuture changes in regulation and enforcement by certain government agencies; changes in taxation; and shifts in international relations, immigration,immigration policy, public benefit programs, and trade policy, including an increase in the use of tariffs, which has resulted in threatened retaliatory tariffs by other countries. We cannot predict the timing or impact, if any, of any such future actions if taken.taken by the U.S. Government or other countries.

Compliance with new or additional Domestic and International government data protection laws or regulations, including but not limited to the European Union General Data Protection Regulation (“EU GDPR”), the UK GDPR and DPA 2018, as amended, the Canada Personal Information Protection and Electronic Documents Act (“PIPEDA”),Act, the California Consumer Privacy ActAct, (“CCPA”),as The California Privacy Rights Act (“CPRA”), the Colorado Privacy Act (“CPA”), the Connecticut Data Privacy Act (“CTDPA”), the Utah Consumer Privacy Act (“UCPA”), the Virginia Consumer Data Protection Act (“VCDPA”),amended, and several other data privacy and biometric laws passed or enacted by U.S. states,states or other countries, which could increase costs for compliance. If we fail to comply with these laws or regulations, it could damage our brand and subject the Company to reputational damage, significant litigation, monetary damages, regulatory enforcement actions or fines in various jurisdictions. For example, a failure to comply with the EU GDPR or UK GDPR could result in fines up to the greater of €20 million or £17.5 million, respectively, or 4% of annual global revenues.revenues, whichever is higher, per violation.

Part of our technology infrastructure, such as our Domesticdomestic point-of-sale system, is specifically designed for us and our operational systems.systems, and we may not be able to find a suitable replacement or be able to successfully upgrade this critical technology. Infrastructure upgrades or prolonged and widespread technological difficulties related to our technology infrastructure may occur and may result in unexpected costs, delays or efficiencies. Significant portions of our technology infrastructure, particularly in our digital ordering solutions, are provided by third parties, and the performance of these systems is largely beyond our control. Occasionally, we have experienced or could experience temporary disruptions in our business due to third-party systems failing to adequately perform. Failure to manage future failures of these systems could harm our business and the satisfaction of our customers. Such third-party systems could be disrupted through a variety of means, such as system failure, contractual dispute, or a cybersecurity incident. While we may be entitled to damages if our third-party service providers fail to satisfy their obligations usto us, any award may be insufficient to cover out damages, or we may be unable to recover such award. In addition, we may not have or be able to obtain adequate protection or insurance to mitigate the risks of these events or compensate for losses related to these events, which could damage our business and reputation and be expensive and difficult to remedy or repair.repair, if at all, and damage our business and reputation.

We depend on the Papa John’s brand name and rely on a combination of trademarks, service marks, copyrights, trade secrets and similar intellectual property rights to protect and promote our brand. We believe the success of our business depends on our continued ability to exclusively use our existing marks to increase brand awareness and further develop our brand, both domestically and abroad.internationally. We may not be able to adequately protect our intellectual property rights, and we may be required to pursue litigation to prevent consumer confusion and preserve our brand’s high-quality reputation. Litigation could result in high costs and diversion of resources, which could negatively affect our results of operations, regardless of the outcome.

In 2024,2025, thewe Companyremained focused on executing our strategic transformation priorities andas buildingwe aposition foundationthe business for longlong-term termsuccess success, while navigatingamidst a challenging macroeconomicand environment.softer consumer environment in North America and a dynamic market internationally. We continuecontinued to putsteer our efforts and investments towards initiatives that improve our price/value perception and improveenhance the customer journey across our digital and loyalty experienceplatforms to increase conversion and reduce friction within the customer experience. SeveralOur key areas of focus include:

InAnnounced in December 2023, the Company announced international transformation initiatives (“International Transformation Plan”) was 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 certain international markets, including the United Kingdom, for long-term profitable growth and brand strength. Total estimated pre-tax costs associated with the International Transformation Plan are expected to be approximately $30 million to $35 million (inclusive of the $29.5 million incurred through December 29, 2024), the remainder of which we expect to be recognized in 2025. See “Note 16. Restructuring” of “Notes to Consolidated Financial Statements” for additional details.

We record property and equipment at its historical cost, which includes all costs necessarily incurred to bring the asset to the condition and location necessary for its intended use. Purchases of property and equipment were $74.4 million in 2025 and $72.5 million in 2024,2024. $76.6Purchase of property and equipment for 2025 included $9.7 million inof 2023,capital andexpenditures $78.4related millionto indamages 2022.from natural disasters. Property and equipment are depreciated on a straight-line basis over their useful lives, which are based on management’s estimates of the period over which the assets provide a benefit to the Company. The useful lives are estimated based on historical experience with similar assets as well as other information regarding condition and utility of the assets. Our asset useful lives are generally five to ten years for restaurant, commissary, and other equipment, twenty to forty years for buildings and improvements, and five years for technology and capitalized software. Leasehold improvements are amortized over the shorter of their estimated useful lives or the term of the respective lease, including the first renewal period (generally five to ten years). We will re-assess our useful life estimate for an asset when facts and circumstances indicate the period over which the asset is expected to provide economic benefits has changed, which can occur for various reasons including technological advancements, a demonstrable change in usage patterns, market demand, or legal or regulatory changes. Depreciation expense was $80.8 million in 2025 and $59.6 million in 2024,2024. $54.3The increase in 2025 was due mainly to $18.4 million inof 2023accelerated anddepreciation $45.6expense millionrelated to investments in 2022.technology platforms, primarily our new omnichannel experience.

We evaluate property and equipment and other long-lived assets (primarily right-of-use operating lease assets) for potential indicators of impairment at least annually, or as facts and circumstances indicate that the carrying value of the asset may not be recoverable. We perform these assessments at the operating market level for Domestic restaurants and at the restaurant level for our UK Company-owned restaurants,restaurants in the United Kingdom (“UK”), as this represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. If we determine there are indicators of impairment, we compare the net carrying value of the asset group to the projected undiscounted cash flows to be generated from the use of the asset group. If the carrying amount of the long-lived asset group exceeds the amount of estimated future undiscounted cash flows, then we estimate the fair value of the asset group and record an impairment loss if the carrying value exceeds fair value. If indicators of impairment are present, calculating projected undiscounted cash flows requires management to make assumptions and estimates for factors that include future comparable sales growth and gross margin based on internal projections as well as the historical performance of the market or individual restaurant and whether that is an indicator of future performance. These assumptions for future growth are subjective and may be negatively impacted by future changes in operating performance or economic conditions. We recorded impairment losses of $11.7 million in 2024, primarily consisting of property and equipment and lease asset impairment, related to the closure of 43 UK Company-owned restaurants and 30 UK franchised restaurants as well as five UK Company-owned restaurants where the carrying value of the asset group was not deemed to be recoverable. We also incurred impairment losses of $5.5 million during 2024 in connection with the refranchising of 15 Domestic Company-owned restaurants. During 2022, we recognized lease impairment charges of $0.9 million related to the termination of a specific and significant franchisee in the UK. We did not record any impairment losses on property and equipment during 2023.

Papa John’s is subject to income taxes in the United States and several foreign jurisdictions. Significant judgmentJudgment is required in determining Papa John’s provision for income taxes and the related assets and liabilities. The provision for income taxes includes income taxes paid, currently payable or receivable and those deferred. Deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using enacted tax rates and laws that are expected to be in effect when the differences reverse. Deferred tax assets are also recognized for the estimated future effects of tax attribute carryforwards (e.g., net operating losses, capital losses, and foreign tax credits). The effect on deferred taxes of changes in tax rates is recognized in the period in which the new tax rate is enacted.

The comparability of 2024 results2025 and 20232024 results is impacted by the following transactions that have changed the composition of our Domestic and UK restaurants:

•TheAt acquisitionthe beginning of 118 formerly franchised restaurants in2024, the Company operated 117 UK inCompany-owned restaurants. In the second and third quarters of 20232024, (the “Company closed 43 Company-owned restaurants in the UK franchisee acquisitions”), and the subsequent closure of 43 and refranchising ofrefranchised 60 offormerly theseCompany-owned restaurants duringin the second and third quarters of 2024 impacts the comparability of revenues and expenses from the International segment for 2023 and 2024.UK. After prior disposalsdisposal of twoone mobile restaurants,restaurant, the Company operated 13 UK Company-owned restaurants subsequent to July 1, 2024. See “Note 24. Acquisitions” and “Note 16. Restructuring” of the “Notes to Consolidated Financial Statements” for additional information on these transactions.

Total revenues decreased $76.3$5.6 million, or 3.6%0.3%, to $2.06$2.05 billion for the year ended December 29,28, 2024,2025, as compared to the prior year. Revenues for the 53rd week of operations in 2023 contributed approximately $41 million to prior year total revenues. Excluding the impact of the additional week in 2023, Total revenues decreased approximately $35 million, or 1.7%.

Company-owned restaurant sales, which include sales from both Domestic and International Company-owned restaurants, decreased $36.2$49.0 million, or 4.8%6.8% for the year ended December 29,28, 2025 compared to the prior year, primarily due to the transactions discussed above. Company-owned restaurant sales in the UK declined by approximately $18.8 million compared to 2024 due to the UK Company-owned restaurant closures and refranchising transactions in 2024, and the Domestic refranchising transactions discussed above resulted in a decrease of approximately $18.5 million as compared to the prior year. The benefit ofAdditionally, the 53rd2024 weekperiod of operations in 2023 was approximately $15 million. Excluding the impact of the additional week in 2023, Company-owned restaurant sales would have decreased approximately $21 million. This decrease was primarily due to a decrease in comparable sales of 4.9% for our Domestic Company-owned restaurants that was partially offset byincluded approximately $5 million of additional deferred revenue recognized during 2024 related to lowering the redemption thresholds for our Papa Rewards program,program in 2024, which allowed consumers to redeem rewards more quickly. Additionally,The remaining decline was a result of a decline in Domestic equivalentcompany-owned unitsrestaurant grewcomparable 3.4%sales forof 3.3% driven by lower transaction volumes, partially offset by increases in International comparable sales of 5.0% compared to the yearprior ended December 29, 2024.year.

Franchise royalties and fees, which include revenues generated from both North American and International franchisees, decreasedincreased $8.0$3.9 million, or 4.1%2.1%, for the year ended December 29,28, 20242025 compared to the prior year. The benefit of the 53rd week of operations in 2023 was approximately $3 million. Excluding the additional week, Franchise royalties and fees would have decreased approximately $5 million. The decreaseincrease was primarily due to declinesa $4.0 million increase from our International franchisees due to growth in North America franchised and International comparable sales of 3.5%5.0%. Royalties and 0.8%,fees respectively.from This was partially offset byour North America franchisees were flat for the year ended December 28, 2025 compared to the prior year, as an increase in franchise equivalent unit growthunits of 4.6%2.6% and fewer royalty waivers in 20242025 as compared to 2023.2024 were offset by declines in comparable sales for our North America franchised restaurants of 2.3%.

International franchise restaurant sales decreased $22.7 million to $1.16 billion for the year ended December 29, 2024 compared to $1.19 billion for the prior year. The benefit of the 53rd week of operations in 2023 was approximately $25 million. As mentioned above, the UK franchisee acquisitions in 2023 and the UK restaurant closures and refranchising transactions in the second and third quarters of 2024 impacted the comparability of International franchise sales earned in each period. Excluding the impact of the UK franchisee acquisitions, the additional week, and foreign currency fluctuations, International franchise restaurant sales increased $41.4 million or 3.6% for the year ended December 29, 2024. International franchise restaurant sales are also not included in Company revenues; however, our International franchise royaltiesroyalty andrevenue fees areis derived from these sales. International franchise restaurant sales increased $123.7 million to $1.29 billion for the year ended December 28, 2025 compared to the prior year. The UK restaurant closures and refranchising transactions in 2024 impacted the comparability of International franchise restaurant sales earned as compared to the prior year period. Excluding the impact of the UK restaurant changes and excluding foreign currency fluctuations, International franchise restaurant sales would have increased 7.6% to $1.27 billion for the year ended December 28, 2025 compared to the prior year. The increase is due to growth in International comparable sales of 5.0% noted above as well as restaurant growth.

Commissary revenues, which includes sales from our North American and International QC Centers, decreasedincreased $25.0$30.3 million or 2.7%3.4%, for the year ended December 29,28, 20242025 compared to the prior year. The benefit from the 53rd week of operations in 2023 was approximately $20 million. Excluding the impact of the additional week in 2023, Commissary revenues decreased approximately $5 million for the year ended December 29, 2024. The declineincrease in Commissary revenues was primarily a result of lowerhigher volumes.prices Thisand washigher transaction volumes, partially offset by thechanges previously-disclosedin increaseproduct mix as compared to the fixedprior operatingyear margincomparable charged by Domestic QC Centers that took effect during the first quarter of 2024.period.

Advertising funds revenue, which includes the operations of PJMF, local marketing fundsfunds, and International marketing funds, increased $7.1$2.4 millionmillion, or 4.5%1.5%, in 2024.2025. BeginningThe withincrease was primarily due to global system-wide restaurant sales growth of 1.1% as well as increases in the PJMF contribution percentage that took effect in the second quarter of 2024,2024 PJMFand increasedincreases itsto contribution percentage, while local marketing was made optional. The changepercentages in mixcertain toInternational our marketing contributions, along with more franchised locations during 2024, increased Advertising funds revenue in 2024 by approximately $10.1 million.markets. This was partially offset by national marketing fund rebates offered to franchisees and a 3.5% declinedecrease in Northlocal Americamarketing franchisedspend comparablein sales.2025.

Total costs and expenses were approximately $1.96 billion, or 95.7% of total revenues in 2025, as compared to $1.90 billion, or 92.4% of total revenues in 2024, as compared to $1.99 billion, or 93.1% of total revenues for the prior year. This decrease in total costs and expenses, as a percentage of revenues, was primarily due to the following:

(ac) “All other” refers to all other business units that do not meet the quantitative or qualitative thresholds for determining reportable segments, whichand primarily includes our online and mobile ordering business and our marketing funds and are not operating segments.

General and administrative expenses (“G&A expenses”) were $190.5$244.3 million, or 9.3%11.9%, of total revenues for 20242025 compared to $208.1$190.5 million, or 9.7%9.3%, of total revenues for the prior year. G&A expenses consisted of the following components (in thousands):

(bc) Represents costs associated with the Company’s Enterprise Transformation Plan and International Transformation Plan. See “Note 16. Restructuring”. for additional details.

Papa John’s International, Inc. (referred to as the “Company,” “Papa John’s,” “Papa Johns” or in the first-person notations of “we,” “us” and “our”) operates and franchises pizza delivery and carryout restaurants and, in certain international markets, dine-in and delivery restaurants under the trademark “Papa John’s”. Papa Johns began operations in 1984. At MarchJune 29,28, 2026, there were 6,0205,978 Papa John’s restaurants in operation, consisting of 470469 Company-owned and 5,5505,509 franchised restaurants operating in 5051 countries and territories. Our revenues are derived from retail sales of pizza and other food and beverage products to the general public by Company-owned restaurants, franchise royalties, and sales of franchise and development rights. Additionally, we derive revenues from sales to franchisees of various items including food and paper products from our North America Quality Control Centers (“QC Centers”) and operation of our International QC Center in the United Kingdom (“UK”), contributions received by Papa John’s Marketing Fund (“PJMF”) which is our national marketing fund, and fees related to the use of information systems equipment as well as software and related services. We believe that in addition to supporting profitability and growth of both Company-owned and franchised restaurants, these activities contribute to product quality and consistency throughout the Papa Johns system.

During the firstsecond quarter of 2026, we continued progressing on our business transformation initiatives as we position the business for long-term success amidst a challenging and softer consumer environment in North America and a dynamic International market. We continued to steer our efforts and investments towards initiatives that improve our value perception and enhance the customer journey across our digital platforms to increase conversion and reduce friction within the customer experience. Our key areas of focus include:

•Marketing strategy: We have partnered with our franchisees to re-establish our area advertising cooperative (“Co-op”) program, helping ensure a strong presence in key regional and local markets. Through our mix of national and local advertising, we continued investments in our messaging to highlight our six simple ingredients, fresh, never frozen original dough and the craftsmanship behind the products we serve, which we believe are key differentiators of our brand. We alsocontinued sharpenedwork to sharpen our value perception with limited-time promotional offers while continuing to emphasize our Papa Pairings mix and match platform. We also began work to refine our aggregator channel strategy, which remains an important component of our customer acquisition strategy. We believe opportunities exist to enhance both visibility and conversion through a more targeted mix of promotional offers, supported by an ongoing evaluation of our national and local third-party marketing investments. These efforts are intended to improve the efficiency of our spending and drive incremental customer trial. As a brand, we plan to maintain a compelling value proposition while staying true to our premium positioning and layering in exciting menu innovations, such as our new pan pizzas and oven-toasted sandwiches, to expand our addressable market and strengthen our barbell strategy.

•Digital and loyalty strategy: Most of our sales occur through digital channels, and we are making significant investments in our technology infrastructure to deliver a more seamless experience across our owned channels, better connect with customers, and support greater efficiency across our operations. In 2025, we introduced our new omnichannel platform, releasing new mobile apps across both Android and iOS platforms as well as our refreshed website and mobile web experience, which we believe provides a streamlined ordering journey for our customers. We also recently announced our multi-year initiative to transition to a new point-of-sale system across all U.S. Company-owned and franchised restaurants that, if successful, will replace our existing point-of-sale system.

AtWe thehave timealso weinitiated determinea thatmulti-year ourtransition to a new technology solutions, including the point-of-sale system,system areacross feasibleall U.S. Company-owned and franchised restaurants that, if successful, will replace our legacyexisting technologypoint-of-sale assets,system. theseWe assetscurrently may require adjustmentsexpect to theirfully deploy the new system by the end of 2027, at which point we will retire our current point-of-sale system. During the second quarter of 2026, we began pilot testing our new point-of-sale system; consequently, we began accelerating the remaining useful lives toof betterour reflectexisting remainingpoint-of-sale technologysoftware utilization.assets. We anticipate that we may incur an incremental $5 million to $10 million of accelerated depreciation expense related to these initiatives.

•Transforming our cost structure: In December 2025 our Board of Directors approved a business transformation program (the “Enterprise Transformation Plan”), with the goal of creating capacity to invest in our next phase of growth by reducing non-consumer-facing spending and optimizing our restaurant portfolio to improve unit economics. The execution of actions approved under the Enterprise Transformation Plan resulted in the closure of 44101 restaurants in North America during the firstsix quartermonths ofended June 28, 2026 as well as the reduction of our corporate workforce by approximately 7%. As of June 28, 2026, the Company had approved the closure of 17 additional Company-owned restaurants, most of which we expect to close by the end of 2026. We incurred restructuring expenses of $4.3$4.4 million during the firstsecond quarter of 2026 under the Enterprise Transformation Plan, which consisted primarily of professional services fees and non-cash charges related to Company-owned restaurant closures. We currently estimate that we will incur aggregate restructuring charges of approximately $24 million to $31 million under the Enterprise Transformation Plan related to actions approved thus far, inclusive of the $12.0$16.4 million recognized during 2025 and the firstsix quartermonths ofended 2026,June 28, 2026 to date. We expect to recognize the remainder of whichthe werestructuring expect will be recognizedcharges during 2026 and 2027. We believe that these initiatives will improve systemwide health and facilitate future growth, and we have identified at least $30 million of general and administrative expense savings, exclusive of marketing spend, to be captured across fiscal years 2026 and 2027.

The implementation of the Enterprise Transformation Plan remains ongoing and may result in additional restructuring charges, although the amounts and nature of future expenses arerelating currentlyto not estimable as no specific additionalany actions haveyet beento be determined or approved by management or our Board of Directors.Directors are currently not estimable. Potential future actions likely to be approved are expected to include elevated levels of restaurant closures in North America during 2026 and 2027, as we focus on improving the health of our restaurant portfolio by closing underperforming restaurants that lack a path to sustainable financial improvement, allowing our franchisees to invest resources in their remaining restaurants to accelerate growth.

•Optimizing our supply chain: WeAs have completed our previously announced internal reviewpart of our North American supply chain and have identified productivity initiatives that we believe will optimize our commissary business in an effortefforts to reduce the overall cost to serve across all of our Domestic Company-owned and franchised restaurants, withoutwe impactingare realizing benefits from productivity and cost reduction initiatives designed to optimize our commissary business while maintaining our commitment to product quality. We expect to achieve at least $60 million in North America systemwide supply chain savings over the next two years, equating to meaningful restaurant-level margin improvement. We have captured approximately $7$16 million of cumulative benefits infrom thethese first quarterinitiatives and are on track to realize at least $25 million of savings by the end of 2026.

•Development strategy: Development is a key long-term growth driver as we believe there is significant opportunity to offer our quality products to more customers globally and domestically. Our near-term development plan in North America includes focused development within our priority markets and on improving the quality and profitability of our restaurant portfolio, with fewer new restaurant openings expected in 2026. ToOur aidnear-term International development pipeline remains strong, as our franchiseesInternational inbusiness pursuingdelivered profitablepositive growthcomparable insales conjunction withfor the supplyseventh chainconsecutive and restaurant optimization initiatives described above, we are offering royalty incentives for new restaurants opening in 2026, which we believe will add scale in key markets and attract growth-driven franchisees. We are also providing franchise remodel incentives for eligible restaurants to refresh and elevate our customer experience.quarter.

•AcceleratingPartnering with and evolving our refranchisingfranchisee programbase: RefranchisingWe are focused on strengthening franchisee health and supporting long-term system growth through a combination of the supply chain and restaurant optimization initiatives described above, as well as incentive programs tied to operational excellence and restaurant image improvements that began during the second quarter. We believe these actions will further align the interests of our franchisees and the Company, accelerate the execution of our transformation initiatives, and support sustainable growth across the system. In addition, refranchising is a strategic action that we plan to continue to pursue across our Company-owned restaurants as it provides developing franchisees opportunities to expand their businesses and strengthens the long-term health of Papa Johns while providing additional means to reinvest into our transformation initiatives. WeIn achievedthe asecond keyquarter milestoneof 2026 we entered into an agreement to refranchise 28 restaurants in Florida, with the accelerationtransaction ofexpected ourto Domestic refranchising programclose during the fourththird quarter of 2025, completing the refranchising of 85 restaurants,quarter, and we continue exploringto explore opportunities to refranchise additional markets.

We believe Domestic Company-owned, North America franchised, and International Comparable sales growth (decline) and Global system-wide restaurant sales information is useful in analyzing our results since our franchisees pay royalties and marketing fund contributions that are based on a percentage of franchise sales. Comparable sales and Global system-wide restaurant sales results for restaurants operating outside of the United States are reported on a constant dollar basis, which excludes the impact of foreign currency translation. Franchise sales also generate commissary revenue in the United States and in certain international markets. Comparable sales growth (decline) and Global system-wide restaurant sales information is also useful for comparison to industry trends and evaluating the strength of our brand. Management believes the presentation of Global system-wide restaurant sales growth,growth (decline), excluding the impact of foreign currency, provides investors with useful information regarding underlying sales trends and the impact of new unit growth without being impacted by swings in the external factor of foreign currency. Franchise restaurant sales are not included in the Company’s revenues.

(a)For the three and six months ended MarchJune 29,28, 2026, comparable sales decline and system-wide restaurant sales decline for Domestic Company-owned restaurants and North America franchised restaurants were adjusted to exclude the impact of refranchising 85 restaurants during the fourth quarter of 2025. See “Note 11. Divestitures” of “Notes to Condensed Consolidated Financial Statements” for additional information.

Total revenues decreased $39.7$46.8 million, or 7.7%,8.8%, to $478.6$482.4 million for the three months ended MarchJune 29,28, 2026 and decreased $86.5 million, or 8.3%, to $961.0 million for the six months ended June 28, 2026, as compared to the prior year comparable period.periods. Changes in total revenues were impacted by the transaction noted above and are detailed in the discussions below.

Company-owned restaurant sales, which include sales from both Domestic and International Company-owned restaurants, decreased $30.7$36.8 million, or 17.7%,20.6%, for the three months ended MarchJune 29,28, 2026 and decreased $67.6 million, or 19.1%, for the six months ended June 28, 2026, as compared to the prior year comparable period.periods. The decrease wasfor the three and six month periods is primarily attributable to $24.9approximately $25 million and $50 million, respectively, in prior-period sales from the formerly-Company owned restaurants refranchised in the 2025 refranchising transaction, as detailed above. The decrease was also due to lower comparable sales of 5.2%8.9% and 7.4% for our Domestic Company-owned restaurants for the three and six months ended June 28, 2026, respectively, driven by lower transaction volumes, partially offset by higher average ticket.volumes.

Franchise royalties and fees, which include revenues generated from both North American and International franchisees, decreased $0.5$1.7 million, or 1.0%,3.6%, for the three months ended MarchJune 29,28, 2026 and decreased $2.2 million, or 2.3%, for the six months ended June 28, 2026, as compared to the prior year comparable period.periods. The decrease is primarily due to a $2.1$3.3 million and $5.5 million decrease in royalties and fees from our North America franchisees due to declines in comparable sales of 6.7%,8.2% partiallyand offset7.4% by an increase in number of restaurants due tofor the 2025three refranchisingand transactionsix discussedmonths above.ended June 28, 2026, respectively. International franchise royalties and fees increased $0.6 million and $1.2 million due to growth in International systemwidecomparable sales of 6.0%1.5% and 2.5% for the three and six months ended MarchJune 29,28, 2026.2026, respectively, and due to an increase in international franchise restaurants over the periods compared.

North America franchise restaurant sales are not included in Company revenues; however, our North America franchise royalties are derived from these sales. North America franchise restaurant sales decreased 3.4%5.3% to $728.7$712.4 million and decreased 4.4% to $1.4 billion for the three and six months ended MarchJune 29,28, 20262026, respectively, compared to the prior year comparable period,periods and excluding the impact of foreign currency fluctuations. The decline in franchise restaurant sales was primarily due to a decrease in comparable sales of 6.7%,8.2% and franchise7.4% for the three and six months ended June 28, 2026, respectively. Franchise equivalent unitunits decreaseincreased of1.6% 1.0%, offset byfor the restaurantthree growthmonths notedended above.June 28, 2026 and increased 0.3% for the six months ended June 28, 2026 compared to the prior year comparable periods.

International franchise restaurant sales are also not included in Company revenues; however, our international royalty revenue is derived from these sales. International franchise restaurant sales increased 6.0%5.1% to $315.1$344.0 million and increased 5.5% to $673.9 million for the three and six months ended MarchJune 29,28, 20262026, respectively, compared to the prior year comparable period,periods and excluding the impact of foreign currency fluctuations. The increase was due to growth in International comparable sales of 3.6%1.5% and 2.5% for the three and six months ended June 28, 2026, respectively, as well as restaurant growth.

Commissary revenues, which includes sales from our North American and International QC Centers, decreased $6.3$3.8 million, or 2.8%,1.6%, for the three months ended MarchJune 29,28, 2026 and decreased $10.1 million, or 2.2%, for the six months ended June 28, 2026 as compared to the prior year comparable period.periods. The decrease was primarily due to food cost deflation, lower transaction volumes, and franchisee food cost subsidies during the quarter, partially offset by higher pricesprices. andThe an increasedecrease in commissary revenues comparedwas toalso thepartially prioroffset year comparable period of approximately $7 million due toby an increase in franchised restaurants as a result of the 2025 refranchising transaction discussed above.above, which contributed to an increase of approximately $7 million and $14 million for the three and six months ended June 28, 2026, respectively.

Other revenues, which primarily includes revenues derived from our online and mobile ordering business, decreased $2.0$1.7 million, or 8.3%,7.2%, and decreased $3.6 million, or 7.8%, for the three and six months ended MarchJune 29,28, 20262026, respectively, as compared to the prior year comparable periodperiods. The decreases were primarily due to lower revenues generated from technology services as a result of a decreasereduction in the technology fee charged to franchisees that began in the second half of 2025, as well as lower North America systemwide sales.sales declines of 8.3% and 7.4% for the three and six months ended June 28, 2026, respectively.

Advertising funds revenue, which includes the operations of PJMF as well as local and International marketing funds, decreased by$2.8 lessmillion, thanor 1%6.4%, and decreased $3.0 million, or 3.4% for the three and six months ended MarchJune 29,28, 20262026, respectively, as compared to the prior year comparable period.periods. The decreasedecreases waswere primarily driven by global system-wide restaurant sales decline of 3.1%4.8% and 4.0% for the three and six months ended MarchJune 29,28, 2026.2026, respectively.

Total costs and expenses were $457.9$459.2 million, or 95.7%95.2% of total revenuesrevenues, forand the three months ended March 29, 2026, as compared to $494.3$917.1 million, or 95.4% of total revenuesrevenues, for the three and six months ended June 28, 2026, respectively, as compared to $504.7 million, or 95.4% of total revenues, and $999.0 million, or 95.4% of total revenues, for the prior year comparable period.periods, respectively.

Cost of sales primarily consists of Company-owned restaurant and supply chain costs incurred to generate related revenues. Components of cost of sales primarily include food and paper products, labor, freight and delivery, occupancy costs, local advertising costs, insurance expense, and insuranceother expense.costs. CostCosts of sales wasby $340.9 millionsegment for the three and six months ended MarchJune 28, 2026 and June 29, 2026,2025 awere decreaseas of $25.6 million, or 7.0%, from the prior year comparable period.follows:

(a) Segment cost of sales in the table above include stock-based compensation expenses and other adjustments that are excluded from oursegment expenses in the segment results,footnote, which are presented on an adjusted basis (see “Note 12. Segment Information”).

(c) “All otherOther” refers to all other business units that do not meet the quantitative or qualitative thresholds for determining reportable segments, and primarily includes our online and mobile ordering business and our marketing fundsfunds. andThese are not considered operating segments.

Cost of sales were $339.0 million and $679.9 million for the three and six months ended June 28, 2026, a decrease of $32.7 million and $58.3 million, respectively, from the prior year comparable periods. The decreasedecreases in cost of sales waswere primarily due primarily to fewerthe Domestic Company-owned restaurantsrestaurant in 2026segment as a result of the 2025 refranchising transaction, which resulted in anfewer Company-owned restaurants in 2026 compared to the prior year comparable periods and drove a decrease of approximately $23 million decreaseand $46 million in cost of sales for the Domestic Company-owned restaurants.restaurant segment for the three and six months ended June 28, 2026, respectively. The decreaseDomestic wasCompany-owned restaurant segment cost of sales also decreased due to commodityimproved deflationlabor productivity and lower local advertising costs. Cost of sales for our Domestic QC Centers and due to lower transaction volumes for ourthe Domestic Company-owned restaurants and Domestic QC Centers also decreased due to lower transaction volumes as a result of lower North America comparable sales declines. These decreases in cost of sales were partially offset by higher volumes for our International restaurants due to an increase in International comparable sales. These decreases were alsopartially partiallyoffset by increases in labor and technology costs for our online and mobile ordering business and were further offset by decreases in intersegment cost of sales due to a decrease in the number of Domestic Company-owned restaurants as a result of the 2025 refranchising transaction discussed above.

General and administrative expenses (“G&A”) expenses were $56.0$59.0 million, or 11.7%12.2% of total revenuesrevenues, and $115.0 million, or 12.0% of total revenues, for the three and six months ended MarchJune 29,28, 2026, respectively, as compared to $65.2$70.1 million, or 12.6%13.3% of total revenues, and $135.3 million, or 12.9% of total revenues, for the prior year comparable period.periods, respectively. G&A expenses consisted of the following:

(b)For the three and six months ended MarchJune 29,28, 2026, represents costs associated with the Company’s Enterprise Transformation Plan. For the three and six months ended MarchJune 30,29, 2025, represents costs associated with the Company’s International Transformation Plan. Refer to “Note 9. Restructuring” for additional details.

(c)Represents additional pre-tax gain on sale, net of transaction costs,expense (gain), associated with the 2025 refranchising transaction related to the assignment of certain85 remainingrestaurants leaseson toNovember the24, Buyer.2025. See “Note 11. Divestitures” for additional details.

(d)For the three months ended March 29, 2026, represents costsii.Costs associated with project-based strategic initiatives that are not related to our ongoing operations.operations; Forand the three months ended March 30, 2025, other costs is comprised of costsiii.Costs incurred, net of anticipated insurance recoveries, arising from a tornadotornadoes that damaged the Texas QC Center; as well as the restaurant support center and costsQC associatedCenter within project-basedLouisville, strategic initiatives that are not related to our ongoing operations.Kentucky.

Advertising funds expensesexpense werewas $43.2$42.0 million or 99.5% of advertising revenues for the three months ended March 29, 2026, as compared to $44.3 millionmillion, or 101.5% of advertising revenuesfunds revenue, and $85.2 million, or 100.5% of advertising funds revenue for the three and six months ended June 28, 2026, respectively, compared with $44.0 million, or 99.7% of advertising funds revenue, and $88.4 million, or 100.6% of advertising funds revenue, for the prior year comparable period.periods, respectively. Advertising funds expense is comprisedconsists primarily of expenses incurred by PJMF, which is designed to operate at break-even as it spends all annual contributions received from the system. The decrease for the three months ended March 29, 2026 was primarily due to a global system-wide restaurant sales decline of 3.1%. Advertising funds expense also contains expenses incurred through our international marketing funds to support our International business, which may lead to Advertising funds expense being less than or in excess of Advertising funds revenue due to timing differences. The decrease in advertising funds expense for the three and six months ended June 28, 2026 compared to the prior year comparable periods was primarily due to declines in global system-wide restaurant sales in 2026.

Domestic Company-owned restaurants segment adjusted EBITDA increaseddecreased $2.9$3.2 million for the three months ended MarchJune 29,28, 2026 primarily due to a decrease in comparable sales of 8.9% and due to fewer Domestic Company-owned restaurants as a result of the 2025 refranchising transaction. The decrease was partially offset by the impact of a prospective change in our internal cost allocation methodology in 2026 to refine internal allocations of certain operating costs.costs to our segments. This change in allocation methodology resulted in a $2.1 million increase in Domestic Company-owned restaurants segment adjusted EBITDA overfor the comparablethree periods.months ended June 28, 2026. Please see “4-wall EBITDA” below for a discussion onof this change. This increase was also due to lower cost of sales as a result of increased labor productivity for our Domestic Company-owned restaurants andsegment commodityadjusted deflation,EBITDA partiallydecreased offset$0.4 bymillion for the six months ended June 28, 2026 due primarily to a decrease in comparable sales of 5.2% over the periods compared7.4% and bydue to fewer Domestic Company-owned restaurants as a result of the 2025 refranchising transaction.transaction, partially offset by commodity deflation and by the change in cost allocation methodology mentioned above, which resulted in a $4.2 million increase in Domestic Company-owned restaurants segment adjusted EBITDA for the six months ended June 28, 2026.

North America franchising segment adjusted EBITDA decreased $1.9$3.1 million and $5.0 million for the three and six months ended MarchJune 29,28, 2026 primarily due to a decreasedecreases in comparable sales of 6.7%,8.2% partiallyand offset7.4%, by franchise restaurant growth over the periods compared as a result of the 2025 refranchising transaction.respectively.

North America commissaries segment adjusted EBITDA increased $2.7 million for the three months ended June 28, 2026 primarily due to higher prices, partially offset by lower transaction volumes in 2026. North America commissaries segment adjusted EBITDA decreased $6.9$4.2 million for the threesix months ended MarchJune 29,28, 2026 primarily due to lower transaction volumes, franchisee food cost subsidies during the first quarter, and timing of planned pricing during the quarter.year.

International segment adjusted EBITDA increased $2.8$1.7 million and $4.5 million for the three and six months ended MarchJune 29,28, 2026 primarily due to an increaseincreases in comparable sales of 3.6%,1.5% and 2.5%, respectively. The six months ended June 28, 2026 also increased year-over-year due to favorable foreign currency exchange rate fluctuations, and international franchise restaurant growth over the periods compared.fluctuations.

Net interest expense decreased $0.4$1.1 million and $1.5 million for the three and six months ended MarchJune 29,28, 20262026, respectively, compared with the prior year comparable periods, primarily due to lower average interest rates during the respective periods.rates.

Our effective income tax rate was 37.4%36.4% and 36.8% for the three and six months ended MarchJune 29,28, 20262026, respectively, as compared to an effective income tax rate of 32.7%30.5% and 31.6% for the prior year comparable period.periods, respectively. The higher effective tax rate was primarily due to a shift in income between jurisdictions andjurisdictions, tax shortfall generated by vesting of restricted shares.shares, and lower projected income tax credits.

Net income included losses$0.2 million of $0.3 millionincome attributable to noncontrolling interests for the three months ended MarchJune 29,28, 2026 asand $0.2 million of losses attributable to noncontrolling interests for the six months ended June 28, 2026, compared towith income of $0.1 million forand $0.3 million, respectively, in the prior year comparable period.periods.

Diluted earnings per common share were $0.21$0.24 and $0.46 for the three and six months ended MarchJune 29,28, 20262026, respectively, as compared to $0.27$0.28 and $0.56 for the prior year comparable period,periods, respectively, representing a decrease of $0.06.$0.04 and $0.10, respectively. Adjusted diluted earnings per common share, a non-GAAP measure, was $0.32$0.46 and $0.78 for the three and six months ended MarchJune 29,28, 20262026, respectively, as compared to adjusted diluted earnings per common share of $0.36$0.41 and $0.77 for the prior year comparable period,periods, respectively, representing aan decreaseincrease of $0.04.$0.05 and $0.01, respectively. See “Non-GAAP Measures” for additional information.

` (a)For the three and six months ended MarchJune 29,28, 2026, represents costs associated with the Company’s Enterprise Transformation Plan,Plan. These amounts are inclusive of $0.2$1.0 million and $1.1 million for the three and six months ended June 28, 2026, respectively, of non-cash stock-based compensation expense and depreciation expense.expenses which are excluded from adjusted EBITDA above but are reflected as adjustments to non-GAAP diluted EPS. For the three and six months ended MarchJune 30,29, 2025, represents costs associated with the Company’s International Transformation Plan. Refer to “Note 9. Restructuring” for additional details.

(c)For the three months ended March 29, 2026, represents costsii.Costs associated with project-based strategic initiatives that are not related to our ongoing operations.operations; Forand the three months ended March 30, 2025 other costs is comprised of costsiii.Costs incurred, net of anticipated insurance recoveries, arising from a tornadotornadoes that damaged the Texas QC Center; as well as the restaurant support center and costsQC associatedCenter within project-basedLouisville, strategic initiatives that are not related to our ongoing operations.Kentucky.