El Pollo Loco Holdings, Inc.

Previous wording

This report contains forward-looking statements within the meaning of federal securities laws that are subject to risks and uncertainties. All statements other than statements of historical fact included in this report are forward-looking statements. Examples of forward-looking statements in this report include, but are not limited to, discussions of our current expectations, projections, intentions, or beliefs relating to our financial condition, results of operations, liquidity, prospects, growth, trends, strategies, and the industry in which we operate. You can identify forward-looking statements because they do not relate strictly to historical or current facts. These statements may include words such as “aim,” “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “outlook,” “potential,” “project,” “projection,” “plan,” “intend,” “seek,” “may,” “could,” “would,” “will,” “should,” “can,” “can have,” “likely,” the negatives thereof and other words and terms of similar meaning used in connection with any discussion of the timing or nature of future operating or financial performance or other events. All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those that we expected. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. All forward-looking statements are expressly qualified in their entirety by these cautionary statements. You should evaluate all forward-looking statements made in this report in the context of the factors that could cause outcomes to differ materially from our expectations. These factors include, but are not limited to: our ability to open new restaurants in new and existing markets; our ability to compete successfully; global economic or other business conditions, including trade policies, tariff and import regulations by the United States, as well as consumer preferences; our ability to attract, develop, assimilate, and retain employees; our vulnerability to regional geographic conditions; our ability to maintain business continuity in the event of a disaster or disruption; impairment of our assets; changes in food and supply costs, especially for chicken, labor, construction and utilities; the impacts of public health crises; potential negative publicity; our ability to continue to expand our digital business, delivery orders and catering; concerns about food safety and quality and about food-borne illness; dependence on frequent and timely deliveries of food and supplies; our ability to service our level of indebtedness; the success of our marketing programs, new menu items, advertising campaigns and restaurant designs and remodels; risks related to our dependence on our franchisees, including their vulnerability to economic changes; exposure from our self-insurance progra…

Excerpt shortened here; the source contains the full paragraph.

Current wording

This report contains forward-looking statements within the meaning of federal securities laws that are subject to risks and uncertainties. All statements other than statements of historical fact included in this report are forward-looking statements. Examples of forward-looking statements in this report include, but are not limited to, discussions of our current expectations, projections, intentions, or beliefs relating to our financial condition, results of operations, liquidity, prospects, growth (inclusive of the opening of future restaurants), trends, strategies, and the industry in which we operate. You can identify forward-looking statements because they do not relate strictly to historical or current facts. These statements may include words such as “aim,” “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “outlook,” “potential,” “project,” “projection,” “plan,” “intend,” “seek,” “may,” “could,” “would,” “will,” “should,” “can,” “can have,” “likely,” the negatives thereof and other words and terms of similar meaning used in connection with any discussion of the timing or nature of future operating or financial performance or other events. All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those that we expected. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. All forward-looking statements are expressly qualified in their entirety by these cautionary statements. You should evaluate all forward-looking statements made in this report in the context of the factors that could cause outcomes to differ materially from our expectations. These factors include, but are not limited to: our ability to open new restaurants in new and existing markets; our ability to compete successfully; global economic or other business conditions, including trade policies, tariff and import regulations by the United States, as well as consumer preferences; our ability to attract, develop, assimilate, and retain employees; our vulnerability to regional geographic conditions; our ability to maintain business continuity in the event of a disaster or disruption; impairment of our assets; changes in food and supply costs, especially for chicken, labor, construction and utilities; the impacts of public health crises; potential negative publicity; our ability to continue to expand our digital business, delivery orders and catering; concerns about food safety and quality and about food-borne illness; dependence on frequent and timely deliveries of food and supplies; our ability to service our level of indebtedness; the success of our marketing programs, new menu items, advertising campaigns and restaurant designs and remodels; risks related to our dependence on our franchisees, including their vulnerability to economic…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

As a result of California legislation increasing wages of fast food workers, we experienced an increase in our labor and regulatory compliance costs in recent periods. Although we have been able to substantially offset these cost pressures through various actions, such as increasing menu prices, managing menu mix, and productivity improvements, we expect these cost pressures to continue in 2026.

Current wording

As a result of California legislation increasing wages of fast food workers, we experienced an increase in our labor and regulatory compliance costs in recent periods. Although these cost pressures have continued in 2026, we have been able to offset these cost pressures through various actions, such as increasing menu prices, managing menu mix, and productivity improvements.

Previous wording

Additionally, we are impacted by macroeconomic challenges, such as inflationary pressures and changes in trade policies, that have in the past affected, and may continue in the future, to affect our operations in certain areas such as food cost, labor costs, construction costs and other restaurant operating costs. We have been able to substantially offset these inflationary and other cost pressures through various actions, such as increasing menu prices, managing menu mix, and productivity improvements. However, we expect these inflationary and other cost pressures to continue in 2026 and we may not be able to offset cost increases in the future. Global events, such as the ongoing war in Iran, may also impact our business costs, including the costs of transportation and energy.

Current wording

Additionally, we are impacted by macroeconomic challenges, such as inflationary pressures and changes in trade policies, that have in the past affected, and may continue in the future, to affect our operations in certain areas such as food cost, labor costs, construction costs and other restaurant operating costs. We have been able to substantially offset these inflationary and other cost pressures through various actions, such as increasing menu prices, managing menu mix, and productivity improvements. However, we expect these inflationary and other cost pressures to continue in 2026 and some into 2027, and we may not be able to offset cost increases in the future. Global political and macroeconomic events may also impact our business costs, including the costs of transportation and energy.

Previous wording

Although the United States-Mexico-Canada Agreement (“USMCA”) remains in force, the United States did not agree to renew the agreement in its current form following the July 2026 joint review, and certain goods from Canada and Mexico, including USMCA-compliant goods, may be subject to new tariffs unless an exemption applies. While we continue to evaluate the potential impacts of increased tariff rates, as well as our ability to mitigate any related impacts, the imposition of tariffs on goods we import into the United States may increase our foods and paper costs and adversely impact our financial results. Any new or increased import duties, tariffs, or taxes, or other changes in U.S. trade or tax policy could result in further increases to our food and paper costs and other restaurant operating costs that would adversely impact our financial results. For additional information, see “Item 1A. Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2025, including the risk factor titled “We are vulnerable to changes in political and economic conditions, such as trade policies, tariff and import regulations by the United States, as well as consumer preferences.”

Current wording

Although the United States-Mexico-Canada Agreement (“USMCA”) remains in force, the United States did not agree to renew the agreement in its current form following the July 2026 joint review, and certain goods from Canada and Mexico, including USMCA-compliant goods, may be subject to new tariffs unless an exemption applies. While we continue to evaluate the potential impacts of increased tariff rates, as well as our ability to mitigate any related impacts, the imposition of tariffs on goods we import into the United States may increase our food and paper costs and adversely impact our financial results. Any new or increased import duties, tariffs, or taxes, or other changes in U.S. trade or tax policy could result in further increases to our food and paper costs and other restaurant operating costs that would adversely impact our financial results. For additional information, see “Item 1A. Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2025, including the risk factor titled “We are vulnerable to changes in political and economic conditions, such as trade policies, tariff and import regulations by the United States, as well as consumer preferences.”

Previous wording

As of July 1, 2026, we had 511 locations in ten states. For the twenty-six weeks ended July 1, 2026, our franchisees opened six new restaurants, two in Colorado and one in each of the following states: California, Arizona, Idaho, and Texas, and the Company opened one new restaurant in California and one new restaurant in Texas. In fiscal 2025, we opened one new company-operated restaurant in California, and our franchisees opened eight new restaurants, two in California, two in Arizona, and one in each of the following states: Colorado, Texas, New Mexico and Washington.

Current wording

As of September 30, 2026, we had 515 locations in ten states. For the thirty-nine weeks ended September 30, 2026, our franchisees opened nine new restaurants: two in Colorado, two in California, two in Texas, and one in each of the following states: Arizona, Idaho, and New Mexico, and the Company opened one new restaurant in California, and two new restaurants in Texas. In fiscal year 2025, we opened one new company-operated restaurant in California, and our franchisees opened eight new restaurants: two in California, two in Arizona, and one in each of the following states: Colorado, Texas, New Mexico and Washington.

Previous wording

For the thirteen and twenty-six weeks ended July 1, 2026, our total revenue was $129.6 million and $255.8 million, respectively. For the thirteen weeks ended July 1, 2026, our company-operated restaurant revenue was $108.1 million, and our franchise revenue and franchise advertising fee revenue was $21.5 million. For the twenty-six weeks ended July 1, 2026, our company-operated restaurant revenue was $214.1 million, and our franchise revenue and franchise advertising fee revenue was $41.7 million.

Current wording

For the thirteen and thirty-nine weeks ended September 30, 2026, our total revenue was $126.3 million and $382.1 million, respectively. For the thirteen weeks ended September 30, 2026, our company-operated restaurant revenue was $105.4 million, and our franchise revenue and franchise advertising fee revenue was $20.9 million. For the thirty-nine weeks ended September 30, 2026, our company-operated restaurant revenue was $319.4 million, and our franchise revenue and franchise advertising fee revenue was $62.6 million.

Previous wording

For the thirteen and twenty-six weeks ended July 1, 2026, system-wide comparable restaurant sales increased by 3.9% and 4.9%, respectively, from the comparable period in the prior year. For company-operated restaurants, comparable restaurant sales for the thirteen and twenty-six weeks ended July 1, 2026 increased by 3.0% and 4.2%, respectively. For franchise-operated restaurants, comparable restaurant sales increased by 4.5% and 5.2% for the thirteen and twenty-six weeks ended July 1, 2026, respectively. A restaurant enters our comparable restaurant base the first full week after its 15-month anniversary. System-wide comparable restaurant sales include restaurant sales at all comparable company-operated restaurants and at all comparable franchise-operated restaurants, as reported by franchisees. Refer to “Comparable Restaurant Sales” definition in the section titled “Key Performance Indicators” below.

Current wording

For the thirteen and thirty-nine weeks ended September 30, 2026, system-wide comparable restaurant sales increased by 5.0% and 4.9%, respectively, from the comparable period in the prior year. For company-operated restaurants, comparable restaurant sales for the thirteen and thirty-nine weeks ended September 30, 2026 increased by 4.4% and 4.3%, respectively. For franchise-operated restaurants, comparable restaurant sales increased by 5.3% for both the thirteen and thirty-nine weeks ended September 30, 2026. A restaurant enters our comparable restaurant base the first full week after its 15-month anniversary. System-wide comparable restaurant sales include restaurant sales at all comparable company-operated restaurants and at all comparable franchise-operated restaurants, as reported by franchisees. Refer to “Comparable Restaurant Sales” definition in the section titled “Key Performance Indicators” below. Changes in system-wide comparable restaurant sales for each of the periods presented were as follows:

Previous wording

Our restaurant counts at the beginning and end of each of the twenty-six weeks ended July 1, 2026 and June 25, 2025 were as follows:

Current wording

Our restaurant counts at the beginning and end of each of the thirty-nine weeks ended September 30, 2026 and September 24, 2025 were as follows:

Previous wording

During the twenty-six weeks ended July 1, 2026, we completed a total of 24 remodels of which 12 were company-operated restaurant remodels. In fiscal 2026, we plan to continue our standard practices for remodels, which includes a goal of completing a total of 25 to 35 company-operated restaurant remodels and 30 to 40 franchise-operated restaurant remodels. Remodeling is a use of cash and has implications for our net property and depreciation line items on our consolidated balance sheets and consolidated statements of income, among others. The cost of our restaurant remodels varies depending on the scope of the work required, but on average the investment is approximately $0.4 million per restaurant.

Current wording

During the thirty-nine weeks ended September 30, 2026, we completed a total of 45 remodels of which 23 were company-operated restaurant remodels. For the remainder of fiscal 2026, we plan to continue our standard practices for remodels, which includes a goal of completing a total of 28 to 32 company-operated restaurant remodels and 28 to 37 franchise-operated restaurant remodels. Remodeling is a use of cash and has implications for our net property and depreciation line items on our consolidated balance sheets and consolidated statements of income, among others. The cost of our restaurant remodels varies depending on the scope of the work required, but on average the investment is approximately $0.4 million per restaurant.

Previous wording

As of July 1, 2026 and December 31, 2025, the revenue allocated to loyalty points that had not been redeemed was $1.3 million and $1.1 million, respectively, which is reflected in our accompanying condensed consolidated balance sheets within other accrued expenses and current liabilities. We had over 5.6 million loyalty program members as of July 1, 2026.

Current wording

As of September 30, 2026 and December 31, 2025, the revenue allocated to loyalty points that had not been redeemed was $1.2 million and $1.1 million, respectively, which is reflected in our accompanying condensed consolidated balance sheets within other accrued expenses and current liabilities. We had over 5.8 million loyalty program members as of September 30, 2026.

Previous wording

Our operating results for the thirteen and twenty-six weeks ended July 1, 2026 and June 25, 2025 are expressed as percentages of total revenue, with the exception of cost of operations and company restaurant expenses, which are expressed as percentages of company-operated restaurant revenue, and are compared in the tables below.

Current wording

Our operating results for the thirteen and thirty-nine weeks ended September 30, 2026 and September 24, 2025 are expressed as percentages of total revenue, with the exception of cost of operations and company restaurant expenses, which are expressed as percentages of company-operated restaurant revenue, and are compared in the tables below.

Previous wording

For the quarter ended July 1, 2026, company-operated restaurant revenue increased $3.8 million, or 3.7% from the comparable period in the prior year. The increase in company-operated restaurant revenue was mainly due to an increase in company-operated comparable restaurant revenue of $3.1 million, or 3.0%, as well as $1.0 million of additional sales from the opening of three restaurants after the second quarter of 2025. This company-operated restaurant revenue increase was partially offset by $0.3 million of higher discounts and net revenue deferrals associated with our Loco Rewards loyalty program. The company-operated comparable restaurant sales increase consisted of a 4.2% increase in average check size, partially offset by a 1.1% decrease in transactions.

Current wording

For the quarter ended September 30, 2026, company-operated restaurant revenue increased $4.7 million, or 4.6% from the comparable period in the prior year. The increase in company-operated restaurant revenue was mainly due to an increase in company-operated comparable restaurant revenue of $4.3 million, or 4.4%, as well as $1.0 million of additional sales related to three restaurants opened after the third quarter of 2025. This company-operated restaurant revenue increase was partially offset by a $0.3 million decrease in revenue resulting from the transfer of one Company-operated restaurant to a franchisee in the second quarter of 2026. The company-operated comparable restaurant sales increase consisted of a 4.0% increase in average check size, combined with a 0.3% increase in transactions.

Previous wording

For the year-to-date period ended July 1, 2026, company-operated restaurant revenue increased $11.4 million, or 5.6% from the comparable period in the prior year. The increase in company-operated restaurant revenue was mainly due to an increase in company-operated comparable restaurant revenue of $8.5 million, or 4.2%, as well as $1.7 million of additional sales from the opening of three restaurants after the second quarter of 2025. The company-operated comparable restaurant sales increase consisted of a 4.9% increase in average check size, partially offset by a 0.7% decrease in transactions.

Current wording

For the year-to-date period ended September 30, 2026, company-operated restaurant revenue increased $16.0 million, or 5.3% from the comparable period in the prior year. The increase in company-operated restaurant revenue was mainly due to an increase in company-operated comparable restaurant revenue of $12.9 million, or 4.3%, as well as $2.8 million of additional sales related to four restaurants opened after the third quarter of 2025 partially offset by the transfer of one of those to a franchisee along with an additional restaurant transferred to a franchisee, both in the second quarter of 2026. The company-operated comparable restaurant sales increase consisted of a 4.6% increase in average check size, partially offset by a 0.4% decrease in transactions.

Previous wording

For the quarter ended July 1, 2026, franchise revenue decreased $0.5 million, or 3.8% from the comparable period in the prior year. This decrease was primarily due to a $1.1 million decrease in franchisee information technology (“IT”) pass-through revenue related to the franchise rollout of the new Point of Sale (“POS”) system completed in 2025, which was partially offset by a corresponding decrease in related franchise expenses. The decrease was also partially offset by the increase in franchise revenue related to the 11 franchise-operated restaurant openings during or subsequent to the second quarter of 2025 and a franchise comparable restaurant sales increase of 4.5%. The franchise comparable restaurant sales increase consisted of a 5.3% increase in average check size, partially offset by a 0.8% decrease in transactions.

Current wording

For the quarter ended September 30, 2026, franchise revenue decreased $0.4 million, or 3.0% from the comparable period in the prior year. This decrease was primarily due to a $0.6 million decrease in franchisee information technology (“IT”) pass-through revenue related to the franchise rollout of the new Point of Sale (“POS”) system completed in 2025, and a prior year true up of royalty rates. The decrease was partially offset by an increase in franchise revenue related to the 14 franchise-operated restaurant openings during or subsequent to the third quarter of 2025 and a franchise comparable restaurant sales increase of 5.3%. The franchise comparable restaurant sales increase consisted of a 4.4% increase in average check size, combined with a 0.9% increase in transactions.

Previous wording

For the year-to-date period ended July 1, 2026, franchise revenue decreased $1.7 million, or 6.3% from the comparable period in the prior year. This decrease was primarily due to a $3.0 million decrease in franchisee IT pass-through revenue related to the franchise rollout of the new POS system completed in 2025, which was partially offset by a corresponding decrease in related franchise expenses. The decrease was also partially offset by the increase in franchise revenue related to the 11 franchise-operated restaurant openings during or subsequent to the second quarter of 2025 and a franchise comparable restaurant sales increase of 5.2%. The franchise comparable restaurant sales increase consisted of a 5.1% increase in average check size, combined with a 0.1% increase in transactions.

Current wording

For the year-to-date period ended September 30, 2026, franchise revenue decreased $2.1 million, or 5.2% from the comparable period in the prior year. This decrease was primarily due to a $3.6 million decrease in franchisee IT pass-through revenue related to the franchise rollout of the new POS system completed in 2025. The decrease was partially offset by the increase in franchise revenue related to the 14 franchise-operated restaurant openings during or subsequent to the third quarter of 2025 and a franchise comparable restaurant sales increase of 5.3%. The franchise comparable restaurant sales increase consisted of a 4.9% increase in average check size, combined with a 0.4% increase in transactions.

Previous wording

For the quarter ended July 1, 2026, franchise advertising fee revenue increased $0.4 million, or 5.3% from the comparable period in the prior year. As advertising fee revenue is a percentage of franchisees’ revenue, the fluctuations for the quarter were due to the increases and decreases noted in franchise revenue above.

Current wording

For the quarter ended September 30, 2026, franchise advertising fee revenue increased $0.5 million, or 6.5% from the comparable period in the prior year. As advertising fee revenue is a percentage of franchisees’ revenue, the fluctuations for the quarter were due to the increases and decreases noted in franchise revenue above.

Previous wording

For the year-to-date period ended July 1, 2026, franchise advertising fee revenue increased $1.0 million, or 6.6% from the comparable period in the prior year. As advertising fee revenue is a percentage of franchisees’ revenue, the fluctuations for the year-to-date period were due to the increases and decreases noted in franchise revenue above.

Current wording

For the year-to-date period ended September 30, 2026, franchise advertising fee revenue increased $1.6 million, or 6.6% from the comparable period in the prior year. As advertising fee revenue is a percentage of franchisees’ revenue, the fluctuations for the year-to-date period were due to the increases and decreases noted in franchise revenue above.

Previous wording

For the quarter ended July 1, 2026, food and paper costs increased $2.0 million, or 7.7%, from the comparable period in the prior year. The increase in food and paper costs was primarily due to higher sales, higher commodity costs, increased discounts, and menu-mix shifts. For the quarter, food and paper costs as a percentage of company-operated restaurant revenue were 25.4%, up from 24.5% in the comparable period of the prior year. The percentage increase was primarily due to higher commodity costs, increased discounts, and menu-mix shifts highlighted above, partially offset by menu price increases and cost-management initiatives.

Current wording

For the quarter ended September 30, 2026, food and paper costs increased $0.9 million, or 3.5%, from the comparable period in the prior year. The increase in food and paper costs was primarily due to higher sales and higher commodity costs. For the quarter ended September 30, 2026, food and paper costs as a percentage of company-operated restaurant revenue were 24.4%, down from 24.7% in the comparable period of the prior year. The percentage decrease was primarily due to higher menu price increases and cost-management initiatives, partially offset by higher commodity costs and menu mix shifts.

Previous wording

For the year-to-date period ended July 1, 2026, food and paper costs increased $3.6 million, or 7.2%, from the comparable period in the prior year. The increase in food and paper costs was primarily due to higher sales, increased discounts, and higher commodity costs. For the year-to-date period ended July 1, 2026, food and paper costs as a percentage of company-operated restaurant revenue were 25.2%, up from 24.8% in the comparable period of the prior year. The percentage increase was primarily due to the increased discounts and commodity cost increases, partially offset by menu price increases and cost-management initiatives.

Current wording

For the year-to-date period ended September 30, 2026, food and paper costs increased $4.5 million, or 6.0%, from the comparable period in the prior year. The increase in food and paper costs was primarily due to higher sales and higher commodity costs. For the year-to-date period ended September 30, 2026, food and paper costs as a percentage of company-operated restaurant revenue were 24.9%, up from 24.8% in the comparable period of the prior year. The percentage increase was primarily due to the increased commodity costs and menu mix shifts, partially offset by menu price increases and cost-management initiatives.

Previous wording

For the quarter ended July 1, 2026, labor and related expenses increased $0.1 million, or 0.4%, from the comparable period in the prior year. The increase in labor and related expenses was primarily due to a $0.7 million increase in labor associated with the opening of three new restaurants after the second quarter of 2025, combined with higher wage inflation, higher management incentive expense, and higher overtime expense. These increases were partially offset by a $0.6 million reduction in group insurance and worker’s compensation expense. For the quarter ended July 1, 2026, labor and related expenses as a percentage of company-operated restaurant revenue were 29.9%, down from 30.8% in the comparable period in the prior year. The percentage change was driven by leverage on higher company-operated restaurant sales, reduced group insurance, and workers’ compensation claim expenses.

Current wording

For the year-to-date period ended September 30, 2026, labor and related expenses increased $1.2 million, or 1.3%, from the comparable period in the prior year. The increase in labor and related expenses was primarily due to a $1.9 million increase in labor associated with the opening of three new restaurants after the third quarter of 2025, combined with higher wage inflation, higher management incentive expense, higher overtime expense, and an increase in other direct labor related expenses. These increases were partially offset by a $0.8 million reduction in group insurance and workers’ compensation expense. For the year-to-date period ended September 30, 2026, labor and related expenses as a percentage of company-operated restaurant revenue were 30.1%, down from 31.3% in the comparable period in the prior year. The percentage change was driven by leverage on higher company-operated restaurant sales and reduced group insurance expense.

Previous wording

For the quarter ended July 1, 2026, occupancy and other operating expenses increased $0.6 million, or 2.1%, from the comparable period in the prior year. The increase was primarily due to a $0.4 million increase in other operating expenses, primarily from delivery fees, mobile order fees and credit card fees, and a $0.4 million increase in repairs and maintenance costs. These increases were partially offset by a $0.2 million decrease in utility costs and other controllable expenses. For the quarter ended July 1, 2026, occupancy and other operating expenses as a percentage of company-operated restaurant revenue were 25.3%, down from 25.6% in the comparable period in the prior year. The decrease as a percentage of sales resulted primarily from leverage on higher company-operated restaurant sales.

Current wording

For the quarter ended September 30, 2026, occupancy and other operating expenses increased $1.5 million, or 5.5%, from the comparable period in the prior year. The increase was primarily due to a $0.6 million increase in other operating expenses, primarily from delivery fees, mobile order fees and credit card fees, a $0.5 million increase in utility costs and a $0.5 million increase in repairs and maintenance costs. These increases were partially offset by a $0.2 million decrease in insurance. For the quarter ended September 30, 2026, occupancy and other operating expenses as a percentage of company-operated restaurant revenue were 26.7%, up from 26.5% in the comparable period in the prior year. The increase as a percentage of sales resulted primarily from the increases mentioned above, partially offset by leverage on higher company-operated restaurant sales.

Previous wording

For the year-to-date period ended July 1, 2026, occupancy and other operating expenses increased $2.2 million, or 4.3%, from the comparable period in the prior year. The increase was primarily due to a $1.1 million increase in other operating expenses, primarily from delivery fees, mobile order fees and credit card fees, a $0.8 million increase in utilities and repairs and maintenance costs, and a $0.3 million increase in other operating expenses. For the year-to-date period ended July 1, 2026, occupancy and other operating expenses as a percentage of company-operated restaurant revenue were 25.5%, down from 25.9% in the comparable period in the prior year. The decrease as a percentage of sales resulted from leverage on higher company-operated restaurant sales.

Current wording

For the year-to-date period ended September 30, 2026, occupancy and other operating expenses increased $3.7 million, or 4.7%, from the comparable period in the prior year. The increase was primarily due to a $1.7 million increase in other operating expenses, primarily from delivery fees, mobile order fees and credit card fees, a $1.8 million increase in utilities and repairs and maintenance expense and a $0.7 million increase in restaurant advertising expense. These increases were partially offset by a $0.5 million decrease in insurance expense. For the year-to-date period ended September 30, 2026, occupancy and other operating expenses as a percentage of company-operated restaurant revenue were 26.0%, down from 26.1% in the comparable period in the prior year. The decrease as a percentage of sales resulted from leverage on higher company-operated restaurant sales.

Previous wording

For the quarter ended July 1, 2026, general and administrative expenses decreased $6.5 million, or 47.9%, from the comparable period in the prior year. The decrease for the quarter was primarily due to $6.3 million received from a legal settlement, net of legal expenses, in the current year, a $0.8 million decrease in legal and professional fee costs related to shareholder activism and related matters in the prior year, and a $0.7 million decrease related to restructuring and executive transition costs in the prior year. The general and administrative expenses decrease was partially offset by a $0.3 million increase in legal fees, a $0.5 million increase in outside services and software maintenance, a $0.2 million increase in store pre-opening costs and a $0.3 million increase in other general and administrative expenses.

Current wording

For the quarter ended September 30, 2026, general and administrative expenses increased $1.6 million, or 13.1%, from the comparable period in the prior year. The increase for the quarter was primarily due to a $0.8 million increase in incentive compensation and other labor related expenses, a $0.3 million increase in stock compensation, a $0.2 million increase in restructuring and executive transition costs and a $0.5 million increase in other general and administrative expenses. These increases were partially offset by lower shareholder activism and related matters of $0.2 million.

Previous wording

For the year-to-date period ended July 1, 2026, general and administrative expenses decreased $4.9 million, or 20.0%, from the comparable period in the prior year. The decrease was primarily due to a $5.7 million favorable change related to legal settlements, reflecting $6.3 million received from a legal settlement, net of legal expenses, in the current-year period compared with $0.6 million received in the prior-year period, net of legal expenses, a $1.4 million decrease in legal and professional fee costs related to shareholder activism, and a $0.7 million decrease in restructuring and executive transition costs in the prior year. The general and administrative expenses decrease was partially offset by a $0.8 million increase in outside services and software maintenance, a $0.6 million increase in other legal costs, a $0.3 million increase in store pre-opening costs, a combined $0.2 million increased related to our corporate office relocation and the implementation of a new enterprise resource planning system, and a $1.0 million increase in other general and administrative expenses.

Current wording

For the year-to-date period ended September 30, 2026, general and administrative expenses decreased $3.3 million, or 9.0%, from the comparable period in the prior year. The decrease was primarily due to a $5.7 million favorable change related to legal settlements, reflecting $6.3 million received from a legal settlement, net of legal expenses, in the current-year period compared with $0.6 million received in the prior-year period, net of legal expenses, a $1.5 million decrease in legal and professional fee costs related to shareholder activism, and a $0.5 million decrease in restructuring and executive transition costs compared to the prior year. The general and administrative expenses decrease was partially offset by a $1.0 million increase in outside services and software maintenance, a $0.7 million increase in legal fees, a $0.7 million increase in incentive compensation, a $0.4 million increase in travel costs associated with new market support, a $0.4 million increase in stock compensation, a $0.3 million increase in store pre-opening costs, a combined $0.3 million increase related to our corporate office relocation and the implementation of a new enterprise resource planning (“ERP”) system, and a $0.6 million increase in other general and administrative expenses.

Previous wording

For the quarter ended July 1, 2026, franchise expenses decreased $0.8 million, or 6.0%, from the comparable period in the prior year. The decrease was primarily due to a $1.2 million decrease in franchise IT pass-through expense related to the franchise rollout of the new POS system completed in 2025, partially offset by a $0.4 million increase in advertising expenses.

Current wording

For the quarter ended September 30, 2026, franchise expenses increased $0.1 million, or 0.8%, from the comparable period in the prior year. The increase was primarily due to a $0.5 million increase in franchise advertising expenses and a $0.2 million increase in other franchise expenses, partially offset by a $0.6 million decrease in franchise IT pass-through expense related to the franchise rollout of the new POS system completed in 2025.

Previous wording

For the year-to-date period ended July 1, 2026, franchise expenses decreased $2.0 million, or 8.0%, from the comparable period in the prior year. The decrease was primarily due to a $3.2 million decrease in franchise IT pass-through expense related to the franchise rollout of the new POS system completed in 2025, partially offset by a $1.0 million increase in advertising expenses and a $0.2 million increase in other franchise expenses.

Current wording

For the year-to-date period ended September 30, 2026, franchise expenses decreased $1.9 million, or 5.2%, from the comparable period in the prior year. The decrease was primarily due to a $3.7 million decrease in franchise IT pass-through expense related to the franchise rollout of the new POS system completed in 2025, partially offset by a $1.6 million increase in advertising expenses and a $0.3 million increase in other franchise expenses.

Previous wording

For the quarter ended July 1, 2026, depreciation and amortization increased $0.2 million, or 6.1%, from the comparable period in the prior year. The increase was primarily due to the completion of 17 company-operated restaurant remodels in 2025 and 5 company-operated restaurant remodels in 2026, along with the rollout of the new POS system to company-operated restaurants completed in 2025.

Current wording

For the quarter ended September 30, 2026, depreciation and amortization increased $0.7 million, or 16.6%, from the comparable period in the prior year. The increase was primarily due to the completion of 17 company-operated restaurant remodels in 2025 and 23 company-operated restaurant remodels in 2026, along with the rollout of the new POS system to company-operated restaurants completed in 2025.

Previous wording

For the year-to-date period ended July 1, 2026, depreciation and amortization increased $0.7 million, or 8.5%, from the comparable period in the prior year. The increase was primarily due to the completion of 17 company-operated restaurant remodels in 2025 and 12 company-operated restaurant remodels in 2026, along with the rollout of the new POS system to company-operated restaurants completed in 2025.

Current wording

For the year-to-date period ended September 30, 2026, depreciation and amortization increased $1.3 million, or 11.2%, from the comparable period in the prior year. The increase was primarily due to the completion of 17 company-operated restaurant remodels in 2025 and 23 company-operated restaurant remodels in 2026, along with the rollout of the new POS system to company-operated restaurants completed in 2025.

Previous wording

During both the thirteen and twenty-six weeks ended July 1, 2026, we recorded $0.2 million in non-cash impairment charges related to the carrying value of the ROU assets of one restaurant in Nevada. During both the thirteen and twenty-six weeks ended June 25, 2025, we did not record any non-cash impairment charges. Given the inherent uncertainty in projecting results for newer restaurants in newer markets, we are monitoring the recoverability of the carrying value of the assets of several restaurants on an ongoing basis. For these restaurants, if expected performance is not realized, an impairment charge may be recognized in future periods, and such charge could be material.

Current wording

During the thirteen weeks ended September 30, 2026, we did not record any non-cash impairment charges. During the thirty-nine weeks ended September 30, 2026, we recorded $0.2 million in non-cash impairment charges related to the carrying value of the ROU assets of one restaurant in Nevada. During both the thirteen and thirty-nine weeks ended September 24, 2025, we did not record any non-cash impairment charges. Given the inherent uncertainty in projecting results for newer restaurants in newer markets, we are monitoring the recoverability of the carrying value of the assets of several restaurants on an ongoing basis. For these restaurants, if expected performance is not realized, an impairment charge may be recognized in future periods, and such charge could be material.

Previous wording

During both the thirteen and twenty-six weeks ended July 1, 2026 and June 25, 2025, we recognized less than$0.1 million of closed-store reserve expense related to the amortization of ROU assets, property taxes and CAM expenses for our closed locations.

Current wording

During both the thirteen and thirty-nine weeks ended September 30, 2026 and September 24, 2025, we recognized less than$0.1 million of closed-store reserve expense related to the amortization of ROU assets, property taxes and CAM expenses for our closed locations.

Previous wording

For the quarter ended July 1, 2026, interest expense, net, decreased $0.5 million from the comparable period in the prior year. The decrease in interest expense was primarily related to the lower interest rates during the second quarter of 2026 and lower outstanding balances on our 2022 Revolver (as defined below) versus the comparable period in the prior year.

Current wording

For the quarter ended September 30, 2026, interest expense, net, decreased $0.6 million from the comparable period in the prior year. The decrease in interest expense was primarily related to lower outstanding balances on our revolving credit facility versus the comparable period in the prior year partially offset by increased interest rates.

Previous wording

For the year-to-date period ended July 1, 2026, interest expense, net, decreased $0.9 million from the comparable period in the prior year. The decrease in interest expense was primarily related to the lower interest rates during 2026 and lower outstanding balances on our 2022 Revolver (as defined below) versus the comparable period in the prior year.

Current wording

For the year-to-date period ended September 30, 2026, interest expense, net, decreased $1.5 million from the comparable period in the prior year. The decrease in interest expense was primarily related to lower outstanding balances on our revolving credit facility versus the comparable period in the prior year partially offset by increased interest rates.

Previous wording

For the quarter ended July 1, 2026, we recorded an income tax provision of $5.2 million, reflecting an estimated effective tax rate of 28.8%. For the quarter ended June 25, 2025, we recorded an income tax provision of $3.0 million, reflecting an estimated effective tax rate of approximately 29.6%.

Current wording

For the quarter ended September 30, 2026, we recorded an income tax provision of $2.8 million, reflecting an estimated effective tax rate of 28.6%. For the quarter ended September 24, 2025, we recorded an income tax provision of $3.0 million, reflecting an estimated effective tax rate of 28.8%.

Previous wording

For the year-to-date period ended July 1, 2026, we recorded an income tax provision of $8.5 million, reflecting an estimated effective tax rate of 28.8%. For the year-to-date period ended June 25, 2025, we recorded an income tax provision of $5.3 million, reflecting an estimated effective tax rate of approximately 29.7%. The difference between the 21.0% statutory rate and our effective tax rate of 28.8% for theyear-to-date period ended July 1, 2026 is primarily a resultof state tax rates based on apportioned income, the impact of non-tax deductible executive compensation, and tax deficiencies related to stock option exercises, for which the associated tax deductions were lower than the cumulative amount recorded as stock-based compensation expense, partially offset by the impact of higher stock compensation expense deductible for tax related to the vesting of restricted stock awards as compared to the cumulative amount recorded as stock-based compensation expense, and federal targeted job credits.

Current wording

For the year-to-date period ended September 30, 2026, we recorded an income tax provision of $11.3 million, reflecting an estimated effective tax rate of 28.8%. For the year-to-date period ended September 24, 2025, we recorded an income tax provision of $8.3 million, reflecting an estimated effective tax rate of 29.3%. The difference between the 21.0% statutory rate and the effective tax rate of 28.8% for the year-to-date period ended September 30, 2026 is primarily due to state income taxes, net of the federal benefit, and nondeductible executive compensation. Tax deficiencies on stock option exercises, where the tax deductions were lower than the cumulative stock-based compensation expense recorded, also increased the rate. These increases were partially offset by excess tax benefits on the vesting of restricted stock awards, where the tax deductions exceeded the cumulative stock-based compensation expense recorded.

Previous wording

Comparable restaurant sales reflect year-over-year sales changes for comparable company-operated, franchise-operated, and system-wide restaurants. A restaurant enters our comparable restaurant base the first full week after it has operated for fifteen months. Comparable restaurant sales exclude restaurants closed during the applicable period. At July 1, 2026 and June 25, 2025, there were 489 and 485 system-wide comparable restaurants in both periods, respectively, 172 and 171 company-operated restaurants, respectively, and 317 and 314 franchise-operated restaurants, respectively. Comparable restaurant sales indicate the performance of existing restaurants, since new restaurants are excluded. Comparable restaurant sales growth can be generated by an increase in the number of meals sold and/or by increases in the average check amount, resulting from a shift in menu mix and/or higher prices resulting from new products or price increases. Because other companies may calculate this measure differently than we do, comparable restaurant sales as presented herein may not be comparable to similarly titled measures reported by other companies. Management believes that comparable restaurant sales is a valuable metric for investors to evaluate the performance of our store base, excluding the impact of new stores and closed stores.

Current wording

Comparable restaurant sales reflect year-over-year sales changes for comparable company-operated, franchise-operated, and system-wide restaurants. A restaurant enters our comparable restaurant base the first full week after it has operated for fifteen months. Comparable restaurant sales exclude restaurants closed during the applicable period. At September 30, 2026 and September 24, 2025, there were 491 and 485 system-wide comparable restaurants, respectively, 171 and 171 company-operated restaurants, respectively, and 320 and 314 franchise-operated restaurants, respectively. Comparable restaurant sales indicate the performance of existing restaurants, since new restaurants are excluded. Comparable restaurant sales growth can be generated by an increase in the number of meals sold and/or by increases in the average check amount, resulting from a shift in menu mix and/or higher prices resulting from new products or price increases. Because other companies may calculate this measure differently than we do, comparable restaurant sales as presented herein may not be comparable to similarly titled measures reported by other companies. Management believes that comparable restaurant sales is a valuable metric for investors to evaluate the performance of our store base, excluding the impact of new stores and closed stores.

Previous wording

Restaurant contribution and restaurant contribution margin are neither required by, nor presented in accordance with, GAAP. Restaurant contribution is defined as company-operated restaurant revenue less company restaurant expenses which includes food and paper cost, labor and related expenses and occupancy and other operating expenses, where applicable. Restaurant contribution therefore excludes franchise revenue, franchise advertising fee revenue and franchise expenses as well as certain other costs, such as general and administrative expenses, franchise expenses, depreciation and amortization, impairment and closed-store reserves, loss on disposal of assets and other costs that are considered corporate-level expenses and are not considered normal operating costs of our restaurants. Accordingly, restaurant contribution is not indicative of overall Company results and does not accrue directly to the benefit of stockholders because of the exclusion of certain corporate-level expenses. Restaurant contribution margin is defined as restaurant contribution as a percentage of company-operated restaurant revenue.

Current wording

Restaurant contribution and restaurant contribution margin are neither required by, nor presented in accordance with, GAAP. Restaurant contribution is defined as company-operated restaurant revenue less company restaurant expenses which includes food and paper cost, labor and related expenses and occupancy and other operating expenses, where applicable. Restaurant contribution therefore excludes franchise revenue, franchise advertising fee revenue and franchise expenses as well as certain other costs, such as general and administrative expenses, depreciation and amortization, impairment and closed-store reserves, loss on disposal of assets and other costs that are considered corporate-level expenses and are not considered normal operating costs of our restaurants. Accordingly, restaurant contribution is not indicative of overall Company results and does not accrue directly to the benefit of stockholders because of the exclusion of certain corporate-level expenses. Restaurant contribution margin is defined as restaurant contribution as a percentage of company-operated restaurant revenue.

Previous wording

However, depending on macroeconomic conditions, our financial performance and liquidity could be further impacted and could impact our ability to meet certain financial covenants required in our 2022 Credit Agreement (as defined in Note 5, “Long-Term Debt”), specifically the lease-adjusted coverage ratio and fixed-charge coverage ratio.

Current wording

However, depending on macroeconomic conditions, our financial performance and liquidity could be further impacted and could impact our ability to meet certain financial covenants required in our 2026 Credit Agreement (as defined below), specifically the lease-adjusted consolidated leverage ratio and fixed-charge coverage ratio.

Previous wording

For the twenty-six weeks ended July 1, 2026, net cash from operating activities increased by $25.9 million from the comparable period of the prior year. This increase was primarily due to an $8.4 million increase in net income, a $6.2 million favorable change in non-cash and reconciling items and an $11.4 million favorable change in operating assets and liabilities. The favorable change in non-cash and reconciling items was primarily driven by a $4.6 million favorable change in deferred income taxes, a $0.7 million increase in depreciation and amortization, and a $0.6 million increase in losses on the disposal of assets. The favorable change in operating assets and liabilities was primarily driven by favorable changes of $10.3 million in other accrued expenses and current liabilities, $1.0 million in income taxes receivable and payable and $1.0 million in other assets, partially offset by unfavorable changes of $1.4 million in prepaid expenses and other current assets and $0.6 million in accounts payable.

Current wording

For the thirty-nine weeks ended September 30, 2026, net cash from operating activities increased by $18.4 million from the comparable period of the prior year. This increase was primarily due to a $7.9 million increase in net income, a $3.6 million favorable change in non-cash and reconciling items and a $7.0 million favorable change in operating assets and liabilities. The favorable change in non-cash and reconciling items was primarily driven by a $1.3 million increase in depreciation and amortization, a $1.0 million favorable change in deferred income taxes and a $0.5 million increase in losses on the disposal of assets. The favorable change in operating assets and liabilities was primarily driven by favorable changes of $6.0 million in other accrued expenses and current liabilities, $2.5 million in operating lease liabilities and $1.6 million in income taxes receivable and payable, partially offset by unfavorable changes of $3.1 million in accounts payable and $0.4 million in accounts and other receivables.

Previous wording

For the twenty-six weeks ended July 1, 2026, net cash used in investing activities increased by $10.3 million from the comparable period of the prior year. This change was primarily due to an increase in purchase of property and equipment mostly related to restaurant remodeling and new restaurant development during the twenty-six weeks ended July 1, 2026 when compared to the prior year.

Current wording

For the thirty-nine weeks ended September 30, 2026, net cash used in investing activities increased by $12.3 million from the comparable period of the prior year. This change was primarily due to an increase in purchase of property and equipment mostly related to restaurant remodeling and new restaurant development during the thirty-nine weeks ended September 30, 2026 when compared to the prior year.

Previous wording

For the twenty-six weeks ended July 1, 2026, net cash used in financing activities increased by $15.0 million from the comparable period of the prior year. This change was primarily due to a $21.0 million net paydown on the 2022 Revolver (as defined below) during the twenty-six weeks ended July 1, 2026, compared to a $2.0 million net paydown during the twenty-six weeks ended June 25, 2025. The increase was partially offset by a $2.2 million increase in proceeds from the exercise of stock options and the absence of common stock repurchases during the current-year period, compared to $1.8 million of repurchases during the prior-year period.

Current wording

For the thirty-nine weeks ended September 30, 2026, net cash used in financing activities increased by $17.4 million from the comparable period of the prior year. This change was primarily due to a $28.0 million net paydown on our revolving credit facility during the thirty-nine weeks ended September 30, 2026, compared to a $10.0 million net paydown during the thirty-nine weeks ended September 24, 2025, as well as a $0.8 million increase in repurchases of common stock and $0.7 million of deferred financing costs paid in connection with the 2026 Credit Agreement (as defined below). The increase was partially offset by a $2.2 million increase in proceeds from the exercise of stock options.