DISCONTINUED OPERATIONS

4 Months Ended

Jan. 18, 2026

Discontinued Operations and Disposal Groups [Abstract]

Del Taco - On October 15, 2025, the Company entered into a Stock Purchase Agreement (the “Purchase Agreement”) with the Buyer and Buyer Guarantor to sell to Buyer all of the issued and outstanding equity interests of Del Taco, which owns and operates the Company’s Del Taco restaurant operations, for an aggregate purchase price of $115.0 million in cash, subject to certain closing cash, working capital, debt and transaction expense adjustments. The Company is also obligated to indemnify the Buyer up to $10.0 million for certain claims within a one-year period. The transaction closed on December 22, 2025 (the “Del Taco Sale”).

As the Del Taco Sale represents a strategic shift that will have a major effect on our operations and financial results, the Del Taco results are classified as discontinued operations in our condensed consolidated statements of earnings (loss) and our condensed consolidated statements of cash flows for all periods presented. Prior year results have been recast to conform with the current year presentation.

We also entered into a Transition Services Agreement with the Buyer pursuant to which the Buyer is receiving certain services (the “Services”) to enable it to operate the Del Taco business after the closing of the Del Taco Sale. The Services include information technology, finance and accounting, human resources, supply chain and other corporate support services. The Company recorded $0.9 million related to the Services in the first quarter of 2026 as a reduction of selling, general and administrative expenses in the condensed consolidated statements of earnings (loss).

The following table summarizes the Del Taco results for each period prior to the sale (in thousands, except per share data):


	Sixteen Weeks Ended
	January 18, 2026 (1)		January 19, 2025
Company restaurant sales	$	48,713	$	67,650
Franchise revenues	21,509		30,724
Company restaurant costs	(43,199)		(58,309)
Franchise costs	(12,944)		(22,813)
Selling, general, and administrative expenses (2)	(7,018)		(9,523)
Depreciation and amortization (3)	(882)		(5,812)
Pre-opening costs	(50)		(19)
Other operating expense, net	(570)		(972)
Transaction-related costs (4)	(7,817)		—
Gains on the sale of company-operated restaurants	—		2,806
Interest expense, net	1		(46)
Operating (loss) earnings from discontinued operations before income taxes	(2,257)		3,686
Loss on Del Taco sale	(47,428)		—
(Losses) earnings from discontinued operations and before income taxes	(49,685)		3,686
Income tax (benefit) expense (5)	(32,838)		996
(Losses) earnings from discontinued operations, net of income taxes	(16,847)		2,690

Net (loss) earnings per share from discontinued operations
Basic	$	(0.88)	$	0.14
Diluted	$	(0.88)	$	0.14

____________________________

(1)Del Taco operating results include only twelve weeks of activity through the sale date on December 22, 2025.

(2)Selling, general and administrative expenses presented in the table above include corporate costs directly in support of Del Taco operations. All other corporate costs were classified in results of continuing operations.

(3)Depreciation and amortization ceased upon classification of the Del Taco assets as held for sale during the quarter.

(4)Transaction-related costs are comprised primarily of professional fees for accounting and legal, which were not contingent fees included in loss on sale calculation.

(5)Income tax benefit in 2026 is primarily due to utilization of capital loss from the Del Taco sale, net of valuation allowance against excess capital loss carryforward to expire in fiscal year 2031.

The following is a reconciliation of the loss recorded for the Del Taco sale (in thousands):


Net proceeds received from the Del Taco Sale (1)	$	119,086

Del Taco assets:
Cash	$	421
Accounts and other receivables, net	14,048
Inventories	1,688
Prepaid expenses	848
Other current assets	1,508
Property and equipment, net	99,790
Operating lease right-of-use assets	369,349
Intangible assets, net	9,803
Trademarks	105,600
Other assets, net	14,014
Total Del Taco assets	$	617,069
Del Taco liabilities:
Current maturities of long-term debt	$	31
Current operating lease liabilities	21,551
Accounts payable	12,986
Accrued liabilities	21,281
Long-term debt, net of current maturities	245
Long-term operating lease liabilities, net of current portion	349,616
Deferred tax liabilities	23,405
Other long-term liabilities, including note payable	26,390
Total Del Taco liabilities	$	455,505

Other transaction costs incurred as part of the Del Taco sale (2)	$	4,950

Loss on sale of Del Taco before income taxes	$	(47,428)

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(1)The proceeds received from the Del Taco Sale include working capital adjustments outlined in the Purchase Agreement, which must be finalized within 60 days after the closing date.

(2)Costs directly incurred as a result of the Del Taco Sale, including investment bank fees and employee transaction awards.

The assets being sold and liabilities being assumed by the Buyer were classified as held-for-sale during the first quarter of 2026. As such, prior year balances have been recast to conform with this presentation. Upon classification of the Del Taco assets as held for sale, the assets were no longer depreciated. Proceeds from the Del Taco Sale have been presented in the condensed consolidated statement of cash flows within cash provided by discontinued operations in investing activities.

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