Bloomin' Brands, Inc.

(UNAUDITED)

1. Description of the Business and Basis of Presentation

Description of the Business -Bloomin’ Brands, Inc. (“Bloomin’ Brands” or the “Company”) owns and operates casual, upscale casual and fine dining restaurants. OSI Restaurant Partners, LLC (“OSI”) is the Company’s primary operating entity. The Company’s restaurant portfolio includes Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill and Fleming’s Prime Steakhouse & Wine Bar. Additional Outback Steakhouse, Carrabba’s Italian Grill and Bonefish Grill restaurants are operated under franchise agreements.

Basis of Presentation -The accompanying interim unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles in the United States (“U.S. GAAP”) for complete financial statements. The Company utilizes a 52-53-week year ending on the last Sunday in December and its fiscal year ending December 28, 2025 will contain 52 weeks. In the opinion of the Company, all adjustments necessary for fair statement of results for the periods presented have been included and are of a normal, recurring nature. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Unless otherwise noted, disclosures within these Notes to Consolidated Financial Statements relate solely to the Company’s continuing operations.

These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 29, 2024. The preparation of the accompanying consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimated.

Reclassifications - The Company reclassified certain immaterial amounts in prior period financial statements to conform to the current period’s presentation. These reclassifications had no effect on previously reported Net (loss) income.

Recently Adopted Financial Accounting Standards - Effective June 30, 2025, the Company elected to early adopt ASU No. 2025-05, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets,” (“ASU No. 2025-05”) on a prospective basis. ASU No. 2025-05 provides a practical expedient permitting an entity to assume that conditions as of the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current accounts receivable and current contract assets. The adoption did not have a material impact on the consolidated financial statements or the related notes.

Recently Issued Financial Accounting Standards Not Yet Adopted - In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” (“ASU No. 2023-09”), which expands existing income tax disclosures, including disaggregation of the Company’s effective income tax rate reconciliation table and income taxes paid disclosures. ASU No. 2023-09 is effective for the Company beginning with the 2025 Form 10-K, with early adoption permitted, and may be applied either prospectively for reporting periods after the effective date or retrospectively to prior periods presented. The Company will adopt this standard in its 2025 Form 10-K on a prospective basis. While the adoption is expected to primarily affect income tax disclosures, it is not anticipated to have a material impact on the Company’s consolidated financial statements.

In November 2024, the FASB issued ASU No. 2024-03, “Income Statement - Reporting Comprehensive Income (Subtopic 220-40): Disaggregation of Income Statement Expenses,” (“ASU No. 2024-03”) which requires detailed disclosures in the notes to financial statements of expense categories within relevant income statement captions including purchases of inventory, employee compensation, depreciation and intangible asset amortization. ASU No. 2024-03 is effective for the Company beginning with the 2027 Form 10-K, with early adoption permitted, and may be applied either prospectively for reporting periods after the effective date or retrospectively to prior periods presented. The Company is currently evaluating the impact ASU No. 2024-03 will have on its disclosures.

Recent accounting guidance not discussed herein is not applicable, did not have or is not expected to have a material impact to the Company.

2. Discontinued Operations

On December 30, 2024 (the “Closing Date”), an indirect wholly owned subsidiary of the Company (the “Seller”) completed the sale of 67% of the ownership interest in its business in Brazil (the “Disposal Group”) to a fund managed by an affiliate of Vinci Partners Investments Ltd. (the “Buyer”) (the “Brazil Sale Transaction”). Following the closing, the Brazil restaurants began operating as unconsolidated franchisees.

The aggregate consideration paid to the Seller consisted of 67% of the enterprise valuation of the Disposal Group in the amount of R$2.06 billion Brazilian Reais, which equaled R$1.4 billion Brazilian Reais (approximately $225.3 million in U.S. Dollars based on the exchange rate on the Closing Date), subject to customary adjustments, and withholding for Brazilian taxes (the “Purchase Price”). On December 30, 2024, the Company received cash proceeds, net of withheld income taxes, of $103.9 million, in U.S. dollars based on the exchange rate on the Closing Date, representing 52% of the Purchase Price. The proceeds were applied to the Company’s revolving credit facility during the thirteen weeks ended March 30, 2025. The second installment, representing 48% of the Purchase Price, is due on or before the first anniversary of the Closing Date (based on the exchange rate on the date of payment) and will generate interest income based on the interbank deposit rate in Brazil until paid.

The sale represents a strategic shift to a primarily franchised model for the Company’s international operations. The assets and liabilities of the Disposal Group were classified as held for sale on the Company’s Consolidated Balance Sheet as of December 29, 2024. For the thirteen and thirty-nine weeks ended September 28, 2025 and September 29, 2024, all sales, direct costs and expenses and income taxes attributable to restaurants classified as discontinued operations have been aggregated to a single caption titled Net income from discontinued operations, net of tax, in the Company’s Consolidated Statements of Operations and Comprehensive (Loss) Income for all periods presented.

As of the Closing Date, the fair value of the Company’s retained interest was $59.9 million based on the proportional enterprise valuation of the Disposal Group, adjusted for debt used by the Buyer to fund a portion of the Purchase Price and to be pushed down to the operating entity subsequent to the second installment. See Note 3 -Equity Method Investmentfor additional details regarding the Company’s retained interest in its Brazil operations.

Net income from discontinued operations, net of tax, in the Company’s Consolidated Statements of Operations and Comprehensive (Loss) Income includes the following for the periods indicated:

(1)Includes royalty expense of $6.6 million and $19.5 million for the thirteen and thirty-nine weeks ended September 29, 2024, respectively, eliminated in consolidation prior to the Brazil Sale Transaction, with the corresponding royalty revenues recorded within Franchise and other revenues from continuing operations in the Company’s Consolidated Statements of Operations and Comprehensive (Loss) Income.

(2)The thirteen and thirty-nine weeks ended September 28, 2025 include $0.7 million and $3.6 million, respectively, of net foreign currency translation gains on contingent consideration assets and indemnification liabilities, as discussed below.

Contingent Consideration Assets and Indemnification Liabilities - On the Closing Date, the Company recognized contingent consideration assets of $29.3 million, primarily judicial deposits, and indemnification liabilities of $6.9 million, primarily labor and tax exposures, within Other assets, net and Other long-term liabilities, net, respectively, on the Company’s Consolidated Balance Sheet in connection with the Brazil Sale Transaction. As of September 28, 2025, the Company’s balance of contingent consideration assets and indemnification liabilities, which are denominated in Brazilian Reais, increased to $34.0 million and $8.0 million, respectively, as a result of fluctuations in foreign exchange rates. All post-closing adjustments related to contingent consideration assets and indemnification liabilities will be reflected in discontinued operations.

3. Equity Method Investment

The Company retained a 33% interest in the franchisee of the Company’s restaurants in Brazil subsequent to the sale, which is accounted for using the equity method of accounting. To ensure timely reporting, the Company records the results of the equity method investment in Brazil on a calendar basis one-month lag.

As of September 28, 2025, the carrying value of the Company’s equity method investment was $64.7 million and is recorded in Equity method investment on its Consolidated Balance Sheet. The Company’s proportionate share of net loss from its equity interest was $0.3 million and $3.4 million for the thirteen and thirty-nine weeks ended September 28, 2025, respectively, and is recorded within Loss from equity method investment, net of tax in the Consolidated Statements of Operations and Comprehensive (Loss) Income.

4. Revenue Recognition

The following tables include the disaggregation of Restaurant sales and franchise revenues by restaurant concept and segment for the periods indicated:

(1)Includes intercompany royalties from Brazil prior to the sale and royalties from Brazil after the sale.

(2)Primarily includes Restaurant sales for Company-owned restaurants in Hong Kong.

The following table includes a detail of assets and liabilities from contracts with customers included on the Company’s Consolidated Balance Sheets as of the periods indicated:

The following table is a rollforward of deferred gift card sales commissions for the periods indicated:

The following table is a rollforward of unearned gift card revenue for the periods indicated:

5. Impairments and Exit Costs

The components of Provision for impaired assets and restaurant closings are as follows for the periods indicated:

(1)For the thirteen and thirty-nine weeks ended September 28, 2025, primarily includes charges related to the 2025 Restaurant Closures, defined below, and $12.0 million of asset impairment charges related tofive underperforming U.S. restaurants. For the thirteen and thirty-nine weeks ended September 29, 2024, primarily includes charges related to the Q2 2024 decision to close nine restaurants in Hong Kong and the closure of 36 predominantly older, underperforming U.S. restaurants (the “2023 Restaurant Closures”).

2025 Restaurant Closures - During the thirteen and thirty-nine weeks ended September 28, 2025, the Company recognized asset impairments and net closure charges in connection with the decision to close 21 U.S. restaurants and not renew the leases of 22 U.S. restaurants, the majority of which expire over the next four years (the “2025 Restaurant Closures”). The closures of the 21 U.S. restaurants were completed during October 2025 with an estimated $5.0 million to $7.0 million of related severance and closure charges to be recorded during the thirteen weeks ended December 28, 2025.

Following is a summary of the 2025 Restaurant Closures expenses recognized in the Consolidated Statements of Operations and Comprehensive (Loss) Income for the periods indicated (dollars in thousands):

6.(Loss) Earnings Per Share

The following table presents the computation of basic and diluted (loss) earnings per share for the periods indicated:

(1)During the thirty-nine weeks ended September 28, 2025, the 2025 Notes matured and were settled in cash and the remaining warrants were terminated. See Note 9 -Convertible Senior Notes for additional details.

(2)Amounts may not add due to rounding.

7. Stock-based Compensation Plans

The following table presents a summary of the Company’s performance-based share units (“PSUs”) and restricted stock units (“RSUs”) activity:

(1)Based on the $12.27 and $7.24 share price of the Company’s common stock on December 27, 2024 and September 26, 2025, the last trading day of the year ended December 29, 2024 and the thirty-nine weeks ended September 28, 2025, respectively.

(2)The weighted average dividend yield was 6.40% and 7.03% for PSUs and RSUs, respectively. For PSUs, a new performance structure was used for grants beginning in 2025. The new structure contains separate performance goals that are set at the beginning of each of thethree annual performance periods and units earned based on performance will cliff vest after three years.

(3)Represents adjustment to 0% payout for PSUs granted during 2022.

(4)For PSUs, the estimated number of units to be issued upon the vesting of outstanding PSUs is based on Company performance projections of performance criteria set forth in the 2023, 2024 and 2025 PSU award agreements.

The following represents unrecognized stock-based compensation expense and the remaining weighted average recognition period as of September 28, 2025:

8. Supplemental Balance Sheet Information

Other current assets, net, consisted of the following as of the periods indicated:

(1)Represents second installment related to Brazil Sale Transaction which includes interest income and foreign currency translation gains. See Note 2 -Discontinued Operations for additional details.

Goodwill and Intangible Assets- The Company performs its annual assessment for impairment of goodwill and other indefinite-lived intangible assets during its second fiscal quarter. During the thirteen weeks ended June 29, 2025, the Company performed a quantitative impairment analysis due to the recent decline in the Company’s market capitalization, while its 2024 assessment was qualitative. In connection with these assessments, the Company didnot record any impairment charges.

The goodwill analysis indicated that all reporting units had fair values that exceeded their carrying values. However, the Outback Steakhouse and Bonefish Grill reporting units had fair values that decreased to approximately 10% above their respective carrying values. The fair values for the Outback Steakhouse and Bonefish Grill reporting units decreased primarily due to lower cash flow estimates, increased discount rates, lower market multiples, and additionally for Bonefish Grill, a lower long-term growth rate, compared to the last quantitative impairment analysis performed during the quarter ended June 25, 2023.

The quantitative impairment analysis for indefinite-lived intangible assets indicated that all trade names had fair values exceeding their carrying values; however, the Outback Steakhouse trade name’s fair value decreased to approximately 15% above its carrying value. Similar to the goodwill analysis, the fair value of the Outback Steakhouse trade name decreased primarily due to lower projected system-wide sales and an increased discount rate.

Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions, estimates and market factors. Key assumptions include cash flow estimates (including sales and operating profit), long-term growth rates, discount rates, royalty rates, market multiples and other market factors. Sales declines, unplanned increases in commodity or labor costs, decreases to the market multiples, increases in discount rates, deterioration in overall economic conditions and challenges in the restaurant industry or any such event may impact the Company’s fair value determinations and may result in future impairment charges. It is possible that changes in circumstances or changes in assumptions and estimates could result in impairment of the Company’s goodwill or other intangible assets. Further, as a result of the decreased fair values, the Outback Steakhouse and Bonefish Grill reporting units and the Outback Steakhouse trade name are at a higher risk of future impairment.

Other assets, net, consisted of the following as of the periods indicated:

(1)Net of accumulated amortization of $2.3 million and $0.6 million as of September 28, 2025 and December 29, 2024, respectively.

Accrued and other current liabilities consisted of the following as of the periods indicated:

Other long-term liabilities, net, consisted of the following as of the periods indicated:

(1)Includes indemnification liabilities in connection with the Brazil Sale Transaction. See Note 2 –Discontinued Operations for additional details.

Long-term debt, net, consisted of the following as of the periods indicated:

(1)Interest rate represents the weighted average interest rate as of the respective periods.

(2)On May 1, 2025, the 2025 Notes were settled using borrowings from the revolving credit facility.

Debt Covenants -As of September 28, 2025 and December 29, 2024, the Company was in compliance with its debt covenants.

9. Convertible Senior Notes

The Company’s 5.00% convertible senior notes due in 2025 (the “2025 Notes”) matured on May 1, 2025 and were settled in cash for $20.7 million, excluding accrued interest. In connection with the maturity of the 2025 Notes, the related convertible note hedges entered into with certain purchasers of the 2025 Notes and/or their respective affiliates and other financial institutions expired. On May 16, 2025, the Company terminated the remaining warrants in cash for $0.4 million.

10. Stockholders’ Equity

Dividends -The Company declared and paid dividends per share during fiscal year 2025 as follows:

In October 2025, the Company’s Board of Directors (the “Board”) suspended the dividend as a component of the Company’s turnaround strategy.

Accumulated Other Comprehensive Income (Loss)-The following table is a rollforward of the components of Accumulated Other Comprehensive Income (Loss) for the periods indicated:

(1)For the thirteen and thirty-nine weeks ended September 28, 2025, represents foreign currency translation adjustments primarily related to the Company’s equity method investment.

11. Derivative Instruments and Hedging Activities

Cash Flow Hedges of Interest Rate Risk -In March 2024 and December 2023, OSI entered into 11 interest rate swap agreements withten counterparties (the “Swap Transactions”) to manage its exposure to fluctuations in variable interest rates that includeone- andtwo-year tenors. The remaining Swap Transactions have an aggregate notional amount of $275.0 million with the following terms:

(1)The weighted average fixed interest rate excludes the term SOFR adjustment and interest rate spread described below.

In connection with the remaining Swap Transactions, the Company effectively converted $275.0 million of its outstanding indebtedness from SOFR, plus a term SOFR adjustment of 0.10% and a spread of 150 to 250 basis points, to the weighted average fixed interest rates within the table above, plus a term SOFR adjustment of 0.10% and a spread of 150 to 250 basis points. The Swap Transactions have an embedded floor of minus 0.10%.

The Swap Transactions have been designated and qualify as cash flow hedges, are recognized on the Company’s Consolidated Balance Sheets at fair value and are classified based on the instruments’ maturity dates. The Company estimates $0.6 million of interest expense will be reclassified from Accumulated Other Comprehensive Income (Loss) to Interest expense, net over the next 12 months related to the Swap Transactions.

The following table presents the fair value and classification of the Company’s swap agreements as of the periods indicated:

(1)See Note 13 -Fair Value Measurements for fair value discussion of the interest rate swaps.

By utilizing the interest rate swaps, the Company is exposed to credit-related losses in the event that the counterparty fails to perform under the terms of the derivative contract. To mitigate this risk, the Company enters into derivative contracts with major financial institutions based upon credit ratings and other factors. The Company continually assesses the creditworthiness of its counterparties. As of September 28, 2025, all counterparties to the Swap Transactions performed in accordance with their contractual obligations.

The Swap Transactions contain provisions whereby the Company could be declared in default on its derivative obligations if the repayment of the underlying indebtedness is accelerated by the lender due to the Company’s default on indebtedness. If the Company had breached any of these provisions as of September 28, 2025 and December 29, 2024, it could have been required to settle its obligations under the Swap Transactions at their termination value of $0.6 million and $0.8 million, respectively. As of September 28, 2025 and December 29, 2024, the Company has not posted any collateral related to the Swap Transactions.

In October 2025, subsequent to the thirteen weeks ended September 28, 2025, OSI entered into eight interest rate swap agreements with eight counterparties (the “2025 Swap Transactions”) to manage its exposure to fluctuations in variable interest rates that include 12- and 21-month tenors. The 2025 Swap Transactions have an aggregate notional amount of $300.0 million with the following terms:

(1)The weighted average fixed interest rate excludes the term SOFR adjustment and interest rate spread described below.

Upon the effective date, as a result of the 2025 Swap Transactions, the Company effectively converted $300.0 million of its outstanding indebtedness from SOFR, plus a term SOFR adjustment of 0.10% and a spread of 150 to 250 basis points, to the weighted average fixed interest rates within the table above, plus a term SOFR adjustment of 0.10% and a spread of 150 to 250 basis points. The 2025 Swap Transactions have an embedded floor of minus 0.10%.

The 2025 Swap Transactions have been designated and qualify as cash flow hedges, will be recognized on the Company’s Consolidated Balance Sheets at fair value and will be classified based on the instruments’ maturity dates.

Non-Designated Hedges

During the fourth quarter of 2024, the Company entered into foreign currency forward contracts to partially offset the foreign currency exchange gains and losses generated by the Brazilian Reais rate risk associated with the purchase price installment payments from the Brazil Sale Transaction. As of September 28, 2025, the Company had R$745.9 million Brazilian Reais (approximately$138.6 million U.S. Dollars) of outstanding notional amounts related to its foreign currency forward contracts. The liability and asset related to the foreign exchange forward contracts as of September 28, 2025 and December 29, 2024, respectively, are not material as they typically mature monthly. As of September 28, 2025 and December 29, 2024, the Company has not posted any collateral related to the foreign currency forward contracts.

The following table summarizes the effects of the Company’s foreign exchange forward contracts on the Consolidated Statements of Operations and Comprehensive (Loss) Income for the periods indicated:

(1)The loss on foreign currency forward contracts, which includes costs in connection with the forward contracts, is partially offset within General and administrative expense by foreign currency exchange gains of $3.6 million and $17.8 million for the thirteen and thirty-nine weeks ended September 28, 2025, respectively, related to the installment receivable from the Brazil Sale Transaction.

The Company’s interest rate swaps and foreign currency forward contracts are subject to master netting arrangements. As of September 28, 2025, the Company elected not to offset derivative positions in its Consolidated Balance Sheet with the same counterparty under the same agreement.

12. Leases

The following table includes a detail of lease assets and liabilities included on the Company’s Consolidated Balance Sheets as of the periods indicated:

(1)Net of accumulated amortization of $4.7 million and $4.0 million as of September 28, 2025 and December 29, 2024, respectively.

Following is a summary of expenses and income related to leases recognized in the Company’s Consolidated Statements of Operations and Comprehensive (Loss) Income for the periods indicated:

(1)Excludes rent expense for office facilities and closed or subleased properties of $3.2 million and $3.6 million for the thirteen weeks ended September 28, 2025 and September 29, 2024, respectively, and $10.3 million and $10.7 million for the thirty-nine weeks ended September 28, 2025 and September 29, 2024, respectively, which is included in General and administrative expense.

The following table is a summary of cash flow impacts to the Company’s Consolidated Financial Statements related to its leases for the periods indicated:

13. Fair Value Measurements

Fair value is the price that would be received for an asset or paid to transfer a liability, or the exit price, in an orderly transaction between market participants on the measurement date. Fair value is categorized into one of the following three levels based on the lowest level of significant input:

Fair Value Measurements on a Recurring Basis -The following table summarizes the Company’s financial assets and liabilities measured at fair value by hierarchy level on a recurring basis as of the periods indicated:

Fair value of each class of financial instruments is determined based on the following:

Fair Value Measurements on a Nonrecurring Basis -Assets and liabilities that are measured at fair value on a nonrecurring basis relate primarily to property, fixtures and equipment, operating lease right-of-use assets, goodwill and other intangible assets, which are remeasured when carrying value exceeds fair value. Carrying value after impairment approximates fair value. The following table summarizes the Company’s assets measured at fair value by hierarchy level on a nonrecurring basis for the periods indicated:

(1)Carrying values measured using discounted cash flow models (Level 3).

(2)Carrying values measured using Level 2 inputs to estimate fair value totaled $4.9 million and $5.2 million for the thirteen and thirty-nine weeks ended September 28, 2025, respectively. All other assets were valued using Level 3 inputs. Third-party market appraisals and executed sales contracts (Level 2) and discounted cash flow models (Level 3) were used to estimate the fair value.

See Note 5 -Impairments and Exit Costs for information regarding impairment charges during the thirteen and thirty-nine weeks ended September 28, 2025. Projected future cash flows, including discount rate and growth rate assumptions, are derived from current economic conditions, expectations of management and projected trends of current operating results. As a result, the Company has determined that the majority of the inputs used to value its long-lived assets held and used are unobservable inputs that fall within Level 3 of the fair value hierarchy.

In the assessment of impairment for operating locations, the Company determines the fair values of individual operating locations using an income approach, which requires discounting projected future cash flows. When determining the stream of projected future cash flows associated with an individual operating location, management makes assumptions, including highest and best use and inputs from restaurant operations, where necessary, and about key variables including the following unobservable inputs: revenue growth rates, controllable and uncontrollable expenses, and asset residual values. In order to calculate the present value of those future cash flows, the Company discounts its cash flow estimates at its weighted-average cost of capital applicable to the country in which the measured assets reside.

Interim Disclosures about Fair Value of Financial Instruments -The Company’s non-derivative financial instruments consist of cash equivalents, accounts receivable, accounts payable and long-term debt. The fair values of cash equivalents, accounts receivable, including the second installment related to the Brazil Sale Transaction, and accounts payable approximate their carrying amounts reported on the Company’s Consolidated Balance Sheets due to their short duration.

Debt is carried at amortized cost; however, the Company estimates the fair value of debt for disclosure purposes. The following table includes the carrying value and fair value of the Company’s debt by hierarchy level as of the periods indicated:

(1)On May 1, 2025, the 2025 Notes matured and were settled in cash. See Note 9 -Convertible Senior Notes for additional details.

14. Income Taxes

NM Not meaningful.

In the U.S., a restaurant company employer may claim a credit against its federal income taxes for FICA taxes paid on certain tipped wages (the “FICA tax credit”). The level of FICA tax credits is primarily driven by U.S. Restaurant sales and is not impacted by costs incurred that may reduce (Loss) income before (benefit) provision for income taxes.

For the thirteen weeks ended September 28, 2025 and September 29, 2024, the benefit for income taxes includes the impact of changes to the estimate of forecasted annual pre-tax book income relative to the respective prior quarter and the benefit of FICA tax credits.

For the thirty-nine weeks ended September 28, 2025, the benefit for income taxes includes the impact of FICA tax credits relative to low forecasted annual pre-tax book income.

For the thirty-nine weeks ended September 29, 2024, the provision for income taxes includes the impact of the non-deductible losses associated with the repurchase of $83.6 million of the outstanding 2025 Notes (the “Second 2025 Notes Partial Repurchase”) recorded in the thirty-nine weeks ended September 29, 2024, which, relative to a pre-tax book loss, resulted in a negative effective income tax rate.

The effective income tax rate for the thirteen weeks ended September 28, 2025 was lower than the Company’s blended federal and state statutory rate of approximately 26% primarily due to the impact of changes to forecasted pre-tax book income relative to prior quarters.

The effective income tax rate for the thirty-nine weeks ended September 29, 2024 was lower than the Company’s blended federal and state statutory rate of approximately 26% primarily due to the impact of the non-deductible losses associated with the Second 2025 Notes Partial Repurchase, which, relative to a pre-tax book loss, resulted in a negative effective income tax rate.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. with the effective dates of certain provisions in OBBBA beginning in 2025 while other provisions begin after 2025. The Company has evaluated the material provisions of OBBBA and estimated its impact on the consolidated financial statements to be immaterial. As additional guidance is published, the Company will continue evaluating the full impact of these legislative changes.

15. Commitments and Contingencies

Litigation and Other Matters - The Company recorded reserves of $4.2 million and $2.3 million for certain of its outstanding legal proceedings as of September 28, 2025 and December 29, 2024, respectively, within Accrued and other current liabilities on its Consolidated Balance Sheets. While the Company believes that additional losses beyond these accruals are reasonably possible, it cannot estimate a possible loss contingency or range of reasonably possible loss contingencies beyond these accruals.

Lease Guarantees - The Company assigned its interest, and is contingently liable, under certain real estate leases. These leases have varying terms, the latest of which expires in 2032. As of September 28, 2025, the undiscounted payments that the Company could be required to make in the event of non-payment by the primary lessees was $11.2 million. The present value of these potential payments discounted at the Company’s incremental borrowing rate as of September 28, 2025 was $8.9 million. In the event of default, the indemnity clauses in the Company’s purchase and sale agreements generally govern its ability to pursue and recover damages for certain of its assigned leases. As of September 28, 2025 and December 29, 2024, the Company’s recorded contingent lease liability was $1.7 million and $1.6 million, respectively.

16. Segment Reporting

The following is a summary of reportable segments:

(1)Includes franchise locations.

Segment accounting policies are the same as those described in Note 2 -Summary of Significant Accounting Policiesin the Company’s Annual Report on Form 10-K for the year ended December 29, 2024. Revenues for all segments include only transactions with customers and exclude intersegment revenues. There were no material transactions among reportable segments. Excluded from Income from operations for U.S. are certain legal and corporate costs not directly related to the performance of the segment, most stock-based compensation expenses, a portion of insurance expenses and certain bonus expenses. The following segment disclosures have been recast to include amounts that relate solely to the Company’s continuing operations. In the tables below, “other” primarily includes amounts related to its Hong Kong subsidiary.

The following table is a summary of revenues by segment for the periods indicated:

The following table presents segment operating income and significant segment expense information for the periods indicated:

(1)Includes depreciation and amortization, general and administrative and impairment expense.

(2)Includes general and administrative expense.

The following table is a reconciliation of segment income from operations to (Loss) income before (benefit) provision for income taxes for the periods indicated:

The following table is a summary of depreciation and amortization by segment for the periods indicated:

The following table is a summary of capital expenditures by segment, excluding non-cash activity, for the periods indicated:

The following table sets forth Total assets by segment as of the periods indicated:

(1)Includes the Company’s equity method investment in Brazil.