Dine Brands Global, Inc. (DIN)

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Management's Discussion and Analysis of our results of operations and financial condition should be read in conjunction with the Condensed Consolidated Financial Statements included in this Form 10-Q. This Item 2 is organized as follows:

•Consolidated Results

•Key Performance Indicators

•Segment Results

•Non-Segment Results

•Liquidity and Capital Resources of the Company

•Critical Accounting Estimates

Consolidated Results

Total revenues increased $10.4 million, largely driven by an $11.9 million increase from the company-owned restaurant revenues from restaurants acquired since the first quarter of 2025. This increase was partially offset by a $1.3 million decrease in franchise revenues primarily driven by lower proprietary product sales due to timing, weaker international franchisee performance and a decrease in franchise termination fees recognized in the current period as compared to the prior year period. In addition, franchise revenues were impacted by a reduction in the number of franchised restaurants due in part to the acquisition of 12 Applebee's restaurants in May 2025 and 12 Applebee's restaurants in February 2026. Total cost of revenues increased $13.3 million primarily due to the increase in company-owned restaurants.

Income before income taxes in the three months ended March 29, 2026 decreased largely due to a decrease in gross profit, increase in interest expense and an increase in general and administrative expenses, partially offset by a decrease in closure and impairment charges and the gain on disposition of assets. The increase in interest expense is primarily the result of the refinancing of our 2025 Class A-2 Notes completed in June 2025 which resulted in increased principal and a higher interest rate. The increase in general and administrative expenses is primarily due to our investment in our dual-branded and company-owned restaurant initiatives. Closure and impairment charges decreased as a result of less one-time lease termination and lease asset impairment costs incurred in the current year as compared to the respective prior year period. Gain on disposition of assets was related to the sale of land and building of two IHOP restaurants.

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Table of Contents

Key Performance Indicators

In addition to revenues, cost of revenues, and gross profit in evaluating the performance of each of our brands, management also considers the following key performance indicators in evaluating our business:

"System sales" are retail sales at IHOP, Applebee’s and Fuzzy's restaurants operated by franchisees reported to the Company and revenues generated at company-owned restaurants. Sales at restaurants that are operated by franchisees are not revenues attributable to the Company. An increase in system sales of franchised restaurants will result in a corresponding increase in our royalty revenues, while a decrease will result in a corresponding decrease in our royalty revenues.

"Domestic same-restaurant sales change" reflects the percentage change in sales of domestic restaurants in any given fiscal period that operated during the comparable prior year period and have been open for at least 18 months. Due to new restaurant openings and restaurant closures, the restaurants open throughout both fiscal periods being compared may be different from period to period.

"Same-restaurant sales change" reflects the percentage change in sales of domestic and international restaurants in any given fiscal period that operated during the comparable prior year period and have been open for at least 18 months. Due to new restaurant openings and restaurant closures, the restaurants open throughout both fiscal periods being compared may be different from period to period.

"Domestic average weekly unit sales" represents the average sales generated per restaurant per operating week during the reporting period. This is calculated by dividing total restaurant sales by the number of operating weeks for all restaurants open during the period. For restaurants that were open for only part of the period, adjustments are made to the number of operating weeks to correspond to the period there were restaurant sales.

"Net development" refers to the overall change in the number of restaurants during a period, calculated as total openings less total closures.

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Table of Contents

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(a) The calculation of franchise sales percentage change and average weekly unit sales excludes restaurants that were closed or acquired by the Company.

(b) Included in the IHOP franchise restaurants closed and IHOP company-owned restaurants opened are 10 restaurants acquired by the Company in March 2025. Included in the Applebee's franchise restaurants closed and Applebee's company-owned restaurants opened are 12 restaurants acquired by the Company in February 2026.

Dual-branded restaurants are defined as restaurants that operate our IHOP and Applebee's restaurant concepts under two separate franchise agreements but within one restaurant location. Because of this, each dual-branded restaurant is counted in both IHOP and Applebee’s restaurant count and activity.

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Table of Contents

As of March 29, 2026, we had 35 dual-branded domestic IHOP and Applebee's restaurant locations. During the three months ended March 29, 2026, we had two existing company-owned Applebee's restaurants which added the IHOP brand, three existing Applebee's franchises which added the IHOP brand, one existing IHOP franchise which added the Applebee's brand, and two new franchise restaurants which added to both brands. This totaled 10 dual-branded domestic openings.

During the three months ended March 30, 2025, we had one existing IHOP franchise which added the Applebee's brand for a total of one dual-branded opening.

As of March 29, 2026, we had 37 dual-branded international IHOP and Applebee's restaurant locations. During the three months ended March 29, 2026, we had five new franchise restaurants which added both brands. This totaled 10 dual-branded international openings.

As of March 30, 2025, we had 19 dual-branded international IHOP and Applebee's restaurant locations. During the three months ended March 30, 2025, we had one existing Applebee's franchise which added the IHOP brand for a total of one dual-branded international opening.

The following table shows the effects of the domestic and international restaurant count methodology described above:

As our dual-branded business expands, we may reevaluate how these restaurants are counted in future disclosures.

IHOP's system domestic same-restaurant sales remained flat for the three months ended March 29, 2026 as compared to the respective prior year period,

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Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations.

General

The following provides a discussion of our results of operations for fiscal 2025 as compared to fiscal 2024 and should be read together with the financial statements included in this Annual Report on Form 10-K. For discussion of our results of operations for fiscal 2024 and 2023 results, please refer to “Management's Discussion and Analysis of Financial Condition and Results of Operations” contained in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 29, 2024. This Item 7 is organized as follows:

•Consolidated Results

•Key Performance Indicators

•Segment Results

•Non-Segment Items

•Liquidity and Capital Resources of the Company

•Critical Accounting Estimates

•Recent Accounting Pronouncements

Consolidated Results

Total revenues increased $67.0 million in fiscal year 2025 compared to fiscal year 2024, largely driven by $95.3 million increase from the Company-owned restaurant segment from restaurants acquired over the last 14 months. This increase was partially offset by a $20.5 million decrease in franchise revenues due to lower system sales and a $7.8 million decrease in rental revenues. Total cost of revenues increased $83.0 million primarily due to an increase in Company-owned restaurant expenses.

Income before income taxes in fiscal year 2025 decreased compared to fiscal year 2024 largely due to increases in closure and impairment charges, decrease in gross profit, increases in general and administrative expenses, and increase in interest expense. The increase in closure and impairment charges is primarily due to a $29 million non-cash impairment charge recorded in the fourth quarter of 2025 related to the Fuzzy's tradename intangible assets. The increase in general and administrative expenses is primarily due to an increase in compensation-related expenses and an increase in professional service fees. The increase in interest expense is primarily the result of the refinancing of our Fixed Rate Senior Secured Notes Series 2025-1 completed in June 2025. This increase is driven by an increase in the interest rate and an increase to the principal, partially offset by a decrease in the Credit Facility interest.

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Key Performance Indicators

In addition to revenue, cost of revenues, and gross profit in evaluating the performance of each of our brands, management also considers the following key performance indicators in evaluating our business:

"System sales” are retail sales at IHOP, Applebee’s and Fuzzy's restaurants operated by franchisees reported to the Company and revenues generated at Company-owned restaurants. Sales at restaurants that are operated by franchisees are not revenues attributable to the Company. An increase in system sales of franchised restaurants will result in a corresponding increase in our royalty revenues, while a decrease will result in a corresponding decrease in our royalty revenues.

“Domestic same-restaurant sales change” reflects the percentage change in sales of domestic restaurants in any given fiscal period that operated during the comparable prior year period and have been open for at least 18 months. Due to new restaurant openings and restaurant closures, the restaurants open throughout both fiscal periods being compared may be different from period to period.

“Same-restaurant sales change” reflects the percentage change in sales of domestic and international restaurants in any given fiscal period that operated during the comparable prior year period and have been open for at least 18 months. Due to new restaurant openings and restaurant closures, the restaurants open throughout both fiscal periods being compared may be different from period to period.

"Domestic average weekly unit sales" represents the average sales generated per restaurant per operating week during the reporting period. This is calculated by dividing total restaurant sales by the number of operating weeks for all restaurants open during the period. For restaurants that were open for only part of the period, adjustments are made to the number of operating weeks to correspond to the period there were restaurant sales.

"Net development" refers to the overall change in the number of restaurants during a period, calculated as total openings less total closures.

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(a)Applebee's System same-restaurant sales change and Franchise same-restaurant sales change for fiscal year 2023 was 0.7% and 0.7%, respectively.

(b)The franchise sales percentage change for 2025 was impacted by the acquisition of 47 Applebee's restaurants in November 2024, 10 IHOP restaurants in March 2025, and 12 Applebee's restaurants in May 2025 now reported as company-owned.

(c)Included in the IHOP franchise restaurants closed and IHOP company-owned restaurants opened are 10 restaurants acquired by the Company in March 2025. Included in the Applebee's franchise restaurants closed and Applebee's company-owned restaurants opened are 12 restaurants acquired by the Company in May 2025 and 56 restaurants acquired by the Company in November 2024.

(d)Included in the Applebee's franchise restaurants opened and Applebee's company-owned restaurants closed are nine restaurants refranchised by the Company in 2024.

Dual-branded restaurants are defined as restaurants that operate our IHOP and Applebee's restaurant concepts under two separate franchise agreements but within one restaurant location. Because of this, each dual-branded restaurant is counted as part of both IHOP and Applebee’s restaurant count and activity.

As of December 28, 2025, we had 27 dual-branded domestic IHOP and Applebee's restaurant locations. Of these 27 locations, we had 26 existing IHOP or Applebee’s restaurants which added a second brand and one new restaurant which added both brands, totaling 28 dual-branded domestic openings.

As of December 28, 2025, we had 32 dual-branded international IHOP and Applebee's restaurant locations. Of these 32 locations, we had 10 existing IHOP or Applebee’s restaurants which added a second brand and four new restaurants which added both brands, totaling 18 dual-branded international openings in 2025. The remaining dual-branded locations were opened prior to 2025.

As of December 29, 2024, we had 18 dual-branded international IHOP and Applebee's restaurant locations. Of these 18 locations, we had four existing IHOP or Applebee’s restaurants which added a second brand and seven new restaurants which added both brands, totaling 18 dual-branded international openings in 2024. The remaining dual-branded locations were opened prior to 2024.

As our dual-branded business expands, we may reevaluate how these restaurants are counted in future disclosures.

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IHOP’s system domestic same-restaurant sales increased 0.3% for the three months ended December 28, 2025 and decreased 1.5% for the year ended December 28, 2025, as compared to the same respective periods of 2024. The increase for the three months ended December 28, 2025 was primarily driven by an increase in traffic, partially offset by a decrease in average check. The decrease for the year was primarily due to a decrease in average check, resulting from the introduction of our new everyday value menu.

Based on data from Black Box Intelligence, a restaurant sales reporting firm (“Black Box”), IHOP domestic same-restaurant sales outperformed for the three months ended December 28, 2025 and underperformed for the twelve months ended December 28, 2025 in the family dining category (excluding IHOP), as compared with the same respective periods of fiscal 2024. According to Black Box, the family dining category experienced a decrease in same-restaurant sales resulting from a decrease in customer traffic, partially offset by an increase in average customer check for the twelve months ended December 28, 2025.

(1) Primarily to-go, delivery and catering sales.

IHOP's off-premise sales for the three and twelve months ended December 28, 2025 increased by $6.4 million and $6.3 million respectively, as compared to the same respective periods of fiscal 2024 primarily due to the brand's focus on delivery promotions and catering services.

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Applebee’s system domestic same-restaurant sales decreased 0.4% for the three months ended December 28, 2025 and increased 1.3% for the year ended December 28, 2025, as compared to the same respective periods of 2024. The decrease for the three months ended December 28, 2025 was primarily due to a decrease in traffic, partially offset by an increase in average check. The increase for the year ended December 28, 2025 was primarily due to an increase in average check resulting from menu price increases, partially offset by additional value offerings.

Based on data from Black Box, Applebee's domestic same-restaurant sales for the three and twelve months ended December 28, 2025 underperformed the casual dining category (excluding Applebee's) as compared with the same respective periods of fiscal 2024. Black Box reported the casual dining category experienced strong same-restaurant sales increase for the twelve months ended December 28, 2025 driven by an increase in average customer check.

(1) Primarily to-go, delivery and catering sales.

Applebee's off-premise sales for the three and twelve months ended December 28, 2025 increased $2.3 million and $7.6 million, respectively, as compared with the same respective periods of fiscal 2024, primarily due to limited time offers paired with digital promotions to encourage more off-premise occasions.

Domestic Same-Restaurant Sales - Fuzzy's

Fuzzy's system domestic same-restaurant sales decreased 0.8% for the three months ended December 28, 2025 and decreased 7.0% for the year ended December 28, 2025, as compared to the same respective periods of 2024. The decrease for the three and twelve months ended December 28, 2025 was primarily due to a decrease in traffic, partially offset by an increase in average check, resulting primarily from menu price increases.

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Segment Results

Our total franchise segment profit decreased $3.8 million in 2025 compared to 2024.

Franchise revenues decreased as a result of the following:

•IHOP franchise revenue decreased $6.9 million primarily due to a decrease in royalty revenue and a decrease in proprietary product sales. The decrease in royalty revenue and proprietary product sales was primarily due to a 1.5% decrease in franchise domestic same-restaurant sales and a decrease in the number of franchise restaurants due to the acquisition of 10 IHOP company-owned restaurants in March 2025.

•Applebee’s franchise revenue decreased $2.6 million primarily due to a decrease in royalty revenue partially offset by an increase in termination fees. The decrease in royalty revenue was primarily due to a decrease in the number of franchise restaurants due in part to the acquisition of our 47 Applebee’s company-owned restaurants in November 2024 and 12 Applebee’s company-owned restaurants in May 2025. This decrease was partially offset by a 1.4% increase in franchise domestic same-restaurant sales.

•Fuzzy’s franchise revenue decreased $2.3 million primarily due to a decrease in royalty revenue and a decrease in proprietary product sales. The decrease in royalty revenue and proprietary product sales was primarily due to a 7.0% decrease in franchise domestic same-restaurant sales and a decrease in the number of franchise restaurants.

•Advertising revenue decreased $8.7 million due to the decrease in the number of franchise restaurants as noted above and a 1.5% decrease in IHOP domestic same-restaurant sales, partially offset by a 1.4% increase in Applebee’s domestic same-restaurant sales.

Franchise expenses decreased as a result of the following:

•IHOP franchise expenses decreased $2.8 million primarily due to a decrease in the cost of proprietary sales and a decrease in franchisor advertising contributions as compared to the prior year.

•Applebee’s franchise expenses increased $5.3 million primarily due to an increase in bad debt expense.

•Fuzzy’s franchise expense decreased $2.8 million primarily due to a franchisor advertising contribution in the prior year.

•Advertising expenses decreased $16.4 million primarily due to a corresponding decrease in the number of franchise restaurants and a 1.5% decrease in IHOP domestic same-restaurant sales, partially offset by a 1.4% increase in Applebee's franchise domestic same-restaurant sales.

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During fiscal year 2025, the Company owned 72 restaurants compared to 48 restaurants in fiscal year 2024. The change in company-owned restaurant revenue and expenses is primarily driven by the increase in the number and timing of restaurants acquired during the fiscal years 2025 and 2024. Segment loss for the company‑owned restaurant for the twelve months ended December 28, 2025 was primarily due to costs of transitioning the restaurants, including expenditures and delays related to obtaining liquor licenses and closures from remodeling activities.

Rental operations primarily relate to IHOP franchise restaurants that were developed prior to 2003. Rental revenues are primarily derived from operating leases and interest income from real estate leases. Rental expenses are costs of leases and interest expense of leases on certain franchise restaurants.

Rental segment profit for the year ended December 28, 2025 decreased compared to the prior fiscal year primarily due to lease terminations resulting from restaurant closures and the impact of company-acquired IHOP restaurants in March 2025 for which we previously collected rental revenues as the lessor from the franchisee.

Non-Segment Items

Total general and administrative expenses for 2025 increased $7.1 million, primarily due to an increase in compensation-related expenses and professional service fees, partially offset by a $3.4 million recovery of franchise fees from a settlement with a franchisee.

Interest expense, net, increased $5.9 million in 2025, primarily due to the refinancing of our Series 2025-1 6.720% Fixed Rate Senior Secured Notes, Class A-2 at a higher interest rate and an increase to the principal, partially offset by a decrease in the Credit Facility interest.

As part of the refinancing, the Company repaid the entire outstanding balance of approximately $594.0 million of its 2019 Class A-2-II Notes and recognized a $0.9 million loss on extinguishment of debt from the refinancing in June 2025.

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Closure charges

For the year ended December 28, 2025, we recorded $5.0 million of closure charges primarily comprised of $3.6 million for restaurant closure costs related to IHOP restaurants closed in 2025 or earlier. This includes $2.0 million related to two leased properties we acquired in March 2025 and closed during 2025 related to the acquisition and closure of certain IHOP restaurants. We also incurred $0.7 million related to the exit of office space in the Leawood, Kansas restaurant support center.

The closure charges of $2.2 million for the year ended December 29, 2024 were $1.5 million for revisions to existing reserves, for approximately 21 IHOP restaurants closed prior to 2023, and $0.6 million related to the office space in the Leawood, Kansas restaurant support center referenced above.

Intangible assets impairment charges

In the fourth quarter of 2025, the Company determined the Fuzzy's tradename intangible asset was impaired and recorded a $29.0 million noncash impairment charge. In the fourth quarter of 2024, we wrote off goodwill of $7.1 million related to our acquisition of Fuzzy's. See Note 2 - Basis of Presentation and Summary of Significant Accounting Policy, Note 6 - Goodwill and Note 7 - Other Intangible Assets of the Notes to the Consolidated Financial Statements.

Asset Impairment Charges

The $6.0 million impairment charge of other assets for the year ended December 28, 2025 primarily relates to $2.7 million of off-market leases attributable to the acquisition and closure of certain IHOP restaurants in March 2025, $2.0 million write-off of work-in-process assets associated with the transition of Applebee's to a new point-of-sale platform, and a $1.0 million write off of an investment the Company had in a robotic automation company focused on developing automation solutions for the food industry.

Amortization of Intangible Assets

Amortization of intangible assets primarily relates to Applebee's and Fuzzy's franchise rights. See Note 7 - Other Intangible Assets, in the Notes to the Consolidated Financial Statements for additional information.

Gain on Disposition of Assets

The gain on disposition of assets for the year ended December 28, 2025 primarily relates to the early termination of a finance lease and the release of certain financing obligations in 2025 compared to a gain on the refranchising of nine Applebee's restaurants simultaneously acquired with 47 Applebee's restaurants in 2024.

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The fiscal year 2025 effective tax rate of 32.0% was different than the statutory Federal income tax rate of 21% primarily due to state and local taxes and a lower tax deduction related to stock-based compensation.

The fiscal year 2024 effective tax rate of 27.5% was different than the statutory Federal income tax rate of 21% primarily due to state and local taxes and a lower tax deduction related to stock-based compensation.

Liquidity and Capital Resources of the Company

Our total cash balances including restricted cash, net of revolving credit facility borrowings, at December 28, 2025 and December 29, 2024 were as follows:

Cash Flows

In summary, our cash flows for the years ended December 28, 2025 and December 29, 2024 were as follows:

Operating Activities

Cash provided by operating activities decreased $19.2 million during the current fiscal year compared to the same period of the prior year. This decrease was primarily attributable to the decrease from operating performance of company restaurants and increase in incentives paid to franchisee, partially offset by a decrease in income tax payments during the fiscal year.

Investing Activities

Investing activities used net cash of $31.6 million for the year ended December 28, 2025 compared to using net cash of $8.5 million during the comparable prior period. The increase in cash used in investing activities is largely driven by the remodels and construction of the company-owned restaurants and decrease of principal receipts from notes and equipment contracts receivables offset by the decrease in restaurant reacquisition activity.

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The following table represents the timing of principal receipts from the Company's long-term receivables for equipment, real estate leases receivable, and other notes receivable from franchisees as of December 28, 2025:

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(1)Equipment leases receivable extend through the year 2037.

(2)Real estate leases receivable extend through the year 2046.

(3)Other notes receivable extend through the year 2032.

Financing Activities

Cash flows used in financing activities increased $52.6 million for the year ended December 28, 2025. The increase in cash used in financing activities of $52.6 million was primarily due to the increase of $48.6 million in repurchases of common stock and repayment and issuance of long-term debt of $5.6 million including payment of debt issuance costs. There were no repayment or issuance of long-term debt during the year ended December 29, 2024.

Long-Term Debt

Key provisions of our long-term debt potentially impacting liquidity are summarized below. See Note 8 - Long-Term Debt, of the Notes to the Consolidated Financial Statements, for additional detail on long-term debt, including the balances outstanding as of December 28, 2025 and December 29, 2024.

Instruments

Our long-term debt includes two series of fixed rate senior secured notes, the Series 2023-1 7.824% Fixed Rate Senior Secured Notes, Class A-2 in an initial aggregate principal amount of $500 million (the "2023 Class A-2 Notes") and the Series 2025-1 6.720% Fixed Rate Senior Secured Notes, Class A-2 in an initial aggregate principal amount of $600 million (the "2025 Class A-2 Notes" and, together with the 2023 Class A-2 Notes, the "Class A-2 Notes").

Our long-term debt also includes the Credit Facility that allows for drawings up to $325 million of variable funding notes on a revolving basis and the issuance of letters of credit. As of December 28, 2025, we had drawn $100.6 million, which includes $0.6 million of letters of credit. The weighted average interest rate on Credit Facility borrowings for the period outstanding during the year ended December 28, 2025 was 6.78%.

Maturity

The final maturity of the 2023 Class A-2 Notes is in March 2053, but it is anticipated that, unless repaid earlier, to the extent permitted under the Indenture, the 2023 Class A-2 Notes will be repaid in June 2029. The final maturity of the 2025 Class A-2 Notes is in June 2055, but it is anticipated that, unless repaid earlier, the 2025 Class A-2 Notes will be repaid in June 2030 (together with the 2023 Class A-2 Notes and 2025 Class A-2 Notes, the "Class A-2 Notes").

While the Class A-2 Notes are outstanding, payment of principal and interest is required to be made on the Class A-2 Notes on a quarterly basis. The payment of principal on the Class A-2 Notes may be suspended when the leverage ratio for the Company and its subsidiaries is less than or equal to 5.25x. As of December 28, 2025, our leverage ratio was approximately 4.8x. Exceeding the leverage ratio of 5.25x does not violate any covenant related to the Class A-2 Notes.

The renewal date of the Credit Facility is June 2030, subject to two additional one-year extensions at the option of the Company upon the satisfaction of certain conditions.

On February 16, 2023, our Company's Board of Directors authorized a debt repurchase program of up to $100 million. Repurchases of the Company's debt, if any, are expected to reduce future cash interest payments, as well as future amounts due at maturity or upon redemption. Under the authorization, the Company may make repurchases of the Company's debt from time to time in the open market or in privately negotiated transactions upon such terms and at such prices as management may determine.

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Make-whole Premiums

We may voluntarily repay the Class A-2 Notes at any time; however, if repaid prior to certain dates we would be required to pay make-whole premiums. As of December 28, 2025, the make-whole premium associated with voluntary prepayment of the 2023 Class A-2 Notes was approximately $17.4 million and for the 2025 Class A-2 Notes was approximately $37.1 million. We also would be subject to a make-whole premium in the event of a mandatory prepayment required following certain rapid amortization events or certain asset dispositions.

Covenants and Restrictions

Our long-term debt is subject to a series of covenants and restrictions customary for transactions of this type, including maintenance of a debt service coverage ratio ("DSCR"). In general, the DSCR ratio is net cash flow for the four quarters preceding the calculation date divided by the total debt service payments of the preceding four quarters. Failure to maintain a DSCR greater than 1.75x can trigger events causing required immediate payments of our Class A-2 Notes and Credit Facility.

Our DSCR for the reporting period ended December 28, 2025 was approximately 3.0x.

Capital Allocation

Dividends

During the fiscal years ended December 28, 2025, December 29, 2024 and December 31, 2023, we declared and paid dividends on common stock as shown in Note 11 - Stockholders' Deficit, of the Notes to the Consolidated Financial Statements. On February 20, 2026, our Board of Directors declared a first quarter 2026 cash dividend of $0.19 per share of common stock, payable on April 10, 2026 to the stockholders of record as of the close of business on March 18, 2026.

Share Repurchases

On February 17, 2022, our Board of Directors authorized a share repurchase program, effective April 1, 2022, of up to $250 million (the "2022 Repurchase Program"). A summary of shares repurchased under the 2022 Repurchase Program, during the year ended December 28, 2025 and cumulatively, is as follows:

See Note 11 - Stockholders' Deficit, of the Notes to the Consolidated Financial Statements included in this report for shares repurchased in fiscal 2025, 2024 and 2023.

From time to time, we also repurchase shares owned and tendered by employees to satisfy tax withholding obligations on the vesting of restricted stock awards. Shares are deemed purchased at the closing price of our common stock on the vesting date. See Part II, Item 5 - Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities for detail on this stock repurchase activity during the twelve months ended December 28, 2025.

Adjusted Free Cash Flow

We define “adjusted free cash flow” for a given period as cash provided by operating activities, plus receipts from notes and equipment contract receivables, less additions to property and equipment. Management uses this liquidity measure in its periodic assessments of, among other things, the amount of cash dividends per share of common stock and repurchases of common stock and we believe it is important for investors to have the same measure used by management for that purpose. Adjusted free cash flow does not represent residual cash flow available for discretionary purposes.

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Adjusted free cash flow is a non-GAAP measure. This non-GAAP measure is not defined in the same manner by all companies and may not be comparable to other similarly titled measures of other companies. Non-GAAP measures should be considered in addition to, and not as a substitute for, the U.S. GAAP information contained within our financial statements. Reconciliation of the cash provided by operating activities to adjusted free cash flow is as follows:

The decrease in adjusted free cash flow in 2025 compared to 2024 was primarily due to the increase in additions to property and equipment and the decrease in cash provided by operating activities, which was discussed in preceding section of this Management's Discussion & Analysis.

As of December 28, 2025, we had contractual obligations to repay debt, make payments under operating leases, finance leases and financing obligations, and to purchase certain goods and services. Material cash requirements to satisfy these obligations were as follows:

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(1) See referenced note of Notes to the Consolidated Financial Statements for additional information about the obligation.

See Note 10 - Commitments and Contingencies, of the Notes to the Consolidated Financial Statements, for a description of the Company's lease guarantees.

We believe that our unrestricted cash and cash equivalents on hand, cash flow from operations and the borrowing capacity available under our Credit Facility will provide us with sufficient liquidity for at least the next twelve months.

Critical Accounting Estimates

Our significant accounting policies are comprehensively described in Note 2 - Basis of Presentation and Summary of Significant Accounting Policies, of the Notes to the Consolidated Financial Statements contained in Part II, Item 8 of this Form 10-K. We believe the accounting policies discussed below, which are important in the preparation of our consolidated financial statements, require a higher degree of judgment or complexity in the preparation of our consolidated financial statements. In exercising these judgments, we make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. Actual results could differ from our estimates and judgments, which could significantly affect our reported results of operations, financial condition and cash flows in the future.

Goodwill and Indefinite-lived Intangible Assets

Goodwill and intangible assets considered to have an indefinite life are required to be tested for impairment annually or more frequently if indicators of impairment exist. Such indicators include, but are not limited to, events or circumstances such as a significant adverse change in our business, climate of the business, unanticipated competition, a loss of key personnel, adverse legal or regulatory developments or a significant decline in the market price of our common stock.

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If no indicators of impairment exist, we perform our annual impairment test of goodwill and indefinite-lived intangible assets annually in the fourth fiscal quarter. In doing so, we first perform a qualitative assessment of whether it is more likely than not that an impairment exists. Factors considered in this assessment include, but are not limited to, macro-economic conditions, market and industry conditions, cost considerations, the competitive environment, share price fluctuations, overall financial performance and results of past impairment tests. If we qualitatively determine that it is more likely than not that an impairment exists, we perform a quantitative impairment test. Alternatively, in any given year, we may elect to skip the qualitative assessment and only perform a quantitative assessment of impairment.

Goodwill is tested for impairment at our reporting units. Reporting units are operating segments or one level below an operating segment. In performing a quantitative test for impairment of goodwill, we compare the carrying value of a reporting unit to its fair value. We primarily use a discounted cash flow method of valuation to determine the fair value of a reporting unit. In addition, we may use a market approach that includes the guideline public company method to determine the fair value of a reporting unit or to compare to the value derived from our discounted cash flow. Significant assumptions made by management in estimating fair value under the discounted cash flow model include restaurant sales trends, future development plans, restaurant closures, cost of revenues, operating expenses, and an appropriate discount rate based on our estimated cost of equity capital and after-tax cost of debt. Significant assumptions used to determine fair value under the guideline public company method include the selection of guideline companies and the valuation multiples applied. We believe our assumptions and valuation methodologies are consistent with those that would be used by a market participant.

Our indefinite-lived intangible assets have primarily consisted of the Applebee's and Fuzzy's tradenames. In performing a quantitative impairment test of these, we primarily use the relief from royalty method under the income approach of valuation. Significant assumptions used to determine fair value under the relief from royalty method include future trends in system sales, the royalty rate applied to system sales, and the discount rate used to calculate the present value of the forecasted cash flow stream.

There is an inherent degree of uncertainty in preparing any forecast of future results. Future trends in system sales are dependent to a large degree on national, regional and local economic conditions, and, to a lesser degree, on global economic conditions, particularly those conditions affecting the demographics of the guests that frequently patronize our restaurants. There are numerous potential events that could reasonably be expected to negatively affect the forecast of system sales, from a decrease in customers' disposable income to an unexpected event such as a global pandemic. As a result, our restaurants could experience a decline in system sales as a result of numerous factors.

During the year ended December 28, 2025, the Company performed a qualitative test of goodwill and the Applebee’s tradename and a quantitative test of Fuzzy's tradename, using the approaches described above. Based on our qualitative assessment of goodwill and the Applebee’s tradename we determined it was more likely than not that the fair value of the reporting units and Applebee’s tradename were greater than their respective carrying values. Our quantitative test of the Fuzzy’s tradename showed that the fair value was less than its carrying value and we recorded a non-cash impairment charge of $29.0 million in the fourth quarter. In fiscal year 2024, our quantitative test of goodwill determined that the fair value of the Fuzzy’s reporting unit was less than its carrying value and we recorded a non-cash impairment charge of $7.1 million during the year.

Property and Equipment and Finite-Lived Intangible Assets

The Company assesses whether property and equipment and finite-lived intangible assets that are held and used are impaired whenever events or changes in circumstances indicate the carrying amount may not be recoverable. These assets are primarily made up of property and equipment and right-of-use ("ROU") assets of Company-owned restaurants, ROU assets leased or subleased to franchisees and Applebee’s and Fuzzy’s franchising rights. When there is an indication an asset may not be recoverable, the analysis requires the asset to be grouped with other assets used to generate cash flows that are largely independent of cash flows generated by other assets. The sum of the estimated undiscounted future cash flows of the group is compared to its carrying amount. If the carrying amount of the group of assets exceeds the sum of the estimated undiscounted future cash flows, the fair value of the group of assets is determined. The fair value of the group of assets is primarily determined using the discounted cash flows. An impairment charge is recorded for the amount by which the group’s carrying amount exceeds its fair value. For assets of Company-owned restaurants and ROU assets leased or subleased, we generally determine the individual restaurant to be the group of assets. For property and equipment and finite-lived intangible assets held for sale, the group of assets is written down to its fair value, less costs to sell.

Income Taxes

We provide for income taxes based on our estimate of US and foreign income tax liabilities. We make certain estimates and judgments in the calculation of tax expense, the resulting tax liabilities and in the recoverability of deferred tax assets that arise from temporary differences between the financial statement recognition of revenue and expense and recognition of those for tax reporting.

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Deferred tax accounting requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that a portion or all of a deferred tax asset will not be realized. When we establish or reduce the valuation allowance, our income tax expense will increase or decrease, respectively, in the period such determination is made. Tax laws are complex and subject to different interpretations by the taxpayers and respective governmental authorities.

Recent Accounting Pronouncements

See Note 2 - Basis of Presentation and Summary of Significant Accounting Policies, of the Notes to the Consolidated Financial Statements included in this report, for a description of accounting standards we adopted in the current fiscal year and newly issued accounting standards that may impact us in the future.