Discontinued Operations

6 Months Ended

Jun. 29, 2025

Discontinued Operations and Disposal Groups [Abstract]

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 payment, representing 48% of the Purchase Price, is due on 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 twenty-six weeks ended June 29, 2025 and June 30, 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 Income (Loss) 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 payment. See Note 3 - Equity Method Investment for additional details regarding the Company’s retained interest in its Brazil operations.

, in the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss) includes the following for the periods indicated:


	THIRTEEN WEEKS ENDED				TWENTY-SIX WEEKS ENDED
(dollars in thousands)	JUNE 29, 2025		JUNE 30, 2024		JUNE 29, 2025		JUNE 30, 2024



Revenues	$	—	$	125,799	$	—	$	258,609






Operating costs and expenses	—		123,226		—		249,800
Gain on sale of Brazil business (1)	1,672		—		4,575		—


Income from operations	1,672		2,573		4,575		8,809


Provision (benefit) for income taxes	893		(1,082)		4,050		2,246
Net income from discontinued operations, net of tax	$	779	$	3,655	$	525	$	6,563

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(1)The thirteen and twenty-six weeks ended June 29, 2025 include $1.3 million and $2.9 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 June 29, 2025, the Company’s balance of contingent consideration assets and indemnification liabilities, which are denominated in Brazilian Reais, increased to $33.1 million and $7.8 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.

Discontinued Operations