v3.26.1
INCOME TAXES
 12 Months Ended
May 31, 2026
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
Total income tax expense was allocated as follows:
Fiscal Year Ended
(in millions)May 31, 2026May 25, 2025May 26, 2024
Earnings from continuing operations$174.9 $136.2 $145.0 
Loss from discontinued operations(2.9)(0.8)(1.7)
Total consolidated income tax expense$172.0 $135.4 $143.3 

The components of earnings from continuing operations before income taxes and the provision for income taxes thereon are as follows:
Fiscal Year Ended
(in millions)May 31, 2026May 25, 2025May 26, 2024
Earnings from continuing operations before income taxes:
U.S.$1,387.3 $1,180.6 $1,169.2 
Foreign1.3 6.6 6.3 
Earnings from continuing operations before income taxes$1,388.6 $1,187.2 $1,175.5 
Income taxes:
Current:
Federal$60.0 $80.9 $99.2 
State and local42.5 54.4 43.5 
Foreign2.7 — 3.0 
Total current$105.2 $135.3 $145.7 
Deferred (principally U.S.):
Federal$62.8 $0.2 $(0.7)
State and local6.9 0.7 — 
Total deferred$69.7 $0.9 $(0.7)
Total income tax expense$174.9 $136.2 $145.0 
The following table is a reconciliation of the U.S. statutory income tax rate to the effective income tax rate from continuing operations included in the accompanying consolidated statements of earnings, pursuant to the disclosure requirements of ASU 2023-09 for the years ended May 31, 2026, May 25, 2025, and May 26, 2024. See Note 1 - Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements for additional details about the adoption of ASU 2023-09.
Fiscal Year Ended
May 31, 2026May 25, 2025May 26, 2024
(in millions)AmountPercentAmountPercentAmountPercent
Tax provision at the U.S. federal statutory rate$291.6 21.0 %$249.3 21.0 %$246.9 21.0 %
State and local income taxes (net of federal benefit) 1
43.73.1 %46.83.9 %38.13.2 %
Foreign tax effects:
     Canada9.40.7 %1.00.1 %0.80.1 %
     Other foreign jurisdictions2.3 0.2 %2.00.2 %2.20.2 %
Effect of cross-border tax laws(3.4)(0.2)%(0.5)— %(0.5)— %
Tax credits:
     FICA tax tip credit2
(164.5)(11.8)%(151.4)(12.8)%(144.0)(12.3)%
     Other(25.0)(1.8)%(16.2)(1.4)%(12.2)(1.0)%
Changes in valuation allowances(3.7)(0.3)%(1.6)(0.1)%0.8 0.1 %
Nontaxable or nondeductible items:
    FICA taxes paid on tips subject to tax credit2
34.62.5 %31.82.7 %30.22.6 %
    Other(11.5)(0.8)%(9.7)(0.8)%(7.4)(0.6)%
Changes in unrecognized tax benefits(5.0)(0.4)%(4.8)(0.4)%(3.5)(0.3)%
Other adjustments6.40.4 %(10.5)(0.9)%(6.4)(0.7)%
Total$174.9 12.6 %$136.2 11.5 %$145.0 12.3 %
1 State taxes in California, Florida, Illinois, New Jersey, and New York comprise the majority (greater than 50%) of the tax effect in this category for the year ended May 31, 2026. State taxes in California, Florida, Illinois, Massachusetts, New Jersey, and New York made up the majority (greater than 50%) of the tax effect in this category for the years ended May 25, 2025 and May 26, 2024.
2 The FICA tax tip credit represents the gross credit amount attributable to Company-paid FICA taxes related to gratuities provided to our employees by our guests. FICA taxes paid on tips subject to tax credit represents the tax deduction that would otherwise be available, if not for the FICA tax tip credit. The net effect of these two amounts eliminates the financial impact of FICA expenses paid by the Company on gratuities provided to our employees by our guests.

As of May 31, 2026, we had estimated current prepaid state and federal income taxes of $19.4 million and $120.4 million, respectively, which is included on our accompanying consolidated balance sheets as prepaid income taxes and estimated current state income taxes payable of $1.3 million which is included on our accompanying consolidated balance sheets as accrued taxes.
As of May 31, 2026, we had unrecognized tax benefits of $20.1 million, which represent the aggregate tax effect of the differences between tax return positions and benefits recognized in our consolidated financial statements, all of which would favorably affect the effective tax rate, if resolved in our favor.
A reconciliation of the beginning and ending amount of unrecognized tax benefits follows:
(in millions)
Balances at May 25, 2025$21.4 
Additions related to current-year tax positions5.0 
Reductions related to prior-year tax positions(1.5)
Net reductions due to settlements with taxing authorities(1.2)
Reductions to tax positions due to statute expiration(3.6)
Balances at May 31, 2026$20.1 
Interest included in income tax expense in our consolidated statements of earnings is as follows:
Fiscal Year Ended
(in millions)May 31, 2026May 25, 2025May 26, 2024
Interest recorded on unrecognized tax benefits$1.8 $1.6 $1.7 
Interest recorded on income tax receivables$(4.2)$(6.3)$(6.9)
Total (benefit) expense$(2.4)$(4.7)$(5.2)

At May 31, 2026, we had $2.8 million accrued for the payment of interest associated with unrecognized tax benefits and $24.8 million accrued as interest receivable on accrued refunds.

For U.S. federal income tax purposes, we participate in the IRS’s Compliance Assurance Process, whereby our U.S. federal income tax returns are reviewed by the IRS both prior to and after their filing. Income tax returns are subject to audit by state and local governments, generally years after the returns are filed. These returns could be subject to material adjustments or differing interpretations of the tax laws. The major jurisdictions in which the Company files income tax returns include the U.S. federal jurisdiction, Canada, and all states in the U.S. that have an income tax. With a few exceptions, the Company is no longer subject to U.S. federal income tax examinations by tax authorities for years before fiscal 2025, and state and local, or non-U.S. income tax examinations by tax authorities for years before fiscal 2021.
The tax effects of temporary differences that give rise to deferred tax assets and liabilities are as follows:
(in millions)May 31, 2026May 25, 2025
Accrued liabilities$131.6 $149.8 
Compensation and employee benefits146.9 136.2 
Lease liabilities1,441.1 1,430.1 
Net operating loss, credit and charitable contribution carryforwards80.3 84.1 
Other4.6 — 
Gross deferred tax assets$1,804.5 $1,800.2 
Valuation allowance(13.2)(19.8)
Deferred tax assets, net of valuation allowance$1,791.3 $1,780.4 
Trademarks and other acquisition related intangibles(335.7)(330.1)
Buildings and equipment(487.3)(409.2)
Capitalized software and other assets(35.2)(33.3)
Lease assets(1,263.2)(1,266.1)
Other(13.5)(20.5)
Gross deferred tax liabilities$(2,134.9)$(2,059.2)
Net deferred tax liabilities$(343.6)$(278.8)

We have deferred tax assets of $22.4 million reflecting the benefit of federal credit carryforwards, before valuation allowance, which expire at various dates between fiscal 2027 and fiscal 2046. We have deferred tax assets of $57.9 million reflecting the benefit of state net operating loss, credit, and charitable contribution carryforwards, before federal benefit and valuation allowance, which expire at various dates between fiscal 2027 and fiscal 2046.

We have taken current and potential future expirations into consideration when evaluating the need for valuation allowances against these deferred tax assets. A valuation allowance for deferred tax assets is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Realization is dependent upon the generation of future taxable income or the reversal of deferred tax liabilities during the periods in which those temporary differences become deductible. We consider the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which our deferred tax assets are deductible, we believe it is more likely than not that we will realize the benefits of these deductible differences, net of the existing valuation allowances at May 31, 2026.
Cash paid for income taxes, net of refunds, was as follows:
Fiscal Year Ended
(in millions)May 31, 2026May 25, 2025May 26, 2024
Federal41.7101.691.0
State
     California10.47.06.4
     New Jersey6.04.64.9
     Other40.333.934.1
Foreign
     Canada9.61.5— 
     Other1
2.42.12.2
Cash paid for income taxes, net of refunds 1
$110.4 $150.7 $138.6 
1 Foreign withholding taxes were previously excluded from disclosures. Fiscal 2025 and 2024 figures were recast for comparability.