v3.26.1
Revenue Recognition
 6 Months Ended
Jun. 28, 2026
Revenue from Contract with Customer [Abstract]  
Revenue Recognition
5. Revenue Recognition
Contract Balances
Our contract liabilities primarily relate to franchise fees, unredeemed gift card liabilities, and loyalty program obligations, which we classify within Current deferred revenue and Deferred revenue on the Condensed Consolidated Balance Sheets. The Company recognized deferred revenue of $7.6 million and $17.1 million during the three and six months ended June 28, 2026, respectively, and $7.9 million and $17.7 million during the three and six months ended June 29, 2025, respectively.
The following table includes a breakout of contract liability balances:
(In thousands)June 28, 2026December 28, 2025Change
Unearned franchise fees and royalties$18,292 $19,678 $(1,386)
Unredeemed gift card liabilities6,447 7,742 (1,295)
Customer loyalty program obligations1,681 4,970 (3,289)
Total contract liabilities$26,420 $32,390 $(5,970)
Our contract assets consist primarily of equipment incentives provided to franchisees. Equipment incentives are related to the future value of commissary revenue the Company will receive over the term of the incentive agreement. Contract assets were approximately $15.1 million and $19.1 million at June 28, 2026 and December 28, 2025, respectively. Revenue was reduced by approximately $1.8 million and $3.5 million for the three and six months ended June 28, 2026, respectively, and approximately $1.9 million and $3.5 million for the three and six months ended June 29, 2025, respectively, for the amortization of contract assets over the applicable contract terms. Contract assets are included in Prepaid expenses and other current assets and Other assets on the Condensed Consolidated Balance Sheets.
Transaction Price Allocated to the Remaining Performance Obligations
The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied at the end of the reporting period:
Performance Obligations by Period
(In thousands)Less than 1 Year1-2 Years2-3 Years3-4 Years4-5 YearsThereafterTotal
Unearned franchise fees and royalties$3,040 $2,712 $2,490 $2,284 $2,085 $2,981 $15,592 
At June 28, 2026, approximately $2.7 million of area development fees related to unopened restaurants and International unearned franchise fees were included in Deferred revenue. Timing of revenue recognition is dependent upon the timing of restaurant openings and franchisees’ revenues. Unredeemed gift card liabilities, which are included in Deferred revenue, will be recognized in Company-owned restaurant sales when gift cards are redeemed. The Company will recognize redemption fee revenue in Other revenues when cards are redeemed at franchised restaurant locations.