v3.26.1
DISCONTINUED OPERATIONS
 9 Months Ended
Jul. 05, 2026
Discontinued Operations and Disposal Groups [Abstract]  
DISCONTINUED OPERATIONS DISCONTINUED OPERATIONS
Del Taco — On October 15, 2025, the Company entered into a Stock Purchase Agreement (the “Purchase Agreement”) with the Buyer and Buyer Guarantor to sell to Buyer all of the issued and outstanding equity interests of Del Taco, which owns and operates the Company’s Del Taco restaurant operations, for an aggregate purchase price of $115.0 million in cash, subject to certain closing cash, working capital, debt and transaction expense adjustments. The transaction closed on December 22, 2025 (the “Del Taco Sale”). The transaction documents include an indemnification provision pursuant to which the Company may be required to indemnify Del Taco for certain losses incurred within one-year following the transaction closing on December 22, 2025, but only with respect to specifically identified matters, and subject to an aggregate cap of $10.0 million.
As the Del Taco Sale represents a strategic shift that will have a major effect on our operations and financial results, the Del Taco results are classified as discontinued operations in our condensed consolidated statements of earnings (loss) and our condensed consolidated statements of cash flows for all periods presented. Prior year results have been recast to conform with the current year presentation.
The Company had entered into a Transition Services Agreement (“TSA”) pursuant to which the Buyer received certain services to enable it to operate the Del Taco business after the closing of the Del Taco Sale. The services included information technology, finance and accounting, human resources, supply chain and other corporate support services. The TSA period concluded during the second quarter 2026. The Company recorded $1.5 million in the year-to-date period of 2026 related to the TSA as a reduction of selling, general and administrative expenses in the condensed consolidated statements of earnings (loss). On March 13, 2026, the Company filed a complaint against the buyer in the Delaware Court of Chancery seeking to recover unpaid service fees under a now terminated TSA and to require the buyer to comply with insurance collateral and deductible assumption requirements in the Purchase Agreement for workers’ compensation cases related to the Del Taco business.
The following table summarizes the Del Taco results for each period (in thousands, except per share data):
Quarter
Year-to-date(1)
July 5,
2026		July 6,
2025		July 5,
2026		July 6,
2025
Company restaurant sales$— $46,819 $48,713 $161,867 
Franchise revenues— 23,767 21,509 78,058 
Company restaurant costs— (42,276)(43,199)(141,917)
Franchise costs— (17,339)(12,944)(57,986)
Selling, general, and administrative expenses (2)
— (6,258)(7,018)(23,045)
Depreciation and amortization (3)
— (4,172)(882)(14,133)
Pre-opening costs— (493)(50)(545)
Impairment of goodwill and intangible assets— (6,326)— (209,556)
Other operating expense, net— (1,152)(570)(4,580)
Transaction-related costs (4)
(300)— (9,893)— 
Gains on the sale of company-operated restaurants— (146)— 2,630 
Interest expense, net— 209 1 148 
Operating loss from discontinued operations before income taxes(300)(7,367)(4,333)(209,059)
Loss on Del Taco sale— — (47,428)— 
Losses from discontinued operations and before income taxes(300)(7,367)(51,761)(209,059)
Income tax expense (benefit) (5)
619 (6,555)(31,699)(48,010)
Losses from discontinued operations, net of income taxes$(919)$(812)$(20,062)$(161,049)
Net loss per share from discontinued operations
Basic$(0.05)$(0.04)$(1.04)$(8.45)
Diluted$(0.05)$(0.04)$(1.04)$(8.40)
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(1)Del Taco operating results include only twelve weeks of activity through the sale date on December 22, 2025.
(2)Selling, general and administrative expenses presented in the table above include corporate costs directly in support of Del Taco operations. All other corporate costs were classified in results of continuing operations.
(3)Depreciation and amortization ceased upon classification of the Del Taco assets as held for sale during the first quarter of 2026.
(4)Transaction-related costs are comprised primarily of professional fees for accounting, legal, and IT, which were not contingent fees included in the loss on sale calculation.
(5)Income tax benefit in 2026 is primarily due to utilization of capital losses from the Del Taco sale, net of a valuation allowance against excess capital loss carryforwards expiring in fiscal 2031.
The following is a reconciliation of the loss recorded for the Del Taco sale (in thousands):
Net proceeds received from the Del Taco Sale (1)
$119,086 
Del Taco assets:
Cash$421 
Accounts and other receivables, net14,048 
Inventories1,688 
Prepaid expenses848 
Other current assets1,508 
Property and equipment, net99,790 
Operating lease right-of-use assets369,349 
Intangible assets, net9,803 
Trademarks105,600 
Other assets, net14,014 
Total Del Taco assets$617,069 
Del Taco liabilities:
Current maturities of long-term debt$31 
Current operating lease liabilities21,551 
Accounts payable12,986 
Accrued liabilities21,281 
Long-term debt, net of current maturities245 
Long-term operating lease liabilities, net of current portion349,616 
Deferred tax liabilities23,405 
Other long-term liabilities, including note payable26,390 
Total Del Taco liabilities $455,505 
Other transaction costs incurred as part of the Del Taco sale (2)
$4,950 
Loss on sale of Del Taco before income taxes$(47,428)
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(1)The proceeds received from the Del Taco Sale include working capital adjustments outlined in the Purchase Agreement.
(2)Costs directly incurred as a result of the Del Taco Sale, including investment bank fees and employee transaction awards.
The assets being sold and liabilities being assumed by the Buyer were classified as held-for-sale during the first quarter of 2026. As such, prior year balances have been recast to conform with this presentation. Upon classification of the Del Taco assets as held for sale, the assets were no longer depreciated. Proceeds from the Del Taco Sale have been presented in the condensed consolidated statement of cash flows within cash provided by discontinued operations in investing activities.