v3.26.1
INCOME TAXES
 12 Months Ended
Jun. 24, 2026
Income Tax Disclosure [Abstract]  
INCOME TAXES
Income before income taxes consists of the following:
Fiscal Years Ended
June 24, 2026June 25, 2025June 26, 2024
Domestic$579.2 $457.8 $161.8 
Foreign1.7 2.2 3.1 
Income before income taxes$580.9 $460.0 $164.9 
The Provision for income taxes and effective tax rate consists of the following:
Fiscal Years Ended
June 24, 2026June 25, 2025June 26, 2024
Current income tax expenses:
Federal$30.4 $33.2 $17.5 
State31.2 30.6 12.3 
Foreign— 0.6 0.4 
Total current income tax expenses61.6 64.4 30.2 
Deferred income tax expenses (benefit):
Federal31.2 15.2 (18.2)
State0.7 (2.6)(2.5)
Foreign0.4 (0.1)0.1 
Total deferred income tax expenses (benefit)32.3 12.5 (20.6)
Provision for income taxes$93.9 $76.9 $9.6 
Effective tax rate 16.2 %16.7 %5.8 %
A reconciliation between the reported Provision for income taxes and the amount computed by applying the statutory Federal income tax rate of 21.0% to Income before income taxes, for fiscal years 2026, 2025, and 2024, is as follows:
Fiscal Year Ended June 24, 2026
AmountPercentage
U.S federal statutory rate$122.0 21.0 %
Domestic federal
Tax credits
FICA
(57.8)(10.0)%
Other(5.0)(0.9)%
Nontaxable or nondeductible items
Executive compensation18.8 3.2 %
Deductions related to tax credits12.3 2.1 %
Other0.7 0.1 %
Change in valuation allowance(3.8)(0.6)%
Cross-border tax laws(1.6)(0.2)%
Excess tax benefits on share-based payments, before nondeductible items(21.3)(3.7)%
Domestic state and local income tax, net of Federal benefit(1)
24.8 4.3 %
Foreign tax effects
4.5 0.8 %
Worldwide change in unrecognized tax benefits0.3 0.1 %
Effective tax rate$93.9 16.2 %
(1)State taxes in California, Florida, Illinois, Texas, New Jersey, and New York made up the majority (greater than 50%) of the tax effect in this category.
Fiscal Years Ended
June 25, 2025June 26, 2024
Income tax expense at statutory rate$96.6 $34.6 
FICA and other tax credits(41.2)(34.2)
State income taxes, net of Federal benefit22.1 7.7 
Officers' compensation7.7 3.7 
Stock based compensation tax shortfall (windfall)(7.5)(1.2)
Other(0.8)(1.0)
Provision for income taxes$76.9 $9.6 
Income taxes paid, net by jurisdiction for fiscal 2026 is as follows:
Fiscal Year Ended
June 24, 2026
Federal$28.8 
State
California5.6 
Other 27.1 
Foreign4.5 
Income taxes paid, net$66.0 
Deferred Tax and Allowances
The income tax effects of temporary differences that give rise to significant portions of deferred income tax assets and liabilities are as follows:
June 24, 2026June 25, 2025
Deferred income tax assets:
Lease liabilities$553.8 $510.0 
Gift cards6.3 7.3 
Insurance reserves26.6 21.3 
Stock-based compensation9.1 13.1 
Federal credit carryover5.6 26.7 
Employee benefit plans0.2 0.1 
Net operating losses2.8 3.7 
State credit carryover— 0.2 
Restructure charges and impairments1.6 3.8 
Depreciation and capitalized interest on property and equipment18.4 31.3 
Other, net11.7 13.9 
Less: Valuation allowance(1.6)(6.3)
Total deferred income tax assets634.5 625.1 
Deferred income tax liabilities:
Lease assets524.3 482.2 
Goodwill and other amortization23.6 23.0 
Prepaid expenses17.0 17.9 
Other, net0.5 0.6 
Total deferred income tax liabilities565.4 523.7 
Deferred income taxes, net$69.1 $101.4 
As of June 24, 2026, we have deferred tax assets of $3.5 million reflecting the benefit of state loss carryforwards, before federal benefit and valuation allowance, which expire at various dates between 2027 and 2046. We have deferred tax assets of $5.6 million of federal tax credits, which expire in 2046. The recognized deferred tax asset, net of valuation allowance and federal benefit, for the state loss carryforwards is $1.2 million. There is no valuation allowance on the federal credit carryover and $4.0 million is limited by Section 382 of the Internal Revenue Code.
The valuation allowance is $1.6 million at the end of fiscal 2026 to recognize certain deductions and state loss carryforwards management believes are more-likely-than-not to not be realized. In assessing whether a deferred tax asset will be realized, we consider the likelihood of the realization, and the reversal of existing taxable temporary differences, 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, as of June 24, 2026, we believe it is more-likely-than-not that we will realize the benefits of the deferred tax assets, net of the existing valuation allowances.
Unrecognized Tax Benefits
A reconciliation of unrecognized tax benefits are as follows:
June 24, 2026June 25, 2025
Balance at beginning of year$2.7 $2.9 
Additions based on tax positions related to the current year0.6 0.5 
Expiration of statute of limitations(0.2)(0.7)
Balance at end of year$3.1 $2.7 
The total amount of unrecognized tax benefits, excluding interest and penalties, which would affect income tax expenses if resolved in our favor was $2.5 million and $2.2 million as of June 24, 2026 and June 25, 2025, respectively. We do not expect any material changes to our liability for uncertain tax positions in the next 12 months.
We recognize accrued interest and penalties related to unrecognized tax benefits in Provision for income taxes in the Consolidated Statements of Comprehensive Income. As of June 24, 2026, we had $0.4 million ($0.5 million net of a $0.1 million Federal deferred tax benefit) of interest and penalties accrued, compared to $0.3 million ($0.4 million net of a $0.1 million Federal deferred tax benefit) as of June 25, 2025.
Our income tax returns are subject to examination by taxing authorities in the jurisdictions in which we operate. The periods subject to examination for our Canadian return are fiscal 2024 to fiscal 2025. State income tax returns are generally subject to examination for a period of three to five years from date return is filed. We have various state income tax returns in the process of examination or settlements. Our federal returns for fiscal 2026 to fiscal 2027 are under examination through the Internal Revenue Service: Bridge Plus program. There are no unrecorded liabilities associated with these examinations.