v3.26.1
Income Taxes
 12 Months Ended
Jun. 28, 2026
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Total (loss) income before income taxes consists of:
Fiscal Year Ended
June 28, 2026June 29, 2025June 30, 2024
Loss before tax:
U.S.$(42,491)$38,364 $(115,505)
Foreign3,037 3,119 3,952 
Total (loss) income before tax$(39,454)$41,483 $(111,553)
Income tax (benefit) expense consists of the following:
Fiscal Year Ended
June 28, 2026June 29, 2025June 30, 2024
Current income tax provision:
Federal$— $— $369 
State and local5,308 4,225 4,892 
Foreign776 1,531 1,106 
Total current provision6,084 5,756 6,367 
Deferred income tax provision:
Federal(8,155)42,402 (23,156)
State and local(1,726)3,581 (11,554)
Foreign120 (234)371 
Total deferred provision(9,761)45,749 (34,339)
Total income tax (benefit) expense$(3,677)$51,505 $(27,972)
The provision for income taxes differs from the amount computed by applying the statutory rate to the loss before income taxes primarily due to the changes in the valuation allowance and state and local taxes.
The Company adopted ASU 2023-09 "Income Taxes (Topic 740): Improvements To Income Tax Disclosures" on a prospective basis beginning with the year ended June 28, 2026. See Note 2 - Significant Accounting Policies for further detail. The following table presents required disclosure pursuant to ASU 2023-09 and reconciles the U.S. federal statutory tax amount and rate to the Company’s actual global effective amount and rate for the year ended June 28, 2026:
Amount%
Income tax benefit at U.S. federal statutory rate$(8,285)21 %
State and local income tax, net of federal effect
Illinois1,370 (3)%
Maryland545 (1)%
Colorado474 (1)%
California(1,218)3 %
Other states1,220 (4)%
Total state and local income tax, net of federal effect2,391 (7)%
Nontaxable or nondeductible items
Business combination and asset acquisition items, including earnouts(7,147)18 %
Compensation limited by Section 162(m)1,294 (3)%
Section 45B FICA tip wage deduction disallowance928 (2)%
Other permanent differences840 (2)%
Total nontaxable or nondeductible items(4,085)10 %
Tax credits
Work opportunity tax credit(996)3 %
FICA tip credit(4,418)11 %
Total tax credits(5,414)14 %
Other 125 — %
Changes in valuation allowances — federal11,160 (28)%
Foreign tax effects247 (1)%
Effect of cross-border tax laws — GILTI133 — %
Effect of changes in tax laws or rates enacted in the current period51 — %
Income tax benefit and effective tax rate$(3,677)9 %
Prior period amounts reflect the disclosure requirements in effect before the Company's prospective adoption of ASU 2023-09 and have not been recast. The reconciliation of the income tax expense (benefit) for the fiscal years ended June 29, 2025 and June 30, 2024 is as follows:
Fiscal Year Ended
June 29, 2025June 30, 2024
Federal statutory rate$8,695 $(23,426)
State and local tax net of federal benefit6,858 (7,689)
Deferred tax asset valuation allowance56,236 — 
Business Combination and asset acquisition items, including earnouts(21,312)5,643 
Compensation limited by section 162(m) of the Internal Revenue Code2,134 2,242 
Other Permanent Differences1,053 1,015 
Foreign tax rate difference261 324 
Tax credit impact(3,148)(2,879)
Other728 (3,202)
Total income tax expense (benefit)$51,505 $(27,972)
For the fiscal year ended June 28, 2026, the Company’s effective tax rate was increased by disallowed expenses associated with the earnout expense, S162(m) limitations, state and foreign income tax expenses and other items. For the fiscal years ended June 28, 2026 and June 29, 2025, the effective tax rate was favorably impacted by the realization and availability of federal income tax credits totaling approximately $5,414 and $3,148, respectively. These credits were identified in the prior year as the Company developed an appropriate data retrieval process for the current and open tax years. For the fiscal year ended June 28, 2026, the Company’s effective tax rate was impacted by the increase of $13,665 for the partial valuation allowance due to the Company’s review of all positive and negative evidence regarding the realization of a deferred tax asset related to section 163(j) limitation carryforward.
As of June 28, 2026, the Company had a net consolidated income tax receivable of $5,082 reflected in other current assets and a current consolidated income tax payable of $748 reflected in other current liabilities. As of June 29, 2025, the Company had a net consolidated income tax receivable of $1,686 reflected in other current assets, a current consolidated income tax payable of $1,412 reflected in other current liabilities.
In accordance with ASU 2023-09, the following table presents income taxes paid, net of refunds received, disaggregated by federal (national), state and local, and foreign jurisdictions for the fiscal year ended June 28, 2026. Income taxes paid to any individual jurisdiction that represent 5% or more of total income taxes paid, net of refunds received, are presented separately.
Income Taxes Paid (Net of Refunds Received)% of Total Income Taxes Paid (Net of Refunds Received)
Illinois$2,732 27 %
Maryland916 9 %
New Jersey912 9 %
Florida713 7 %
Virginia711 7 %
Colorado618 6 %
California554 6 %
Other states2,411 24 %
Total Income Taxes Paid (Net of Refunds Received) by State9,567 96 %
Federal— — %
Foreign - Mexico409 4 %
Total Income Taxes Paid (Net of Refunds Received)$9,976 100 %
The tax effects of temporary differences and carryforwards that give rise to significant components of deferred income tax assets and liabilities consist of:
June 28, 2026June 29, 2025
Deferred income tax assets:
Reserves not currently deductible$27,934 $26,296 
Finance lease liability271,905 348,048 
R&D Costs (Section 174)— 2,108 
Investment in partnership38,691 39,137 
Net operating loss, interest, and tax credit carryforwards151,792 109,352 
Subtotal490,322 524,941 
Less: Valuation allowance79,704 66,039 
Total net deferred income tax assets410,618 458,902 
Deferred income tax liabilities:
Property and equipment$121,446 $102,313 
ROU assets219,122 285,883 
R&D Costs (Section 174)2,111 — 
Favorable and unfavorable leases28 82 
Goodwill and intangibles10,126 7,139 
Total deferred income tax liabilities352,833 395,417 
Net deferred income tax asset (liabilities)$57,785 $63,485 
As of June 28, 2026, the Company has U.S. tax credit carryforwards of $17,647, U.S. federal net operating loss carryforwards (NOLs) of $237,528, U.S. state NOLs carryforwards of $89,197, Foreign NOLs carryforwards of $2,343 and interest carryforward of $320,685. As of June 29, 2025, the Company has U.S. tax credit carryforwards of $12,233, federal NOLs of $137,445, U.S. state NOLs carryforwards of $50,700, foreign NOLs carryforwards of $1,781 and interest carryforward of $267,545. The majority of the tax credits were generated in tax years ended June 30, 2019 and thereafter. The credits have a 20-year federal carryover period and will begin to expire starting in fiscal year 2028. Certain NOL carryforwards are subject to expiration. The interest carryforward and $118,913 of NOL carryforwards do not expire.
Realization of deferred tax assets associated with deductible temporary differences, net operating losses and other carryforwards is dependent on generating sufficient future taxable income. Under Sections 382 and 383 of the Code, the Company’s federal net operating loss carryforwards and other tax attributes may become subject to an annual limitation in the event of certain cumulative changes in the ownership of the Company’s stock. An “ownership change” pursuant to Section 382 of the Code generally occurs if one or more stockholders or group of stockholders who own at least 5% of a company’s stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three year period. The Company’s ability to utilize certain net operating loss carryforwards and other tax attributes to offset future taxable income or tax liabilities may be limited as a result of ownership changes. Similar rules may apply under state laws. It is currently estimated that $23,057 of the Company’s NOLs are subject to limitation due to the changes in ownership that occurred in 2004. The Company has not experienced an ownership change, as defined under Sections 382 and 383, since July 2017.
During the fiscal years ended June 28, 2026 and June 29, 2025, the Company recorded an increase to its valuation allowance of $13,665 and $65,104, respectively, to a deferred tax asset arising from Section 163(j) interest expense limitation carryforwards. This adjustment reflects management’s assessment that, due to a change in operating structure resulting in increased indebtedness and current projections of future taxable income, the disallowed interest expense carryforward is expected to continue to grow. Accordingly, it is not more likely than not that the related deferred tax asset will be realized, and a valuation allowance has been recorded. The valuation allowance of $79,704 as of June 28, 2026 relates to the Section 163(j) interest limitation carryforward, certain state tax losses that are limited, and federal tax credits nearing their expiration date.
As of June 28, 2026 and June 29, 2025, the Company had not recorded an income tax liability on certain undistributed earnings of its foreign subsidiaries. It is expected that these earnings will be permanently reinvested in the operations within the respective country. The Company has not calculated the deferred tax liability that would come due if the earnings were distributed to the U.S., which the Company believes that any deferred tax liability recognized would not be material.
As of June 28, 2026 and June 29, 2025, the Company had no unrecognized tax benefits recorded, and accordingly no amounts of interest or penalties related to unrecognized tax benefits were recognized in the consolidated statements of operations or accrued in the consolidated balance sheets. The Company filed its FY 2025 income tax return consistent with its request for relief under Treasury Regulation Section 301.9100 to revoke the election out of bonus depreciation on certain qualified property placed in service during the tax year ended July 3, 2022. Because the relief is discretionary, this position remains uncertain unless and until the IRS consents to the requested relief. The position did not reduce FY 2025 income tax, as a result, no unrecognized tax benefit has been recorded with respect to this position. The Company files income tax returns in the U.S. federal jurisdiction and various state, local and foreign jurisdictions, which remain subject to examination for the periods indicated in the Company’s open statutes of limitations.