The Company and its subsidiaries are party to various legal and regulatory proceedings and claims incidental to their business in the ordinary course. In the opinion of management, based upon information currently available, the ultimate liability in excess of amounts accrued with respect to these proceedings and claims will not materially affect the Company’s consolidated results of operations or financial position.

During 2026, the Company received proceeds from legal settlements related to litigation involving its poultry and pork suppliers for a total of $12,596. These proceeds are recorded in other store operating expenses in the Consolidated Statements of Income. During 2026, the Company also received $47,422, net of legal fees, pursuant to a settlement agreement resolving interchange fee litigation. This amount is recorded in the litigation settlement income line on the Consolidated Statement of Income.

The Company maintains insurance coverage for various aspects of its business and operations. The Company has elected, however, to retain all or a portion of losses that occur through the use of various deductibles, limits and retentions under its insurance programs. This situation may subject the Company to some future liability for which it is only partially insured, or completely uninsured. The Company intends to mitigate any such future liability by continuing to exercise prudent business judgment in negotiating the terms and conditions of its contracts. See Note 1 for a further discussion of insurance and insurance reserves.

Related to its insurance coverage, the Company is contingently liable pursuant to standby letters of credit as credit guarantees to certain insurers. As of July 31, 2026, the Company had $8,703 of standby letters of credit related to securing reserved claims under workers’ compensation insurance and certain sale and leaseback transactions. All standby letters of credit are renewable annually and reduce the Company’s borrowing availability under its 2025 Revolving Credit facility. See Note 4 for additional information regarding the 2025 Revolving Credit Facility.

The Company has entered into lease guarantees in connection with the assignment to third-party leases of certain leases following closure of the related store locations. The Company is only obligated to perform the new lessees’ lease obligations in the event of non-performance by such lessees for a specified period. The guarantees have varying terms with the latest expiring in March 2035. As of July 31, 2026, the likelihood of payment by the Company under the guarantees is considered remote. No liability has been recorded in the Consolidated Balance Sheet as of July 31, 2026. The maximum aggregate potential future payments under the guarantees are estimated to be approximately $11,223.

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The Company enters into certain indemnification agreements in favor of third parties in the ordinary course of business. The Company believes that the probability of incurring an actual liability under other indemnification agreements is sufficiently remote so that no liability has been recorded in the Consolidated Balance Sheets.