v3.26.3
Commitments and Contingencies
3 Months Ended
Aug. 30, 2026
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Commitments and Contingencies
As collateral for performance on contracts and as credit guarantees to banks and insurers, we are contingently liable for guarantees of subsidiary obligations under standby letters of credit. As of August 30, 2026 and May 31, 2026, we had $71.9 million of standby letters of credit related to workers’ compensation and general liabilities accrued in our consolidated financial statements. As of August 30, 2026 and May 31, 2026, we had $16.6 million and $16.7 million, respectively, of surety bonds related to other payments. Most surety bonds are renewable annually.
As of August 30, 2026 and May 31, 2026, we had $80.4 million and $83.3 million, respectively, of guarantees associated with leased properties that have been assigned to third parties, primarily related to our disposition of Red Lobster in fiscal 2015 and the sale of the Olive Garden Canada Restaurants during the first quarter of fiscal 2026. These amounts represent the maximum potential amount of future payments under the guarantees. The fair value of the maximum potential future payments discounted at our weighted-average cost of capital as of August 30, 2026 and May 31, 2026, amounted to $62.7 million and $64.7 million, respectively. In the event of default by a third party, the indemnity and default clauses in our assignment agreements govern our ability to recover from and pursue the third party for damages incurred as a result of its default. We do not hold any third-party assets as collateral related to these assignment agreements, except to the extent the agreements permit us to recapture the related leasehold interest. The liability recorded for our expected credit losses under these leases as of August 30, 2026 and May 31, 2026 was $10.4 million. These guarantees expire over their respective lease terms, which range from fiscal 2027 through fiscal 2035.
We are subject to private lawsuits, administrative proceedings, and claims that arise in the ordinary course of our business. A number of these lawsuits, proceedings, and claims may exist at any given time. These matters typically involve claims from guests, employees, and others related to operational issues common to the restaurant industry, and can also involve infringement of, or challenges to, our trademarks and copyrights or the trademarks and copyrights of others. While the resolution of a lawsuit, proceeding, or claim may have an impact on our financial results for the period in which it is resolved, we believe that the final disposition of the lawsuits, proceedings, and claims in which we are currently involved, either individually or in the aggregate, will not have a material adverse effect on our financial position, results of operations, or liquidity.