INCOME TAXES |
9 Months Ended |
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Sep. 27, 2026 | |
| Income Tax Disclosure [Abstract] | |
| INCOME TAXES | INCOME TAXES Jersey Mike’s Subs Inc. is subject to U.S. federal, state and local income taxes as a corporation on its allocable share of the taxable income of Jersey Mike’s Holdings. Jersey Mike’s Holdings is treated as a partnership for U.S. federal and most applicable state and local income tax purposes and, as such, generally is not subject to entity-level income tax. Instead, its taxable income or loss passes through to its members, including the Corporation. Jersey Mike’s Holdings and certain of its subsidiaries remain subject to certain state and local taxes. Prior to the Reorganization Transactions, all income of Jersey Mike’s Holdings was allocated to its members. Accordingly, no provision for U.S. federal income taxes was recorded for periods prior to the Reorganization Transactions. The Company’s interim provision for income taxes is based on an estimate of the annual effective tax rate, adjusted for discrete items arising in the period. For the thirteen weeks ended September 27, 2026, the Company recorded income tax expense of $7 million, an effective tax rate of 41%. No material income tax expense was recorded in prior periods. The effective tax rate differs from the 21% U.S. federal statutory rate primarily because of nondeductible equity-based compensation recognized in connection with the IPO and, to a lesser extent, state income taxes, partially offset by income attributable to the noncontrolling interest and to the period before the Reorganization Transactions, which is not subject to U.S. federal income tax at the Corporation level. In connection with the Reorganization Transactions and the IPO, the Corporation recognized a deferred tax asset of $284 million, which relates primarily to the difference between the Corporation’s tax basis and book basis in its investment in Jersey Mike’s Holdings. The deferred tax asset and the TRA liability described below were recorded together as a net reduction to additional paid-in capital of $1,085 million. The Corporation assesses the realizability of its deferred tax assets each reporting period. That assessment considers all available positive and negative evidence, including projected future taxable income. As of September 27, 2026, the Company concluded that it is more likely than not that its deferred tax assets will be realized, and accordingly no valuation allowance has been recorded. As of September 27, 2026 and December 28, 2025, the Company had no unrecognized tax benefits or related accrued interest and penalties. Tax Receivable Agreement In connection with the IPO and the Reorganization Transactions, the Corporation recognized a TRA liability of $1,369 million. As of September 27, 2026, the TRA liability was $1,369 million, all of which is classified as non-current because no payments are expected within the next twelve months. The Corporation made no payments under the TRA and recorded no remeasurement adjustments during the thirteen and thirty-nine weeks ended September 27, 2026. Future exchanges of Common Units for shares of Class A common stock are expected to result in additional TRA liabilities and deferred tax assets, which will be recorded through additional paid-in capital at the time of exchange.
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