FWRG

Cautionary Statement The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited interim consolidated financial statements and notes thereto included in Part I, Item 1 of this Form 10-Q and our audited consolidated financial statements and notes included in our 2025 Form 10-K. As discussed in the “Cautionary Note Regarding Forward-Looking Statements,” the following discussion and analysis contains forward-looking statements that involve risks and uncertainties. Our actual results may materially differ from those discussed in such forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those identified in our 2025 Form 10-K, including under “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and in “Part II, Item 1A. Risk Factors” of this Form 10-Q. References to “we,” “us,” “our” and “the Company” in this Management’s Discussion and Analysis of Financial Condition and Results of Operation (“MD&A”) refer to First Watch Restaurant Group, Inc., collectively with its wholly-owned subsidiaries. Overview First Watch is an award-winning Daytime Dining concept serving made-to-order breakfast, brunch and lunch using fresh ingredients. Our common stock trades on the Nasdaq under the ticker symbol “FWRG.” A recipient of many local “Best Breakfast” and “Best Brunch” accolades, First Watch’s award-winning chef-driven menu includes elevated executions of classic favorites alongside innovative dishes and fresh juices. For four consecutive years, First Watch has been named a Top 100 Most Loved Workplace® by the Best Practice Institute, and in 2025, was named the #1 Most Loved Workplace for the second year in a row, as featured in The Wall Street Journal. We employ more than 18,000 employees, operate and franchise restaurants in 33 states under the “First Watch” trade name and, as of June 28, 2026, had 586 company-owned restaurants and 79 franchise-owned restaurants. Recent Developments Financial highlights for the thirteen weeks ended June 28, 2026 (“second quarter of 2026”) as compared, unless otherwise indicated below, to the thirteen weeks ended June 29, 2025 (“second quarter of 2025”) reflect the continued momentum of our operating performance and include the following: •Opened 18 system-wide restaurants in 15 states, with 1 planned closure, resulting in a total of 665 system-wide restaurants (586 company-owned and 79 franchise-owned) across 33 states as of June 28, 2026 •Total revenues increased 15.2% to $354.7 million from $307.9 million •System-wide sales increased 14.7% to $397.0 million from $346.2 million •Same-restaurant sales growth of 3.4% •Same-restaurant traffic growth of negative 0.4% •Income from operations margin decreased to 2.3% from 2.4% •Restaurant level operating profit margin* increased to 18.8% from 18.6% •Net income increased to $2.3 million, or $0.04 per diluted share, from net income of $2.1 million, or $0.03 per diluted share •Adjusted EBITDA* increased to $34.5 million from $30.4 million ___________________ * See Non-GAAP Financial Measures Reconciliations section below. 20 Table of Contents Business Trends In the second quarter of 2026, we experienced same-restaurant sales growth of 3.4% and same-restaurant traffic growth of negative 0.4%. We expect annual same-restaurant sales growth to be between 1.5% to 3.0%. For the second quarter in a row, we experienced commodity deflation of 1.6%, primarily due to lower costs of eggs, avocados, and bacon, mostly offset by the demand for newly introduced higher cost beef offerings and an increase in coffee prices. We expect our full year commodity inflation to be approximately zero to 1.5%. Restaurant-level wage inflation during the second quarter of 2026 was 4.1% and full year inflation is expected to be approximately 3.5% to 4.5%. Key Performance Indicators Throughout “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” we discuss the following key operating metrics that we believe will drive our financial results and long-term growth model. We believe these metrics are useful to investors because Management uses these metrics to evaluate performance and assess the growth of our business as well as the effectiveness of our marketing and operational strategies. New Restaurant Openings (“NROs”): the number of new company-owned First Watch restaurants commencing operations during the period. Management reviews the number of new restaurants to assess new restaurant growth and company-owned restaurant sales. Franchise-owned New Restaurant Openings (“Franchise-owned NROs”): the number of new franchise-owned First Watch restaurants commencing operations during the period. Same-Restaurant Sales Growth: the percentage change in year-over-year restaurant sales (excluding gift card breakage) for the comparable restaurant base, which we define as the number of company-owned First Watch branded restaurants open for 18 months or longer as of the beginning of the fiscal year (“Comparable Restaurant Base”). For the thirteen and twenty-six weeks ended June 28, 2026 and June 29, 2025, there were 454 restaurants and 382 restaurants, respectively, in our Comparable Restaurant Base. Measuring our same-restaurant sales growth allows Management to evaluate the performance of our existing restaurant base. We believe this measure is useful for investors to provide a consistent comparison of restaurant sales results and trends across periods within our core, established restaurant base, unaffected by results of store openings, closings, and other transitional changes. Same-Restaurant Traffic Growth: the percentage change in year-over-year traffic counts using the Comparable Restaurant Base. Measuring our same-restaurant traffic growth allows Management to evaluate the performance of our existing restaurant base. We believe this measure is useful for investors because same-restaurant traffic provides an indicator as to the development of our brand and the effectiveness of our marketing strategy. System-wide restaurants: the total number of restaurants, including all company-owned and franchise-owned restaurants. System-wide sales: consists of restaurant sales from our company-owned restaurants and franchise-owned restaurants. We do not recognize the restaurant sales from our franchise-owned restaurants as revenue. 21 Table of Contents Non-GAAP Financial Measures To supplement the consolidated financial statements, which are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), we use the following non-GAAP measures, which present operating results on an adjusted basis: (i) Adjusted EBITDA, (ii) Adjusted EBITDA margin, (iii) Restaurant level operating profit and (iv) Restaurant level operating profit margin. Our presentation of these non-GAAP measures includes isolating the effects of some items that are either nonrecurring in nature or have no meaningful correlation to our ongoing core operating performance. These supplemental measures of performance are not required by or presented in accordance with GAAP. Management believes these non-GAAP measures provide investors with additional visibility into our operations, facilitate analysis and comparisons of our ongoing business operations because they exclude items that may not be indicative of our ongoing operating performance, help to identify operational trends and allow for greater transparency with respect to metrics used by Management in our financial and operational decision making. Our non-GAAP measures may not be comparable to similarly titled measures used by other companies and have important limitations as analytical tools. These non-GAAP measures should not be considered in isolation or as substitutes for analysis of our results as reported under GAAP as they may not provide a complete understanding of our performance. These non-GAAP measures should be reviewed in conjunction with our consolidated financial statements prepared in accordance with GAAP. We use Adjusted EBITDA and Adjusted EBITDA margin (i) as factors in evaluating Management’s performance when determining incentive compensation, (ii) to evaluate our operating results and the effectiveness of our business strategies and (iii) internally as benchmarks to compare our performance to that of our competitors. We use Restaurant level operating profit and Restaurant level operating profit margin (i) to evaluate the performance and profitability of operating restaurants, individually and in the aggregate, and (ii) to make decisions regarding future spending and other operational decisions. Adjusted EBITDA: represents Net income (loss) before depreciation and amortization, interest expense, income taxes, and items that we do not consider in our evaluation of ongoing core operating performance as identified in the reconciliation of Net income (loss), the most directly comparable measure in accordance with GAAP, to Adjusted EBITDA, included in the section Non-GAAP Financial Measure Reconciliations below. Adjusted EBITDA Margin: represents Adjusted EBITDA as a percentage of total revenues. See Non-GAAP Financial Measure Reconciliations below for a reconciliation to Net income (loss) margin, the most directly comparable GAAP measure. Restaurant Level Operating Profit: represents restaurant sales, less restaurant operating expenses, which include food and beverage costs, labor and other related expenses, other restaurant operating expenses, pre-opening expenses and occupancy expenses. Restaurant level operating profit excludes corporate-level expenses and other items that we do not consider in the evaluation of the ongoing core operating performance of our restaurants as identified in the reconciliation of Income from operations, the most directly comparable GAAP measure, to Restaurant level operating profit, included in the section Non-GAAP Financial Measure Reconciliations below. Restaurant Level Operating Profit Margin: represents Restaurant level operating profit as a percentage of restaurant sales. See Non-GAAP Financial Measure Reconciliations below for a reconciliation to Income from operations margin, the most directly comparable GAAP measure. Selected Operating Data THIRTEEN WEEKS ENDED JUNE 28, 2026 COMPANY-OWNED FRANCHISE-OWNED TOTAL Beginning of period 572 76 648 New restaurant openings 14 4 18 Closures — (1) (1) End of period 586 79 665 22 Table of Contents TWENTY-SIX WEEKS ENDED JUNE 28, 2026 COMPANY-OWNED FRANCHISE-OWNED TOTAL Beginning of period 560 73 633 New restaurant openings 27 7 34 Closures (1) (1) (2) End of period 586 79 665 THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED JUNE 28, 2026 JUNE 29, 2025 JUNE 28, 2026 JUNE 29, 2025 System-wide sales (in thousands) $ 397,046 $ 346,209 $ 764,612 $ 669,208 Same-restaurant sales growth 3.4 % 3.5 % 3.2 % 2.1 % Same-restaurant traffic growth (0.4) % 2.0 % (1.2) % 0.6 % Income from operations (in thousands) $ 8,127 $ 7,313 $ 9,126 $ 8,426 Income from operations margin 2.3 % 2.4 % 1.3 % 1.4 % Restaurant level operating profit (in thousands) (1) $ 65,948 $ 56,776 $ 126,806 $ 102,898 Restaurant level operating profit margin (1) 18.8 % 18.6 % 18.7 % 17.6 % Net income (loss) (in thousands) $ 2,339 $ 2,106 $ (346) $ 1,277 Net income (loss) margin 0.7 % 0.7 % (0.1) % 0.2 % Adjusted EBITDA (in thousands) (2) $ 34,470 $ 30,379 $ 62,267 $ 53,132 Adjusted EBITDA margin (2) 9.7 % 9.9 % 9.1 % 9.0 % ________________ (1) Reconciliations from Income from operations and Income from operations margin, the most comparable GAAP measures to Restaurant level operating profit and Restaurant level operating profit margin, respectively, are set forth in the schedules within the Non-GAAP Financial Measures Reconciliations section below. (2) Reconciliations from Net income (loss) and Net income (loss) margin, the most comparable GAAP measures to Adjusted EBITDA and Adjusted EBITDA margin, respectively, are set forth in the schedules within the Non-GAAP Financial Measures Reconciliations section below. 23 Table of Contents Results of Operations The following table summarizes our results of operations and the percentages of items in our Consolidated Statements of Operations and Comprehensive Income in relation to Total revenues or, where indicated, Restaurant sales for the thirteen and twenty-six weeks ended June 28, 2026 and June 29, 2025: THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED (in thousands) JUNE 28, 2026 JUNE 29, 2025 JUNE 28, 2026 JUNE 29, 2025 Revenues Restaurant sales $ 351,481 99.1 % $ 304,983 99.1 % $ 679,629 99.1 % $ 584,574 99.1 % Franchise revenues 3,191 0.9 % 2,904 0.9 % 6,002 0.9 % 5,553 0.9 % Total revenues 354,672 100.0 % 307,887 100.0 % 685,631 100.0 % 590,127 100.0 % Operating costs and expenses Restaurant operating expenses (1) (exclusive of depreciation and amortization shown below): Food and beverage costs 82,593 23.5 % 71,978 23.6 % 156,903 23.1 % 138,625 23.7 % Labor and other related expenses 115,723 32.9 % 101,310 33.2 % 226,332 33.3 % 198,064 33.9 % Other restaurant operating expenses 55,557 15.8 % 46,603 15.3 % 107,461 15.8 % 90,862 15.5 % Occupancy expenses 28,345 8.1 % 24,809 8.1 % 55,755 8.2 % 47,958 8.2 % Pre-opening expenses 3,315 0.9 % 3,507 1.1 % 6,372 0.9 % 6,167 1.1 % General and administrative expenses 38,727 10.9 % 33,185 10.8 % 78,672 11.5 % 63,404 10.7 % Depreciation and amortization 21,839 6.2 % 18,136 5.9 % 43,235 6.3 % 34,693 5.9 % Impairments and loss on disposal of assets 114 — % 127 — % 267 — % 136 — % Transaction and restructuring expenses, net 332 0.1 % 919 0.3 % 1,508 0.2 % 1,792 0.3 % Total operating costs and expenses 346,545 97.7 % 300,574 97.6 % 676,505 98.7 % 581,701 98.6 % Income from operations (1) 8,127 2.3 % 7,313 2.4 % 9,126 1.3 % 8,426 1.4 % Interest expense (4,892) (1.4) % (4,003) (1.3) % (9,670) (1.4) % (7,337) (1.2) % Other income, net 133 — % 266 0.1 % 478 0.1 % 950 0.2 % Income (loss) before income taxes 3,368 0.9 % 3,576 1.2 % (66) — % 2,039 0.3 % Income tax expense (1,029) (0.3) % (1,470) (0.5) % (280) — % (762) (0.1) % Net income (loss) $ 2,339 0.7 % $ 2,106 0.7 % $ (346) (0.1) % $ 1,277 0.2 % _____________ (1) As a percentage of restaurant sales. 24 Table of Contents Restaurant Sales Restaurant sales represent the aggregate sales of food and beverages, net of discounts, at company-owned restaurants. Restaurant sales in any period are directly influenced by the number of operating weeks in the period, the number of open restaurants, customer traffic and average check. Average check growth is the combined result of our menu price increases and changes to our menu mix. THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED (in thousands) JUNE 28, 2026 JUNE 29, 2025 Change JUNE 28, 2026 JUNE 29, 2025 Change Restaurant sales: In-restaurant dining sales $ 284,296 $ 247,400 14.9 % $ 550,018 $ 474,127 16.0 % Third-party delivery sales 41,343 34,465 20.0 % 81,035 66,470 21.9 % Take-out sales 25,842 23,118 11.8 % 48,576 43,977 10.5 % Total restaurant sales $ 351,481 $ 304,983 15.2 % $ 679,629 $ 584,574 16.3 % The increase in total restaurant sales during the thirteen and twenty-six weeks ended June 28, 2026 as compared to the same periods in the prior year was due principally to (i) a higher number of restaurants from new openings, (ii) the acquisition of 19 franchise-owned restaurants during the thirteen weeks ended June 29, 2025 and (iii) positive same-restaurant sales growth of 3.4%, partially offset by the 0.4% decrease in same-restaurant traffic. Franchise Revenues Franchise revenues are comprised of sales-based royalty fees, system fund contributions and the amortization of upfront initial franchise fees, which are recognized as revenue on a straight-line basis over the term of the franchise agreement. Franchise revenues in any period are directly influenced by the number of open franchise-owned restaurants. THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED (in thousands) JUNE 28, 2026 JUNE 29, 2025 Change JUNE 28, 2026 JUNE 29, 2025 Change Franchise revenues: Royalty and system fund contributions $ 3,109 $ 2,451 26.8 % $ 5,864 $ 5,038 16.4 % Initial fees 82 55 49.1 % 138 117 17.9 % Business acquisitions - franchise revenues recognized — 398 (100.0) % — 398 (100.0) % Total Franchise revenues $ 3,191 $ 2,904 9.9 % $ 6,002 $ 5,553 8.1 % The increases in franchise revenues during the thirteen and twenty-six weeks ended June 28, 2026 as compared to the same periods in the prior year was due to (i) an increase in the system fund contribution rate during the first quarter of 2026 and (ii) 11 new franchise-owned restaurant openings between June 29, 2025 and June 28, 2026. These increases were partially offset by our acquisitions of 19 franchise-owned restaurants during the thirteen weeks ended June 29, 2025. Food and Beverage Costs Food and beverage costs at company-owned restaurants vary with sales volume and are subject to increases and declines in commodity costs. THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED (in thousands) JUNE 28, 2026 JUNE 29, 2025 Change JUNE 28, 2026 JUNE 29, 2025 Change Food and beverage costs $ 82,593 $ 71,978 14.7 % $ 156,903 $ 138,625 13.2 % As a percentage of restaurant sales 23.5 % 23.6 % (0.1) % 23.1 % 23.7 % (0.6) % Food and beverage costs as a percentage of restaurant sales decreased during the thirteen and twenty-six weeks ended June 28, 2026 as compared to the same periods in the prior year primarily as a result of (i) menu price increases and (ii) the lower cost of eggs, avocados and bacon, mostly offset by the demand for newly introduced higher cost beef offerings and an increase in coffee prices. 25 Table of Contents Food and beverage costs increased during the thirteen and twenty-six weeks ended June 28, 2026 as compared to the same periods in the prior year primarily as a result of the 57 new restaurant openings between June 29, 2025 and June 28, 2026 and the 19 franchise restaurants acquired during the thirteen weeks ended June 29, 2025. These increases were partially offset by commodity deflation. Labor and Other Related Expenses Labor and other related expenses include hourly and management wages, bonuses, payroll taxes, workers’ compensation expense and employee benefits. Factors that influence labor costs include minimum wage and payroll tax legislation, health care costs, the number and performance of our company-owned restaurants and competition for qualified staff. THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED (in thousands) JUNE 28, 2026 JUNE 29, 2025 Change JUNE 28, 2026 JUNE 29, 2025 Change Labor and other related expenses $ 115,723 $ 101,310 14.2 % $ 226,332 $ 198,064 14.3 % As a percentage of restaurant sales 32.9 % 33.2 % (0.3) % 33.3 % 33.9 % (0.6) % Labor and other related expenses as a percentage of restaurant sales decreased during the thirteen and twenty-six weeks ended June 28, 2026 as compared to the same periods in the prior year primarily as a result of the leverage associated with menu price increases, partially offset by wage increases. The increases in labor and other related expenses during the thirteen and twenty-six weeks ended June 28, 2026 as compared to the same periods in the prior year were primarily due to (i) the increase in the number of company-owned restaurants and related headcount and (ii) wage increases. Other Restaurant Operating Expenses Other restaurant operating expenses consist of marketing and advertising expenses, utilities, insurance and other variable expenses incidental to operating company-owned restaurants, such as operating supplies (including paper products, menus and to-go supplies), credit card fees, repairs and maintenance, and third-party delivery services fees. THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED (in thousands) JUNE 28, 2026 JUNE 29, 2025 Change JUNE 28, 2026 JUNE 29, 2025 Change Other restaurant operating expenses $ 55,557 $ 46,603 19.2 % $ 107,461 $ 90,862 18.3 % As a percentage of restaurant sales 15.8 % 15.3 % 0.5 % 15.8 % 15.5 % 0.3 % Other restaurant operating expenses as a percentage of restaurant sales increased during the thirteen and twenty-six weeks ended June 28, 2026 as compared to the same periods in the prior year primarily due to an increase in utilities, repairs and maintenance expenses. The increase in other restaurant operating expenses during the thirteen weeks ended June 28, 2026 as compared to the same period in the prior year was primarily due to the increase in the number of company-owned restaurants driving increased expenses, including (i) $3.4 million related to utilities, repairs and maintenance expenses, (ii) $2.4 million in operating supplies, (iii) $1.6 million in third-party delivery fees and (iv) $0.9 million in credit card fees. The increase in other restaurant operating expenses during the twenty-six weeks ended June 28, 2026 as compared to the same period in the prior year was primarily due to the increase in the number of company-owned restaurants driving increased expenses, including (i) $6.0 million related to utilities, repairs and maintenance expenses, (ii) $4.5 million in operating supplies, (iii) $3.2 million in third-party delivery fees and (iv) $1.9 million in credit card fees. 26 Table of Contents Occupancy Expenses Occupancy expenses primarily consist of rent expense, property insurance, common area expenses and property taxes. THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED (in thousands) JUNE 28, 2026 JUNE 29, 2025 Change JUNE 28, 2026 JUNE 29, 2025 Change Occupancy expenses $ 28,345 $ 24,809 14.3 % $ 55,755 $ 47,958 16.3 % As a percentage of restaurant sales 8.1 % 8.1 % — % 8.2 % 8.2 % — % The increases in occupancy expenses during the thirteen and twenty-six weeks ended June 28, 2026 as compared to the same periods in the prior year were primarily due to the increase in the number of company-owned restaurants. Pre-opening Expenses Pre-opening expenses are costs incurred to open new company-owned restaurants. Pre-opening expenses include rent expense, manager salaries, recruiting expenses, employee payroll and training costs. Pre-opening expenses can fluctuate from period to period, based on the number and timing of new company-owned restaurant openings. THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED (in thousands) JUNE 28, 2026 JUNE 29, 2025 Change JUNE 28, 2026 JUNE 29, 2025 Change Pre-opening expenses $ 3,315 $ 3,507 (5.5) % $ 6,372 $ 6,167 3.3 % The decrease in pre-opening expenses during the thirteen weeks ended June 28, 2026 as compared to the same period in the prior year was primarily due to the lower number of new company-owned restaurants opened during the period. The increase in pre-opening expenses during the twenty-six weeks ended June 28, 2026 as compared to the same period in the prior year was primarily due to the higher number of new company-owned restaurants opened during the period. General and Administrative Expenses General and administrative expenses primarily consist of costs associated with our corporate and administrative functions that support restaurant development and operations including marketing and advertising costs incurred as well as legal fees, professional fees, stock-based compensation and expenses associated with being a public company, including costs associated with our compliance with the Sarbanes-Oxley Act. General and administrative expenses are impacted by changes in our employee headcount and costs related to strategic and growth initiatives. THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED (in thousands) JUNE 28, 2026 JUNE 29, 2025 Change JUNE 28, 2026 JUNE 29, 2025 Change General and administrative expenses $ 38,727 $ 33,185 16.7 % $ 78,672 $ 63,404 24.1 % The increase in general and administrative expenses during the thirteen weeks ended June 28, 2026 as compared to the same period in the prior year was mainly due to (i) a $4.0 million increase in marketing expenses, (ii) a $1.0 million increase in compensation expenses related to stock compensation and additional employee headcount to support growth and (iii) a $0.7 million increase in licenses and fees including information technology related expenses for an increased number of restaurants. The increase was partially offset by a decrease in consulting and other professional services fees. The increase in general and administrative expenses during the twenty-six weeks ended June 28, 2026 as compared to the same period in the prior year was mainly due to (i) a $5.7 million increase in marketing expenses, (ii) a $4.5 million increase in compensation expenses related to stock compensation, bonus expenses and additional employee headcount to support growth, (iii) a $3.9 million increase related to 2026 leadership conference expenses and (iv) a $1.1 million increase in licenses and fees including information technology related expenses for an increased number of restaurants. The increase was partially offset by a decrease in consulting and other professional services fees. 27 Table of Contents Depreciation and Amortization Depreciation and amortization consists of the depreciation of fixed assets, including leasehold improvements, fixtures and equipment and the amortization of definite-lived intangible assets, which are primarily comprised of franchise rights. THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED (in thousands) JUNE 28, 2026 JUNE 29, 2025 Change JUNE 28, 2026 JUNE 29, 2025 Change Depreciation and amortization $ 21,839 $ 18,136 20.4 % $ 43,235 $ 34,693 24.6 % The increases in depreciation and amortization during the thirteen and twenty-six weeks ended June 28, 2026 as compared to the same periods in the prior year were primarily related to depreciating and amortizing the assets of NROs and of acquired restaurants, including reacquired rights from franchisees. Transaction and Restructuring Expenses, Net Transaction and restructuring expenses, net principally include (i) incremental severance costs resulting from organizational optimization, (ii) costs incurred in connection with the 2025 acquisitions of franchise-owned restaurants and (iii) costs related to secondary equity offerings completed in 2025. THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED (in thousands) JUNE 28, 2026 JUNE 29, 2025 Change JUNE 28, 2026 JUNE 29, 2025 Change Transaction and restructuring expenses, net $ 332 $ 919 (63.9) % $ 1,508 $ 1,792 (15.8) % The decrease in transaction and restructuring expenses, net during the thirteen weeks ended June 28, 2026 as compared to the same period in the prior year was due to a decrease in costs incurred in connection with (i) 2025 acquisitions and (ii) 2025 secondary equity offering costs. The decrease in transaction and restructuring expenses, net during the twenty-six weeks ended June 28, 2026 as compared to the same period in the prior year was due to decreases in costs incurred in connection with (i) 2025 acquisitions and (ii) 2025 secondary equity offering costs. The decrease was partially offset by an increase in organizational optimization costs. Income from Operations THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED (in thousands) JUNE 28, 2026 JUNE 29, 2025 Change JUNE 28, 2026 JUNE 29, 2025 Change Income from operations $ 8,127 $ 7,313 11.1 % $ 9,126 $ 8,426 8.3 % As a percentage of restaurant sales 2.3 % 2.4 % (0.1) % 1.3 % 1.4 % (0.1) % Income from operations margin decreased during the thirteen and twenty-six weeks ended June 28, 2026 compared to the same periods in the prior year due to increases in expenses as a percentage of sales, primarily (i) general and administrative expenses, (ii) other restaurant operating expenses and (iii) depreciation and amortization expense. Interest Expense Interest expense primarily consists of interest and fees on our outstanding debt and the amortization expense for debt discount and deferred issuance costs. THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED (in thousands) JUNE 28, 2026 JUNE 29, 2025 Change JUNE 28, 2026 JUNE 29, 2025 Change Interest expense $ 4,892 $ 4,003 22.2 % $ 9,670 $ 7,337 31.8 % The increases in interest expense during the thirteen and twenty-six weeks ended June 28, 2026 as compared to the same periods in the prior year were due to increased debt. 28 Table of Contents Other Income, Net Other income, net includes items deemed to be non-operating based on Management’s assessment of the nature of the item in relation to our core operations. THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED (in thousands) JUNE 28, 2026 JUNE 29, 2025 Change JUNE 28, 2026 JUNE 29, 2025 Change Other income, net $ 133 $ 266 (50.0) % $ 478 $ 950 (49.7) % Other income, net decreased during the thirteen weeks ended June 28, 2026 as compared to the same period in the prior year primarily due to a decrease in sales tax commissions. Other income, net decreased during the twenty-six weeks ended June 28, 2026 as compared to the same period in the prior year primarily due to a decrease in insurance proceeds. Income Tax Income tax consists of federal and state taxes. THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED (in thousands) JUNE 28, 2026 JUNE 29, 2025 Change JUNE 28, 2026 JUNE 29, 2025 Change Income tax expense $ (1,029) $ (1,470) (30.0) % $ (280) $ (762) (63.3) % Effective income tax rate 30.6 % 41.1 % (10.5) % * 37.4 % N/M _____________ *The effective income tax rate for the twenty-six weeks ended June 28, 2026 is not meaningful as a result of the low level of loss before income taxes in the period. Income tax expense and the effective income tax rate decreased for the thirteen weeks ended June 28, 2026 as compared to the same period in the prior year, primarily due to the benefit of federal FICA tax credits and changes in executive compensation related tax impacts. Income tax expense for the twenty-six weeks ended June 28, 2026 decreased as compared to the same period in the prior year primarily due to (i) lower income before income taxes, (ii) the benefit of federal FICA tax credits and (iii) changes in executive compensation related tax impacts. Net Income (Loss) THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED (in thousands) JUNE 28, 2026 JUNE 29, 2025 Change JUNE 28, 2026 JUNE 29, 2025 Change Net income (loss) $ 2,339 $ 2,106 11.1 % $ (346) $ 1,277 (127.1) % As a percentage of total revenues 0.7 % 0.7 % — % (0.1) % 0.2 % (0.3) % Net income (loss) increased during the thirteen weeks ended June 28, 2026 as compared to the same period in the prior year primarily due to (i) the increase in income from operations and (ii) a decrease in income tax expense, partially offset by an increase in interest expense. Net income (loss) and net income (loss) margin decreased during the twenty-six weeks ended June 28, 2026 as compared to the same period in the prior year primarily due to an increase in interest expense associated with increased borrowings, partially offset by the increase in income from operations and a decrease in income tax expense. Restaurant Level Operating Profit and Restaurant Level Operating Profit Margin THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED (in thousands) JUNE 28, 2026 JUNE 29, 2025 Change JUNE 28, 2026 JUNE 29, 2025 Change Restaurant level operating profit $ 65,948 $ 56,776 16.2 % $ 126,806 $ 102,898 23.2 % Restaurant level operating profit margin 18.8 % 18.6 % 0.2 % 18.7 % 17.6 % 1.1 % 29 Table of Contents Restaurant level operating profit margin during the thirteen and twenty-six weeks ended June 28, 2026 increased as compared to the same periods in the prior year primarily due to (i) favorable labor and other related expenses as a percentage of restaurant sales and (ii) favorable food and beverage costs as a percentage of sales, partially offset by the increase in other restaurant operating expenses as a percentage of restaurant sales. Restaurant level operating profit for the thirteen and twenty-six weeks ended June 28, 2026 increased as compared to the same periods in the prior year due to sales growth driven by increases in (i) restaurant locations and (ii) same-restaurant sales. This was partially offset by increases in expenses associated primarily with an increase in the number of company-owned restaurants, including (i) labor and other related expenses, (ii) food and beverage costs, (iii) other restaurant operating expenses and (iv) occupancy expenses. Adjusted EBITDA and Adjusted EBITDA Margin THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED (in thousands) JUNE 28, 2026 JUNE 29, 2025 Change JUNE 28, 2026 JUNE 29, 2025 Change Adjusted EBITDA $ 34,470 $ 30,379 13.5 % $ 62,267 $ 53,132 17.2 % Adjusted EBITDA margin 9.7 % 9.9 % (0.2) % 9.1 % 9.0 % 0.1 % Adjusted EBITDA margin decreased during the thirteen weeks ended June 28, 2026 compared to the same period in the prior year primarily due to an increase in general and administrative expenses as a percentage of revenues, partially offset by an increase in restaurant level operating profit. Adjusted EBITDA margin increased during the twenty-six weeks ended June 28, 2026 compared to the same period in the prior year primarily due to an increase in restaurant level operating profit margin, partially offset by an increase in general and administrative expenses as a percentage of revenues. Adjusted EBITDA increased during the thirteen and twenty-six weeks ended June 28, 2026 compared to the same periods in the prior year primarily due to an increase in restaurant level operating profit, partially offset by an increase in general and administrative expenses. 30 Table of Contents Non-GAAP Financial Measures Reconciliations Adjusted EBITDA and Adjusted EBITDA margin - The following table reconciles Net income (loss) and Net income (loss) margin, the most directly comparable GAAP measures to Adjusted EBITDA and Adjusted EBITDA margin, respectively, for the periods indicated: THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED (in thousands) JUNE 28, 2026 JUNE 29, 2025 JUNE 28, 2026 JUNE 29, 2025 Net income (loss) $ 2,339 $ 2,106 $ (346) $ 1,277 Depreciation and amortization 21,839 18,136 43,235 34,693 Interest expense 4,892 4,003 9,670 7,337 Income tax expense 1,029 1,470 280 762 EBITDA 30,099 25,715 52,839 44,069 Strategic transition costs (1) 228 799 604 2,033 Stock-based compensation, net of amounts capitalized (2) 3,697 2,790 7,049 5,049 Delaware Voluntary Disclosure Agreement Program (3) — 29 — 53 Transaction and restructuring expenses, net (4) 332 919 1,508 1,792 Impairments and loss on disposal of assets (5) 114 127 267 136 Adjusted EBITDA $ 34,470 $ 30,379 $ 62,267 $ 53,132 Total revenues $ 354,672 $ 307,887 $ 685,631 $ 590,127 Net income (loss) margin 0.7 % 0.7 % (0.1) % 0.2 % Adjusted EBITDA margin 9.7 % 9.9 % 9.1 % 9.0 % Additional information Deferred rent (6) $ (344) $ 293 $ (499) $ 478 _____________________________ (1) Represents costs related to process improvements and strategic initiatives. These costs are recorded within General and administrative expenses on the Consolidated Statements of Operations and Comprehensive Income. (2) Represents non-cash, stock-based compensation expense, net of amounts capitalized, which is recorded within General and administrative expenses on the Consolidated Statements of Operations and Comprehensive Income. (3) Represents professional service costs incurred in connection with the Delaware Voluntary Disclosure Agreement Program related to unclaimed or abandoned property. These costs are recorded in General and administrative expenses on the Consolidated Statements of Operations and Comprehensive Income. (4) Represents severance costs resulting from organizational optimization, costs incurred in connection with the acquisition of franchise-owned restaurants, secondary equity offering costs and costs related to restaurant closures. (5) Represents impairment charges and costs related to the disposal of assets due to retirements, replacements, and restaurant closures. (6) Represents the non-cash portion of straight-line rent recorded within both Occupancy expenses and General and administrative expenses on the Consolidated Statements of Operations and Comprehensive Income. 31 Table of Contents Restaurant level operating profit and Restaurant level operating profit margin - The following table reconciles Income from operations and Income from operations margin, the most comparable GAAP measures to Restaurant level operating profit and Restaurant level operating profit margin, respectively, for the periods indicated: THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED (in thousands) JUNE 28, 2026 JUNE 29, 2025 JUNE 28, 2026 JUNE 29, 2025 Income from operations $ 8,127 $ 7,313 $ 9,126 $ 8,426 Less: Franchise revenues (3,191) (2,904) (6,002) (5,553) Add: General and administrative expenses 38,727 33,185 78,672 63,404 Depreciation and amortization 21,839 18,136 43,235 34,693 Transaction and restructuring expenses, net (1) 332 919 1,508 1,792 Impairments and loss on disposal of assets (2) 114 127 267 136 Restaurant level operating profit $ 65,948 $ 56,776 $ 126,806 $ 102,898 Restaurant sales $ 351,481 $ 304,983 $ 679,629 $ 584,574 Income from operations margin 2.3 % 2.4 % 1.3 % 1.4 % Restaurant level operating profit margin 18.8 % 18.6 % 18.7 % 17.6 % Additional information Deferred rent(3) $ (359) $ 244 $ (530) $ 379 _____________________________ (1) Represents severance costs resulting from organizational optimization, costs incurred in connection with the acquisition of franchise-owned restaurants, secondary equity offering costs and costs related to restaurant closures. (2) Represents impairment charges and costs related to the disposal of assets due to retirements, replacements, and restaurant closures. (3) Represents the non-cash portion of straight-line rent recorded within Occupancy expenses on the Consolidated Statements of Operations and Comprehensive Income. Liquidity and Capital Resources As of June 28, 2026, we had cash and cash equivalents of $20.5 million and outstanding borrowings under the Credit Facility of $276.0 million, excluding unamortized debt discount and deferred issuance costs. We had availability of $52.5 million under our revolving credit facility of $125.0 million, of which $2.5 million is reserved under letters of credit pursuant to our credit agreement, dated as of October 6, 2021, as amended (“Credit Agreement”). Our principal uses of cash include capital expenditures for the development, acquisition or remodeling of restaurants, lease obligations, debt service payments and strategic infrastructure investments. Our working capital requirements are low due to our restaurants storing minimal inventory and customers paying for their purchases at the time of the sale, which frequently precedes our payment terms with suppliers. We believe that our cash flow from operations combined with our availability under the Credit Facility and our cash and cash equivalents will be sufficient to meet our liquidity needs for at least the next 12 months. We anticipate that to the extent that we require additional liquidity, or should we decide to pursue one or more significant acquisitions, the funds would be furnished first through additional indebtedness and thereafter through the issuance of equity. Although we believe that our current level of total available liquidity is sufficient to meet our short-term and long-term liquidity requirements, we regularly evaluate opportunities to improve our liquidity position in order to enhance financial flexibility. We estimate that our capital expenditures will total approximately $145.0 million to $150.0 million in 2026. This capital is invested primarily in new restaurant projects and planned remodels. We intend to fund the capital expenditures primarily with cash generated from our operating activities as well as with borrowings pursuant to our Credit Agreement. 32 Table of Contents Summary of Cash Flows The following table presents a summary of our cash provided by (used in) operating, investing and financing activities for the twenty-six weeks ended June 28, 2026 and June 29, 2025: TWENTY-SIX WEEKS ENDED (in thousands) JUNE 28, 2026 JUNE 29, 2025 Cash provided by operating activities $ 61,896 $ 59,570 Cash used in investing activities (70,506) (132,849) Cash provided by financing activities 7,849 59,144 Net decrease in cash and cash equivalents $ (761) $ (14,135) Cash provided by operations is our typical source of liquidity used (i) to fund capital expenditures for new restaurants, (ii) to maintain and remodel existing restaurants and (iii) for debt service. During the twenty-six weeks ended June 28, 2026 as compared to the twenty-six weeks ended June 29, 2025, there was an increase in cash provided by operations primarily due to an increase in company-owned restaurants, partially offset by the timing of operational payments. Cash used in investing activities decreased during the twenty-six weeks ended June 28, 2026 from the twenty-six weeks ended June 29, 2025 due principally to (i) amounts paid in 2025 to acquire franchise locations and (ii) the timing of capital expenditures and payments. Cash provided by financing activities includes borrowing from, and repayments of, the Company’s Credit Facility. Critical Accounting Policies and Estimates Our discussion and analysis of our financial condition and results of operations is based upon the accompanying consolidated financial statements and notes thereto, which have been prepared in accordance with GAAP. The preparation of these consolidated financial statements and related notes requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. Certain of our accounting policies require the application of significant judgment by management in selecting the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. These judgments are based on our historical experience, terms of existing contracts, our evaluation of trends in the industry and information available from other outside sources, as appropriate. We evaluate our estimates and judgments on an on-going basis. Our actual results may differ from these estimates. Judgments and uncertainties affecting the application of those policies may result in materially different amounts being reported under different conditions or using different assumptions. There have been no significant changes to our critical accounting policies as disclosed in “Critical Accounting Policies and Estimates” in the 2025 Form 10-K. Recently Issued Accounting Pronouncements For a discussion of recently issued accounting pronouncements, see Note 2, Summary of Significant Accounting Policies, in the accompanying notes to these consolidated financial statements.