Income Taxes |
9 Months Ended |
|---|---|
Sep. 28, 2025 | |
| Income Taxes | |
| Income Taxes |
Note 8 – Income Taxes For both the nine periods ended September 28, 2025 and the nine months ended September 30, 2024, the Company has computed its interim tax provision using the estimated annual effective tax rate method.
The Company’s effective income tax rate was (222.0)% for the nine periods ended September 28, 2025 compared to 30.6% for the nine months ended September 30, 2024. The Company’s effective tax rate for the nine periods ended September 28, 2025 differs from the statutory U.S. tax rate of 21% due to the establishment of a valuation allowance against the Company’s deferred tax assets. Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended September 28, 2025. Accordingly, the Company recorded a full valuation allowance during the three and nine periods ended September 28, 2025. As a result, the Company recorded a tax expense of $59.1 million and $60.1 million for the three and nine periods ended September 28, 2025, respectively. The Company recorded a tax benefit of $8.6 million for the nine months ended September 30, 2024.The Company’s effective tax rate, for the nine months ended September 30, 2024, differs from the statutory U.S. tax rate of 21% primarily due to the following: (i) tax credits for FICA taxes on certain employees’ tips; (ii) taxes owed in foreign jurisdictions with tax rates that differ from the U.S. statutory rate; (iii) taxes owed in state and local jurisdictions; and (iv) the tax effect of non-deductible compensation; and (v) transaction costs associated with the Benihana Acquisition. The income tax amounts recorded for the nine months ended September 30, 2024 included the discrete period tax benefits resulting from the vesting of restricted stock units. The Company is subject to U.S. federal, state, local and various foreign income taxes for the jurisdictions in which it operates. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. In the normal course of business, the Company is subject to examination by federal, state, local and foreign taxing authorities. On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”), was enacted, which includes a broad range of tax reform provisions, including changes to bonus depreciation and interest expense, among others. Any impact as a result of a change in tax law is recorded in the period of enactment. As such, the effects of the OBBBA are reflected in the Company's provision for income taxes as of and for the three and nine periods ended September 28, 2025. The OBBBA did not have a material effect on income tax expense for the nine periods ended September 28, 2025
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