REVENUE RECOGNITION
Revenues from retail restaurants are presented net of discounts and recognized when food and beverage products are sold to the end customer. Sales taxes collected from customers are excluded from revenues and the obligation is included in accrued liabilities until the taxes are remitted to the appropriate taxing authorities.
The Company also offers delivery services to customers which are generally classified as either Dispatch Sales or Marketplace Sales. Refer to Note 2. Summary Of Significant Accounting Policies for additional information regarding revenue recognition for Dispatch Sales and Marketplace Sales.
The Company sells gift cards which do not have expiration dates. Refer to Note 2. Summary Of Significant Accounting Policies for additional information regarding gift card sales. The Company recognized gift card breakage of $0.9 million for the years ended December 28, 2025, December 29, 2024 and December 31, 2023.
The Company’s revenue related to performance obligations not yet satisfied is revenue from gift cards sold but not yet redeemed. The gift card liability is included in deferred revenue on the consolidated balance sheets as follows (in thousands):
| | | | | | | | | | | | | |
| December 28, 2025 | | December 29, 2024 | | |
| Gift card liability | $ | 6,965 | | | $ | 6,875 | | | |
Revenue recognized in the consolidated statements of operations for the redemption of gift cards that were included in their respective liability balances at the beginning of the year is as follows (in thousands):
| | | | | | | | | | | | | | | | | | | | | |
| | | Fiscal Years Ended |
| | | | | December 28, 2025 | | December 29, 2024 | | December 31, 2023 |
| Revenue recognized from gift card liability balance at the beginning of the year | | | | | $ | 3,980 | | | $ | 3,972 | | | $ | 3,822 | |
In March 2025, the Company launched Perks, an app-less loyalty program that lives in guests' digital wallets. Perks is a visit-based program, and guests earn rewards based on qualified visits. Refer to Note 2. Summary Of Significant Accounting Policies for additional information. As of December 28, 2025, the Perks liability was $0.2 million.
About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.