(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||
Large accelerated filer | ☐ | ☒ | ||||||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||
Emerging growth company |
Class | Outstanding at October 28, 2022 | |||||||
Class A Common Stock, $0.01 par value per share |
Page | |||||||||||
September 27, 2022 | December 28, 2021 | |||||||||||||
(unaudited) | ||||||||||||||
Assets | ||||||||||||||
Current assets: | ||||||||||||||
Cash and cash equivalents | $ | $ | ||||||||||||
Accounts receivable | ||||||||||||||
Inventories | ||||||||||||||
Prepaid expenses and other assets | ||||||||||||||
Income tax receivable | ||||||||||||||
Total current assets | ||||||||||||||
Property and equipment, net | ||||||||||||||
Operating lease assets, net | ||||||||||||||
Goodwill | ||||||||||||||
Intangibles, net | ||||||||||||||
Other assets, net | ||||||||||||||
Total long-term assets | ||||||||||||||
Total assets | $ | $ | ||||||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable | $ | $ | ||||||||||||
Accrued payroll and benefits | ||||||||||||||
Accrued expenses and other current liabilities | ||||||||||||||
Current operating lease liabilities | ||||||||||||||
Current portion of long-term debt | ||||||||||||||
Total current liabilities | ||||||||||||||
Long-term debt, net | ||||||||||||||
Long-term operating lease liabilities, net | ||||||||||||||
Deferred tax liabilities, net | ||||||||||||||
Other long-term liabilities | ||||||||||||||
Total liabilities | ||||||||||||||
Stockholders’ equity: | ||||||||||||||
Preferred stock—$ | ||||||||||||||
Common stock—$ | ||||||||||||||
Treasury stock, at cost, | ( | ( | ||||||||||||
Additional paid-in capital | ||||||||||||||
Accumulated deficit | ( | ( | ||||||||||||
Total stockholders’ equity | ||||||||||||||
Total liabilities and stockholders’ equity | $ | $ |
Fiscal Quarter Ended | Three Fiscal Quarters Ended | |||||||||||||||||||||||||
September 27, 2022 | September 28, 2021 | September 27, 2022 | September 28, 2021 | |||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||||
Restaurant revenue | $ | $ | $ | $ | ||||||||||||||||||||||
Franchising royalties and fees, and other | ||||||||||||||||||||||||||
Total revenue | ||||||||||||||||||||||||||
Costs and expenses: | ||||||||||||||||||||||||||
Restaurant operating costs (exclusive of depreciation and amortization shown separately below): | ||||||||||||||||||||||||||
Cost of sales | ||||||||||||||||||||||||||
Labor | ||||||||||||||||||||||||||
Occupancy | ||||||||||||||||||||||||||
Other restaurant operating costs | ||||||||||||||||||||||||||
General and administrative | ||||||||||||||||||||||||||
Depreciation and amortization | ||||||||||||||||||||||||||
Pre-opening | ||||||||||||||||||||||||||
Restaurant impairments, closure costs and asset disposals | ||||||||||||||||||||||||||
Total costs and expenses | ||||||||||||||||||||||||||
Income (loss) from operations | ( | |||||||||||||||||||||||||
Interest expense, net | ||||||||||||||||||||||||||
Income (loss) before taxes | ( | |||||||||||||||||||||||||
(Benefit from) provision for income taxes | ( | ( | ||||||||||||||||||||||||
Net income (loss) | $ | $ | $ | ( | $ | |||||||||||||||||||||
Earnings (loss) per Class A and Class B common stock, combined | ||||||||||||||||||||||||||
Basic | $ | $ | $ | ( | $ | |||||||||||||||||||||
Diluted | $ | $ | $ | ( | $ | |||||||||||||||||||||
Weighted average shares of Class A and Class B common stock outstanding, combined: | ||||||||||||||||||||||||||
Basic | ||||||||||||||||||||||||||
Diluted |
Fiscal Quarter Ended | ||||||||||||||||||||||||||||||||||||||||||||
Common Stock(1) | Treasury | Additional Paid-In Capital | Accumulated Deficit | Total Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||
Balance—June 28, 2022 | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||
Stock plan transactions and other | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Balance—September 27, 2022 | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||
Balance—June 29, 2021 | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||
Stock plan transactions and other | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Balance—September 28, 2021 | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||
Three Fiscal Quarters Ended | ||||||||||||||||||||||||||||||||||||||||||||
Common Stock(1) | Treasury | Additional Paid-In Capital | Accumulated Deficit | Total Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||
Balance—December 28, 2021 | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||
Stock plan transactions and other | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||
Balance—September 27, 2022 | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||
Balance—December 29, 2020 | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||
L Catterton warrants exercised | — | — | ( | — | ||||||||||||||||||||||||||||||||||||||||
Stock plan transactions and other | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Balance—September 28, 2021 | $ | $ | ( | $ | $ | ( | $ |
Three Fiscal Quarters Ended | ||||||||||||||
September 27, 2022 | September 28, 2021 | |||||||||||||
Operating activities | ||||||||||||||
Net (loss) income | $ | ( | $ | |||||||||||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||||||||||||
Depreciation and amortization | ||||||||||||||
Deferred income taxes | ( | |||||||||||||
Restaurant impairments, closure costs and asset disposals | ||||||||||||||
Amortization of debt issuance costs | ||||||||||||||
Stock-based compensation | ||||||||||||||
Gain on insurance proceeds | ( | |||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||
Accounts receivable | ( | ( | ||||||||||||
Inventories | ( | ( | ||||||||||||
Prepaid expenses and other assets | ( | |||||||||||||
Accounts payable | ( | |||||||||||||
Income taxes | ( | ( | ||||||||||||
Operating lease assets and liabilities | ( | ( | ||||||||||||
Accrued expenses and other liabilities | ( | ( | ||||||||||||
Net cash provided by operating activities | ||||||||||||||
Investing activities | ||||||||||||||
Purchases of property and equipment | ( | ( | ||||||||||||
Insurance proceeds received for property damage | ||||||||||||||
Proceeds from restaurant divestitures | ||||||||||||||
Net cash used in investing activities | ( | ( | ||||||||||||
Financing activities | ||||||||||||||
Net borrowings from swing line loan | ||||||||||||||
Proceeds from borrowings on long-term debt | ||||||||||||||
Payments on long-term debt | ( | ( | ||||||||||||
Payments on finance leases | ( | ( | ||||||||||||
Debt issuance costs | ( | |||||||||||||
Stock plan transactions and tax withholding on share-based compensation awards | ( | ( | ||||||||||||
Net cash provided by (used in) financing activities | ( | |||||||||||||
Net decrease in cash and cash equivalents | ( | ( | ||||||||||||
Cash and cash equivalents | ||||||||||||||
Beginning of period | ||||||||||||||
End of period | $ | $ |
September 27, 2022 | December 28, 2021 | |||||||||||||
Delivery program receivables | $ | $ | ||||||||||||
Vendor rebate receivables | ||||||||||||||
Franchise receivables | ||||||||||||||
Other receivables | ||||||||||||||
Accounts receivable | $ | $ |
September 27, 2022 | December 28, 2021 | |||||||||||||
Prepaid insurance | $ | $ | ||||||||||||
Prepaid occupancy related costs | ||||||||||||||
Current assets held for sale (1) | ||||||||||||||
Prepaid expenses | ||||||||||||||
Other current assets | ||||||||||||||
Prepaid expenses and other assets | $ | $ |
September 27, 2022 | December 28, 2021 | |||||||||||||
Leasehold improvements | $ | $ | ||||||||||||
Furniture, fixtures and equipment | ||||||||||||||
Construction in progress | ||||||||||||||
Accumulated depreciation and amortization | ( | ( | ||||||||||||
Property and equipment, net | $ | $ |
September 27, 2022 | December 28, 2021 | |||||||||||||
Accrued payroll and related liabilities | $ | $ | ||||||||||||
Accrued bonus | ||||||||||||||
Insurance liabilities | ||||||||||||||
Accrued payroll and benefits | $ | $ |
September 27, 2022 | December 28, 2021 | |||||||||||||
Gift card liability | $ | $ | ||||||||||||
Occupancy related | ||||||||||||||
Utilities | ||||||||||||||
Current portion of finance lease liability | ||||||||||||||
Liabilities held for sale (1) | ||||||||||||||
Accrued interest | ||||||||||||||
Insurance liabilities | ||||||||||||||
Other restaurant expense accruals | ||||||||||||||
Other corporate expense accruals | ||||||||||||||
Accrued expenses and other current liabilities | $ | $ |
Fiscal Quarter Ended | Three Fiscal Quarters Ended | |||||||||||||||||||||||||
September 27, 2022 | September 28, 2021 | September 27, 2022 | September 28, 2021 | |||||||||||||||||||||||
(Benefit from) provision for income taxes | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||
Effective tax rate | ( | % | % | % | % |
Fiscal Quarter Ended | Three Fiscal Quarters Ended | ||||||||||||||||||||||
September 27, 2022 | September 28, 2021 | September 27, 2022 | September 28, 2021 | ||||||||||||||||||||
Stock-based compensation expense | $ | $ | $ | $ | |||||||||||||||||||
Capitalized stock-based compensation expense | $ | $ | $ | $ |
Fiscal Quarter Ended | Three Fiscal Quarters Ended | ||||||||||||||||||||||
September 27, 2022 | September 28, 2021 | September 27, 2022 | September 28, 2021 | ||||||||||||||||||||
Restaurant impairments (1) | $ | $ | $ | $ | |||||||||||||||||||
Closure costs (1) | |||||||||||||||||||||||
Loss on disposal of assets and other | |||||||||||||||||||||||
$ | $ | $ | $ |
Fiscal Quarter Ended | Three Fiscal Quarters Ended | |||||||||||||||||||||||||
September 27, 2022 | September 28, 2021 | September 27, 2022 | September 28, 2021 | |||||||||||||||||||||||
Net income (loss) | $ | $ | $ | ( | $ | |||||||||||||||||||||
Shares: | ||||||||||||||||||||||||||
Basic weighted average shares outstanding | ||||||||||||||||||||||||||
Effect of dilutive securities | ||||||||||||||||||||||||||
Diluted weighted average shares outstanding | ||||||||||||||||||||||||||
Earnings (loss) per share: | ||||||||||||||||||||||||||
Basic earnings (loss) per share | $ | $ | $ | ( | $ | |||||||||||||||||||||
Diluted earnings (loss) per share | $ | $ | $ | ( | $ |
Classification | September 27, 2022 | December 28, 2021 | |||||||||||||||
Assets | |||||||||||||||||
Operating | Operating lease assets, net | $ | $ | ||||||||||||||
Finance | |||||||||||||||||
Total leased assets | $ | $ | |||||||||||||||
Liabilities | |||||||||||||||||
Current lease liabilities | |||||||||||||||||
Operating | Current operating lease liabilities | $ | $ | ||||||||||||||
Finance | |||||||||||||||||
Long-term lease liabilities | |||||||||||||||||
Operating | Long-term operating lease liabilities | ||||||||||||||||
Finance | |||||||||||||||||
Total lease liabilities | $ | $ |
Fiscal Quarter Ended | Three Fiscal Quarters Ended | |||||||||||||||||||||||||
September 27, 2022 | September 28, 2021 | September 27, 2022 | September 28, 2021 | |||||||||||||||||||||||
Cash paid for lease liabilities: | ||||||||||||||||||||||||||
Operating leases | $ | $ | $ | $ | ||||||||||||||||||||||
Finance leases | ||||||||||||||||||||||||||
$ | $ | $ | $ | |||||||||||||||||||||||
Right-of-use assets obtained in exchange for lease liabilities: | ||||||||||||||||||||||||||
Operating leases | $ | $ | $ | $ | ||||||||||||||||||||||
Finance leases | ||||||||||||||||||||||||||
$ | $ | $ | $ |
September 27, 2022 | September 28, 2021 | |||||||||||||
Interest paid (net of amounts capitalized) | $ | $ | ||||||||||||
Income taxes paid | ||||||||||||||
Purchases of property and equipment accrued in accounts payable |
Fiscal Quarter Ended | Three Fiscal Quarters Ended | |||||||||||||||||||||||||
September 27, 2022 | September 28, 2021 | September 27, 2022 | September 28, 2021 | |||||||||||||||||||||||
(in thousands, unaudited) | ||||||||||||||||||||||||||
Net income (loss) | $ | 795 | $ | 4,697 | $ | (4,289) | $ | 8,403 | ||||||||||||||||||
Depreciation and amortization | 5,826 | 5,571 | 17,310 | 16,734 | ||||||||||||||||||||||
Interest expense, net | 735 | 594 | 1,661 | 1,714 | ||||||||||||||||||||||
(Benefit from) provision for income taxes | (1) | 29 | (40) | 48 | ||||||||||||||||||||||
EBITDA | $ | 7,355 | $ | 10,891 | $ | 14,642 | $ | 26,899 | ||||||||||||||||||
Restaurant impairments, closure costs and asset disposals (1) | 1,672 | 1,126 | 5,032 | 2,747 | ||||||||||||||||||||||
Stock-based compensation expense | 751 | 1,177 | 3,419 | 3,590 | ||||||||||||||||||||||
Fees and costs related to transactions and other acquisition/disposition costs | 7 | — | 70 | — | ||||||||||||||||||||||
Adjusted EBITDA | $ | 9,785 | $ | 13,194 | $ | 23,163 | $ | 33,236 |
Fiscal Quarter Ended | Three Fiscal Quarters Ended | |||||||||||||||||||||||||
September 27, 2022 | September 28, 2021 | September 27, 2022 | September 28, 2021 | |||||||||||||||||||||||
Company-Owned Restaurant Activity | ||||||||||||||||||||||||||
Beginning of period | 363 | 374 | 372 | 378 | ||||||||||||||||||||||
Openings | 3 | 2 | 11 | 4 | ||||||||||||||||||||||
Closures | — | (2) | (2) | (8) | ||||||||||||||||||||||
Divestitures (1) | — | — | (15) | — | ||||||||||||||||||||||
Restaurants at end of period | 366 | 374 | 366 | 374 | ||||||||||||||||||||||
Franchise Restaurant Activity | ||||||||||||||||||||||||||
Beginning of period | 93 | 77 | 76 | 76 | ||||||||||||||||||||||
Openings | 1 | — | 3 | 1 | ||||||||||||||||||||||
Acquisitions (1) | — | — | 15 | — | ||||||||||||||||||||||
Closures | (1) | (1) | (1) | (1) | ||||||||||||||||||||||
Restaurants at end of period | 93 | 76 | 93 | 76 | ||||||||||||||||||||||
Total restaurants | 459 | 450 | 459 | 450 |
Fiscal Quarter Ended | Three Fiscal Quarters Ended | |||||||||||||||||||||||||
September 27, 2022 | September 28, 2021 | September 27, 2022 | September 28, 2021 | |||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||||
Restaurant revenue | 97.9 | % | 98.4 | % | 97.8 | % | 98.4 | % | ||||||||||||||||||
Franchising royalties and fees, and other | 2.1 | % | 1.6 | % | 2.2 | % | 1.6 | % | ||||||||||||||||||
Total revenue | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||||||||
Costs and expenses: | ||||||||||||||||||||||||||
Restaurant operating costs (exclusive of depreciation and amortization shown separately below): | ||||||||||||||||||||||||||
Cost of sales | 28.1 | % | 25.1 | % | 27.9 | % | 25.0 | % | ||||||||||||||||||
Labor | 30.8 | % | 30.0 | % | 31.1 | % | 30.5 | % | ||||||||||||||||||
Occupancy | 8.8 | % | 9.3 | % | 9.1 | % | 9.8 | % | ||||||||||||||||||
Other restaurant operating costs | 17.9 | % | 17.5 | % | 18.5 | % | 17.7 | % | ||||||||||||||||||
General and administrative | 9.0 | % | 9.7 | % | 9.7 | % | 10.0 | % | ||||||||||||||||||
Depreciation and amortization | 4.5 | % | 4.5 | % | 4.6 | % | 4.6 | % | ||||||||||||||||||
Pre-opening | 0.3 | % | 0.1 | % | 0.3 | % | 0.1 | % | ||||||||||||||||||
Restaurant impairments, closure costs and asset disposals | 1.3 | % | 0.9 | % | 1.3 | % | 0.8 | % | ||||||||||||||||||
Total costs and expenses | 98.8 | % | 95.7 | % | 100.7 | % | 97.2 | % | ||||||||||||||||||
Income (loss) from operations | 1.2 | % | 4.3 | % | (0.7) | % | 2.8 | % | ||||||||||||||||||
Interest expense, net | 0.6 | % | 0.5 | % | 0.4 | % | 0.5 | % | ||||||||||||||||||
Income (loss) before taxes | 0.6 | % | 3.8 | % | (1.2) | % | 2.3 | % | ||||||||||||||||||
(Benefit from) provision for income taxes | — | % | — | % | — | % | — | % | ||||||||||||||||||
Net income (loss) | 0.6 | % | 3.8 | % | (1.2) | % | 2.3 | % |
Fiscal Quarter Ended | Increase / (Decrease) | |||||||||||||||||||||||||
September 27, 2022 | September 28, 2021 | $ | % | |||||||||||||||||||||||
(in thousands, unaudited) | ||||||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||||
Restaurant revenue | $ | 126,638 | $ | 123,094 | $ | 3,544 | 2.9 | % | ||||||||||||||||||
Franchising royalties and fees, and other | 2,743 | 2,032 | 711 | 35.0 | % | |||||||||||||||||||||
Total revenue | 129,381 | 125,126 | 4,255 | 3.4 | % | |||||||||||||||||||||
Costs and expenses: | ||||||||||||||||||||||||||
Restaurant operating costs (exclusive of depreciation and amortization shown separately below): | ||||||||||||||||||||||||||
Cost of sales | 35,528 | 30,946 | 4,582 | 14.8 | % | |||||||||||||||||||||
Labor | 39,049 | 36,896 | 2,153 | 5.8 | % | |||||||||||||||||||||
Occupancy | 11,135 | 11,426 | (291) | (2.5) | % | |||||||||||||||||||||
Other restaurant operating costs | 22,709 | 21,529 | 1,180 | 5.5 | % | |||||||||||||||||||||
General and administrative | 11,596 | 12,187 | (591) | (4.8) | % | |||||||||||||||||||||
Depreciation and amortization | 5,826 | 5,571 | 255 | 4.6 | % | |||||||||||||||||||||
Pre-opening | 337 | 125 | 212 | 169.6 | % | |||||||||||||||||||||
Restaurant impairments, closure costs and asset disposals | 1,672 | 1,126 | 546 | 48.5 | % | |||||||||||||||||||||
Total costs and expenses | 127,852 | 119,806 | 8,046 | 6.7 | % | |||||||||||||||||||||
Income from operations | 1,529 | 5,320 | (3,791) | (71.3) | % | |||||||||||||||||||||
Interest expense, net | 735 | 594 | 141 | 23.7 | % | |||||||||||||||||||||
Income before income taxes | 794 | 4,726 | (3,932) | (83.2) | % | |||||||||||||||||||||
(Benefit from) provision for income taxes | (1) | 29 | (30) | (103.4) | % | |||||||||||||||||||||
Net income | $ | 795 | $ | 4,697 | $ | (3,902) | (83.1) | % | ||||||||||||||||||
Company-owned: | ||||||||||||||||||||||||||
Average unit volume | $ | 1,387 | $ | 1,377 | $ | 10 | 0.7 | % | ||||||||||||||||||
Comparable restaurant sales | 3.4 | % | 15.3 | % |
Three Fiscal Quarters Ended | Increase / (Decrease) | |||||||||||||||||||||||||
September 27, 2022 | September 28, 2021 | $ | % | |||||||||||||||||||||||
(in thousands, except percentages) | ||||||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||||
Restaurant revenue | $ | 364,873 | $ | 354,553 | $ | 10,320 | 2.9 | % | ||||||||||||||||||
Franchising royalties and fees, and other | 8,137 | 5,799 | 2,338 | 40.3 | % | |||||||||||||||||||||
Total revenue | 373,010 | 360,352 | 12,658 | 3.5 | % | |||||||||||||||||||||
Costs and expenses: | ||||||||||||||||||||||||||
Restaurant operating costs (exclusive of depreciation and amortization shown separately below): | ||||||||||||||||||||||||||
Cost of sales | 101,963 | 88,728 | 13,235 | 14.9 | % | |||||||||||||||||||||
Labor | 113,370 | 108,128 | 5,242 | 4.8 | % | |||||||||||||||||||||
Occupancy | 33,358 | 34,594 | (1,236) | (3.6) | % | |||||||||||||||||||||
Other restaurant operating costs | 67,367 | 62,816 | 4,551 | 7.2 | % | |||||||||||||||||||||
General and administrative | 36,180 | 36,094 | 86 | 0.2 | % | |||||||||||||||||||||
Depreciation and amortization | 17,310 | 16,734 | 576 | 3.4 | % | |||||||||||||||||||||
Pre-opening | 1,098 | 346 | 752 | * | ||||||||||||||||||||||
Restaurant impairments, closure costs and asset disposals | 5,032 | 2,747 | 2,285 | 83.2 | % | |||||||||||||||||||||
Total costs and expenses | 375,678 | 350,187 | 25,491 | 7.3 | % | |||||||||||||||||||||
(Loss) income from operations | (2,668) | 10,165 | (12,833) | * | ||||||||||||||||||||||
Interest expense, net | 1,661 | 1,714 | (53) | (3.1) | % | |||||||||||||||||||||
(Loss) income before taxes | (4,329) | 8,451 | (12,780) | * | ||||||||||||||||||||||
(Benefit from) provision for income taxes | (40) | 48 | (88) | * | ||||||||||||||||||||||
Net (loss) income | $ | (4,289) | $ | 8,403 | $ | (12,692) | * | |||||||||||||||||||
Company-owned: | ||||||||||||||||||||||||||
Average unit volumes | $ | 1,353 | $ | 1,298 | $ | 55 | 4.2 | % | ||||||||||||||||||
Comparable restaurant sales | 4.6 | % | 25.4 | % |
Three Fiscal Quarters Ended | ||||||||||||||
September 27, 2022 | September 28, 2021 | |||||||||||||
Net cash provided by operating activities | $ | 7,820 | $ | 29,896 | ||||||||||
Net cash used in investing activities | (20,972) | (12,559) | ||||||||||||
Net cash provided by (used in) financing activities | 12,737 | (22,028) | ||||||||||||
Net decrease in cash and cash equivalents | $ | (415) | $ | (4,691) |
Exhibit Number | Description of Exhibit | |||||||
10.1 | ||||||||
31.1 | ||||||||
31.2 | ||||||||
32.1 | ||||||||
101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |||||||
101.SCH | Inline XBRL Taxonomy Extension Schema Document | |||||||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |||||||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |||||||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
104.0 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
NOODLES & COMPANY | |||||
By: | /s/ CARL LUKACH | ||||
Carl Lukach Chief Financial Officer (principal financial officer and duly authorized signatory for the registrant) | |||||
Date | November 4, 2022 |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ DAVE BOENNIGHAUSEN | ||||||||
Dave Boennighausen | ||||||||
Chief Executive Officer (Principal Executive Officer) |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ CARL LUKACH | ||||||||
Carl Lukach | ||||||||
Chief Financial Officer | ||||||||
(Principal Financial Officer) |
By: | /s/ DAVE BOENNIGHAUSEN | ||||||||||
Name: | Dave Boennighausen | ||||||||||
Title: | Chief Executive Officer |
By: | /s/ CARL LUKACH | ||||||||||
Name: | Carl Lukach | ||||||||||
Title: | Chief Financial Officer |
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares |
Sep. 27, 2022 |
Dec. 28, 2021 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (USD per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (USD per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 180,000,000 | 180,000,000 |
Common stock, shares, issued | 48,443,794 | 48,125,151 |
Common stock, shares, outstanding | 46,019,923 | 45,701,280 |
Treasury shares | 2,423,871 | 2,423,871 |
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands |
9 Months Ended | |
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Sep. 27, 2022 |
Sep. 28, 2021 |
|
Operating activities | ||
Net (loss) income | $ (4,289) | $ 8,403 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
Depreciation and amortization | 17,310 | 16,734 |
Deferred income taxes | (41) | 41 |
Restaurant impairments, closure costs and asset disposals | 1,688 | 1,441 |
Amortization of debt issuance costs | 627 | 333 |
Stock-based compensation | 3,354 | 3,436 |
Gain on insurance proceeds | 0 | (406) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (1,210) | (431) |
Inventories | (709) | (221) |
Prepaid expenses and other assets | 923 | (1,893) |
Accounts payable | (592) | 3,149 |
Income taxes | (119) | (22) |
Operating lease assets and liabilities | (2,440) | (649) |
Accrued expenses and other liabilities | (6,682) | (19) |
Net cash provided by operating activities | 7,820 | 29,896 |
Investing activities | ||
Purchases of property and equipment | (22,549) | (12,965) |
Insurance proceeds received for property damage | 0 | 406 |
Proceeds from restaurant divestitures | 1,577 | 0 |
Net cash used in investing activities | (20,972) | (12,559) |
Financing activities | ||
Net borrowings from swing line loan | 4,967 | 0 |
Proceeds from borrowings on long-term debt | 43,512 | 0 |
Payments on long-term debt | (32,850) | (20,118) |
Debt issuance costs | (1,077) | 0 |
Payments on finance leases | (1,442) | (1,429) |
Stock plan transactions and tax withholding on share-based compensation awards | (373) | (481) |
Net cash provided by (used in) financing activities | 12,737 | (22,028) |
Net decrease in cash and cash equivalents | (415) | (4,691) |
Cash and cash equivalents | ||
Beginning of period | 2,255 | 7,840 |
End of period | $ 1,840 | $ 3,149 |
Business Summary and Basis of Presentation |
9 Months Ended |
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Sep. 27, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business Summary and Basis of Presentation | Business Summary and Basis of Presentation Business Noodles & Company (the “Company”), a Delaware corporation, develops and operates fast casual restaurants that serve globally inspired noodle and pasta dishes, soups, salads and appetizers. As of September 27, 2022, the Company had 459 restaurants system-wide in 31 states, comprised of 366 company-owned restaurants and 93 franchise restaurants. The Company operates its business as one operating and reportable segment. Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of Noodles & Company and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The accompanying interim unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. In the opinion of the Company, all adjustments considered necessary for the fair presentation of the Company’s results of operations, financial position and cash flows for the periods presented have been included and are of a normal, recurring nature. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The results of operations for any interim period are not necessarily indicative of results for the full year. Certain information and footnote disclosures normally included in the Company’s annual consolidated financial statements on Form 10-K have been condensed or omitted. The condensed consolidated balance sheet as of December 28, 2021 was derived from audited financial statements. These financial statements should be read in conjunction with the audited financial statements and the related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 28, 2021. Fiscal Year The Company operates on a 52- or 53-week fiscal year ending on the Tuesday closest to December 31. The Company’s fiscal quarters each contain 13 operating weeks, with the exception of the fourth quarter of a 53-week fiscal year, which contains 14 operating weeks. Fiscal year 2022, which ends on January 3, 2023 contains 53 weeks and fiscal year 2021, which ended on December 28, 2021, contained 52 weeks. The Company’s fiscal quarter that ended September 27, 2022 is referred to as the third quarter of 2022, and the fiscal quarter ended September 28, 2021 is referred to as the third quarter of 2021. Recent Accounting Pronouncements In March 2020, the FASB issued ASU No. 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). ASU 2020-04 is intended to provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. The Company may elect to apply the amendments prospectively through December 31, 2022. The Company adopted this pronouncement in the third quarter of 2022. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements and related disclosures.
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Supplemental Financial Information |
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Supplemental Financial Information [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Financial Information | Supplemental Financial Information Accounts receivable consist of the following (in thousands):
Prepaid expenses and other assets consist of the following (in thousands):
_____________________________ (1) Current assets held for sale as of December 28, 2021 included assets held in connection with the divestiture of 15 company-owned restaurants to a franchisee (“Warner Sale”) which closed in January 2022. Property and equipment, net, consists of the following (in thousands):
Accrued payroll and benefits consist of the following (in thousands):
Accrued expenses and other current liabilities consist of the following (in thousands):
_____________________________ (1) Liabilities held for sale as of December 28, 2021 included liabilities held in connection with the Warner Sale which closed in January 2022.
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Long-Term Debt |
9 Months Ended |
---|---|
Sep. 27, 2022 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt On May 9, 2018, the Company entered into a credit facility with U.S. Bank National Association (the “2018 Credit Facility”). The 2018 Credit Facility consisted of a term loan facility in an aggregate principal amount of $25.0 million and a revolving credit facility of $65.0 million, which included a letter of credit subfacility in the amount of $15.0 million and a swingline subfacility in the amount of $10.0 million. On November 20, 2019, the Company amended its 2018 Credit Facility by entering into the First Amendment to the Credit Agreement (the “Amendment” and the 2018 Credit Facility, as amended, the “First Amended Credit Facility”). On June 16, 2020, the Company amended its First Amended Credit Facility by entering into the Second Amendment to the Credit Agreement (the “Second Amendment” and the First Amended Credit Facility, as amended, or the “Second Amended Credit Facility”). On July 27, 2022, the Company amended and restated its Second Amended Credit Facility by entering into the Third Amendment to the Credit Agreement (the “Third Amendment” or the “Third Amended Credit Facility”) which matures on July 27, 2027. Among other things, the Third Amendment: (i) increased the credit facility from $100.0 million to $125.0 million; (ii) eliminated the term loan and principal amortization components of the credit facility; (iii) removed the Company’s capital expenditure covenant; (iv) enhanced flexibility for certain covenants and restrictions; and (v) lowered the spread within the Company’s cost of borrowing and transitioned from LIBOR to the Secured Overnight Financing Rate (“SOFR”) plus a margin of 1.50% to 2.50% per annum, based upon the consolidated total lease-adjusted leverage ratio. In connection with the Third Amendment, the Company wrote off a portion of the unamortized debt issuance costs related to the Second Amended Credit Facility in the amount of $0.3 million in the third quarter of 2022. As of September 27, 2022, the Company had $37.9 million of indebtedness (excluding $1.7 million of unamortized debt issuance costs) and $3.0 million of letters of credit outstanding under the Third Amended Credit Facility. As of September 27, 2022, the Company had cash on hand of $1.8 million. The Company’s outstanding indebtedness bore interest at rates between 2.35% to 7.50% during the first three quarters of 2022. The Company also maintains outstanding letters of credit to secure obligations under its workers’ compensation program and certain lease obligations. The Company was in compliance with all of its debt covenants as of September 27, 2022.
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Fair Value Measurements |
9 Months Ended |
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Sep. 27, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and all other current liabilities approximate their fair values due to their short-term nature. The carrying amounts of borrowings approximate fair value as the line of credit and term borrowings vary with market interest rates and negotiated terms and conditions are consistent with current market rates. The fair value of the Company’s line of credit and term borrowings are measured using Level 2 inputs. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis Assets recognized or disclosed at fair value in the condensed consolidated financial statements on a non-recurring basis include items such as leasehold improvements, property and equipment, operating lease assets, goodwill and other intangible assets. These assets are measured at fair value if determined to be impaired or when acquired. Adjustments to the fair value of assets measured at fair value on a non-recurring basis as of September 27, 2022 and September 28, 2021 are discussed in Note 7, Restaurant Impairments, Closure Costs and Asset Disposals.
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Income Taxes |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes The following table presents the Company’s provision for income taxes (in thousands):
The effective tax rate for the third quarter of 2022 and the first three quarters of 2022 reflects the impact of the previously recorded valuation allowance. For the remainder of fiscal 2022, the Company does not anticipate material income tax expense or benefit as a result of the valuation allowance recorded. The Company will maintain the valuation allowance against deferred tax assets until there is sufficient evidence to support a full or partial reversal. The reversal of a previously recorded valuation allowance will generally result in a benefit from income tax.
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Stock-Based Compensation |
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Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation The Company’s Stock Incentive Plan (the “Plan”), as amended and restated in May of 2013, authorizes the grant of non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), performance share units and incentive bonuses to employees, officers, non-employee directors and other service providers. As of September 27, 2022, approximately 2.0 million share-based awards were available to be granted under the Plan. The following table shows total stock-based compensation expense (in thousands):
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Restaurant Impairments, Closure Costs and Asset Disposals |
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Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restaurant Impairments, Closure Costs and Asset Disposals | Restaurant Impairments, Closure Costs and Asset Disposals The following table presents restaurant impairments, closure costs and asset disposals (in thousands):
_____________________________ (1)Restaurant impairments and closure costs in all periods presented above include amounts related to restaurants previously impaired or closed. The Company impaired two restaurants during the third quarter of 2022 and four restaurants in the first three quarters of 2022. There was one restaurant impairment in the third quarter of 2021 and two restaurant impairments during the first three quarters of 2021. Impairment is based on management’s current assessment of the expected future cash flows of a restaurant based on recent results and other specific market factors. Impairment expense is a Level 3 fair value measure and is determined by comparing the carrying value of restaurant assets to the estimated fair value of the restaurant assets at resale value and the right- of-use asset based on a discounted cash flow analysis utilizing market lease rates. The Company will continue to monitor the impact from the COVID-19 pandemic as it relates to recoverability of long-lived assets. Closure costs in the third quarter of 2022 include ongoing costs related to restaurants closed in previous years as well as two company-owned restaurant closures during the first three quarters of 2022. The Company did not close any restaurants in the third quarter of 2022. Closure costs in the third quarter of 2021 and the first three quarters of 2021 include ongoing costs related to restaurants closed in previous years as well as eight restaurant closures in the first three quarters of 2021. Loss on disposal of assets and other for the third quarter and the first three quarters of 2022 includes expenses related to the divestiture of company-owned restaurants related to the Warner Sale as well as lease related costs. Both periods include disposals of assets in the normal course of business. Loss on disposal of assets and other for the first three quarters of 2021 includes a gain on insurance proceeds from property damage. These expenses are included in the “Restaurant impairments, closure costs and asset disposals” line in the Condensed Consolidated Statements of Operations.
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Earnings (Loss) Per Share |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings (Loss) Per Share | Earnings (Loss) Per Share Basic earnings (loss) per share (“EPS”) is calculated by dividing net income (loss) available to common stockholders by the weighted-average number of shares of common stock outstanding during each period. Diluted EPS is calculated using net income (loss) available to common stockholders divided by diluted weighted-average shares of common stock outstanding during each period. Potentially dilutive securities include shares of common stock underlying stock options, warrants and RSUs. Diluted EPS considers the impact of potentially dilutive securities except in periods in which there is a loss because the inclusion of the potential common shares would have an anti-dilutive effect. The following table sets forth the computations of basic and diluted EPS (in thousands, except share and per share data):
The Company computes the effect of dilutive securities using the treasury stock method and average market prices during the period. Potential common shares are excluded from the computation of diluted earnings (loss) per share when the effect would be anti-dilutive. The shares issuable on the vesting or exercise of share-based awards that were excluded from the calculation of diluted earnings per share because the effect of their inclusion would have been anti-dilutive totaled 1,810,346 and 359,211 for the third quarters of 2022 and 2021, respectively, and totaled 2,364,003 and 479,494 for the first three quarters of 2022 and 2021, respectively.
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Leases |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | LeasesSupplemental balance sheet information related to leases is as follows (in thousands):
Sublease income recognized in the Condensed Consolidated Statements of Operations was $0.8 million and $0.4 million for the third quarter of 2022 and 2021, and $2.4 million and $1.4 million for the first three quarters of 2022 and 2021, respectively. Supplemental disclosures of cash flow information related to leases are as follows (in thousands):
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Leases | LeasesSupplemental balance sheet information related to leases is as follows (in thousands):
Sublease income recognized in the Condensed Consolidated Statements of Operations was $0.8 million and $0.4 million for the third quarter of 2022 and 2021, and $2.4 million and $1.4 million for the first three quarters of 2022 and 2021, respectively. Supplemental disclosures of cash flow information related to leases are as follows (in thousands):
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Supplemental Disclosures to Condensed Consolidated Statements of Cash Flows |
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Sep. 27, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Disclosures to Condensed Consolidated Statements of Cash Flows | Supplemental Disclosures to Condensed Consolidated Statements of Cash Flows The following table presents the supplemental disclosures to the Condensed Consolidated Statements of Cash Flows for the three quarters ended September 27, 2022 and September 28, 2021 (in thousands):
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Revenue Recognition |
9 Months Ended |
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Sep. 27, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition Revenue Revenue consists of sales from restaurant operations, franchise royalties and fees, and sublease income. Revenue from the operation of company-owned restaurants is recognized when sales occur. The Company reports revenue net of sales tax collected from customers and remitted to governmental taxing authorities. Gift Cards The Company sells gift cards which do not have an expiration date, and it does not deduct non-usage fees from outstanding gift card balances. The Company recognizes revenue from gift cards when the gift card is redeemed by the customer or the Company determines the likelihood of the gift card being redeemed by the customer is remote (“gift card breakage”). The determination of the gift card breakage rate is based upon Company-specific historical redemption patterns. The Company has determined that approximately 13% of gift cards will not be redeemed, and recognizes gift card breakage ratably over the estimated redemption period of the gift card, which is approximately 24 months. Gift card liability balances are typically highest at the end of each calendar year following increased gift card purchases during the holiday season. As of September 27, 2022 and December 28, 2021, the current portion of the gift card liability, $2.1 million and $2.9 million, respectively, was included in accrued expenses and other current liabilities, and the long-term portion, $0.4 million and $0.6 million, respectively, was included in other long-term liabilities in the Condensed Consolidated Balance Sheets. Revenue recognized in the Condensed Consolidated Statements of Operations for the redemption of gift cards was $0.8 million and $0.6 million for the third quarters of 2022 and 2021, and $2.6 million and $2.5 million for the first three quarters of 2022 and 2021, respectively. Franchise Fees Royalties from franchise restaurants are based on a percentage of restaurant revenues and are recognized in the period the related franchised restaurants’ sales occur. Development fees and franchise fees, portions of which are collected in advance, are nonrefundable and are recognized in income ratably over the term of the related franchise agreement or recognized upon the termination of the agreement between the Company and the franchisee. The Company has determined that the initial franchise services are not distinct from the continuing rights or services offered during the term of the franchise agreement and should be treated as a single performance obligation; therefore, initial fees received from franchisees are recognized as revenue over the term of each respective franchise agreement, which is typically 20 years. Loyalty Program The Company operates the Noodles Rewards program, which is primarily a spend-based loyalty program. With each purchase, Noodles Rewards members earn loyalty points that can be redeemed for rewards, including free products. Using an estimate of the value of reward redemptions, we defer revenue associated with points earned, net of estimated points that will not be redeemed based upon the Company’s historical redemption patterns. Points generally expire after six months. Revenue is recognized in a future period when the reward points are redeemed. As of September 27, 2022 and December 28, 2021, the deferred revenue related to the rewards was $0.5 million and $0.4 million, respectively and is included in accrued expenses and other current liabilities in the Condensed Consolidated Balance Sheets.
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Commitments and Contingencies |
9 Months Ended |
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Sep. 27, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and ContingenciesIn the normal course of business, the Company is subject to other proceedings, lawsuits and claims. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. Consequently, the Company is unable to ascertain the ultimate aggregate amount of monetary liability or financial impact with respect to these matters as of September 27, 2022. These matters could affect the operating results of any one financial reporting period when resolved in future periods. The Company believes that an unfavorable outcome with respect to these matters is remote or a potential range of loss is not material to its consolidated financial statements. Significant increases in the number of these claims, or one or more successful claims that result in greater liabilities than the Company currently anticipates, could materially and adversely affect its business, financial condition, results of operations or cash flows. |
Business Summary and Basis of Presentation (Policies) |
9 Months Ended |
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Sep. 27, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of Noodles & Company and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The accompanying interim unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. In the opinion of the Company, all adjustments considered necessary for the fair presentation of the Company’s results of operations, financial position and cash flows for the periods presented have been included and are of a normal, recurring nature. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The results of operations for any interim period are not necessarily indicative of results for the full year. Certain information and footnote disclosures normally included in the Company’s annual consolidated financial statements on Form 10-K have been condensed or omitted. The condensed consolidated balance sheet as of December 28, 2021 was derived from audited financial statements. These financial statements should be read in conjunction with the audited financial statements and the related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 28, 2021. |
Fiscal Year | Fiscal Year The Company operates on a 52- or 53-week fiscal year ending on the Tuesday closest to December 31. The Company’s fiscal quarters each contain 13 operating weeks, with the exception of the fourth quarter of a 53-week fiscal year, which contains 14 operating weeks. Fiscal year 2022, which ends on January 3, 2023 contains 53 weeks and fiscal year 2021, which ended on December 28, 2021, contained 52 weeks. The Company’s fiscal quarter that ended September 27, 2022 is referred to as the third quarter of 2022, and the fiscal quarter ended September 28, 2021 is referred to as the third quarter of 2021.
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Recent Accounting Pronouncements | Recent Accounting Pronouncements In March 2020, the FASB issued ASU No. 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). ASU 2020-04 is intended to provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. The Company may elect to apply the amendments prospectively through December 31, 2022. The Company adopted this pronouncement in the third quarter of 2022. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements and related disclosures.
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Supplemental Financial Information (Tables) |
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Supplemental Financial Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts Receivable | Accounts receivable consist of the following (in thousands):
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Schedule of Prepaid Expenses and Other Assets | Prepaid expenses and other assets consist of the following (in thousands):
_____________________________ (1) Current assets held for sale as of December 28, 2021 included assets held in connection with the divestiture of 15 company-owned restaurants to a franchisee (“Warner Sale”) which closed in January 2022.
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Schedule of Property and Equipment | Property and equipment, net, consists of the following (in thousands):
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Schedule of Accrued Payroll and Benefits | Accrued payroll and benefits consist of the following (in thousands):
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Schedule of Accrued Expenses and Other Current Liabilities | Accrued expenses and other current liabilities consist of the following (in thousands):
_____________________________ (1) Liabilities held for sale as of December 28, 2021 included liabilities held in connection with the Warner Sale which closed in January 2022.
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Income Taxes (Tables) |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Provision for Income Taxes | The following table presents the Company’s provision for income taxes (in thousands):
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Stock-Based Compensation (Tables) |
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Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock-Based Compensation Expense | The following table shows total stock-based compensation expense (in thousands):
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Restaurant Impairments, Closure Costs and Asset Disposals (Tables) |
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Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restaurant Impairments, Closure Costs and Asset Disposals | The following table presents restaurant impairments, closure costs and asset disposals (in thousands):
_____________________________ (1)Restaurant impairments and closure costs in all periods presented above include amounts related to restaurants previously impaired or closed.
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Earnings (Loss) Per Share (Tables) |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Basic and Diluted EPS | The following table sets forth the computations of basic and diluted EPS (in thousands, except share and per share data):
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Leases (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 27, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Supplemental Lease Information | Supplemental balance sheet information related to leases is as follows (in thousands):
Supplemental disclosures of cash flow information related to leases are as follows (in thousands):
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Supplemental Disclosures to Condensed Consolidated Statements of Cash Flows (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 27, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Supplemental Disclosures to the Condensed Consolidated Statements of Cash Flows | The following table presents the supplemental disclosures to the Condensed Consolidated Statements of Cash Flows for the three quarters ended September 27, 2022 and September 28, 2021 (in thousands):
|
Business Summary and Basis of Presentation (Details) |
9 Months Ended |
---|---|
Sep. 27, 2022
segment
restaurant
state
| |
Franchisor Disclosure [Line Items] | |
Number of restaurants | 459 |
Number of states with operations | state | 31 |
Number of operating segments | segment | 1 |
Number of reportable segments | segment | 1 |
Company-owned | |
Franchisor Disclosure [Line Items] | |
Number of restaurants | 366 |
Franchise | |
Franchisor Disclosure [Line Items] | |
Number of restaurants | 93 |
Supplemental Financial Information - Accounts Receivable (Details) - USD ($) $ in Thousands |
Sep. 27, 2022 |
Dec. 28, 2021 |
---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable | $ 5,122 | $ 3,958 |
Delivery program receivables | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable | 1,445 | 1,467 |
Vendor rebate receivables | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable | 705 | 695 |
Franchise receivables | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable | 1,940 | 644 |
Other receivables | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable | $ 1,032 | $ 1,152 |
Supplemental Financial Information - Prepaid Expenses and Other Assets (Details) - USD ($) $ in Thousands |
Sep. 27, 2022 |
Dec. 28, 2021 |
---|---|---|
Supplemental Financial Information [Abstract] | ||
Prepaid insurance | $ 1,409 | $ 853 |
Prepaid occupancy related costs | 91 | 73 |
Current assets held for sale | 0 | 3,514 |
Prepaid expenses | 2,789 | 2,272 |
Other current assets | 122 | 125 |
Prepaid expenses and other assets | $ 4,411 | $ 6,837 |
Supplemental Financial Information - Property and Equipment, Net (Details) - USD ($) $ in Thousands |
Sep. 27, 2022 |
Dec. 28, 2021 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 362,009 | $ 344,726 |
Accumulated depreciation and amortization | (237,577) | (225,450) |
Property and equipment, net | 124,432 | 119,276 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 206,694 | 197,722 |
Furniture, fixtures and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 144,961 | 140,698 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 10,354 | $ 6,306 |
Supplemental Financial Information - Accrued Payroll and Benefits (Details) - USD ($) $ in Thousands |
Sep. 27, 2022 |
Dec. 28, 2021 |
---|---|---|
Supplemental Financial Information [Abstract] | ||
Accrued payroll and related liabilities | $ 7,384 | $ 9,851 |
Accrued bonus | 981 | 5,078 |
Insurance liabilities | 3,014 | 3,671 |
Accrued payroll and benefits | $ 11,379 | $ 18,600 |
Supplemental Financial Information - Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands |
Sep. 27, 2022 |
Dec. 28, 2021 |
---|---|---|
Supplemental Financial Information [Abstract] | ||
Gift card liability | $ 2,095 | $ 2,850 |
Occupancy related | 1,242 | 1,615 |
Utilities | 1,427 | 1,302 |
Current portion of finance lease liability | 2,207 | 1,956 |
Liabilities held for sale | 0 | 1,671 |
Accrued interest | 225 | 271 |
Insurance liabilities | 400 | 393 |
Other restaurant expense accruals | 1,556 | 995 |
Other corporate expense accruals | 2,385 | 2,738 |
Accrued expenses and other current liabilities | $ 11,537 | $ 13,791 |
Long-Term Debt - Narrative (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Jul. 27, 2022 |
Sep. 27, 2022 |
Sep. 27, 2022 |
Dec. 28, 2021 |
May 09, 2018 |
|
Line of Credit Facility [Line Items] | |||||
Write off of Deferred Debt Issuance Cost | $ 300,000 | ||||
Cash and cash equivalents | 1,840,000 | $ 1,840,000 | $ 2,255,000 | ||
2018 Credit Facility | |||||
Line of Credit Facility [Line Items] | |||||
Indebtedness | 37,900,000 | 37,900,000 | |||
Unamortized debt issuance costs | 1,700,000 | 1,700,000 | |||
Letters of credit outstanding | 3,000,000 | 3,000,000 | |||
Cash and cash equivalents | 1,800,000 | $ 1,800,000 | |||
2018 Credit Facility | Minimum | |||||
Line of Credit Facility [Line Items] | |||||
Interest rate during period | 2.35% | ||||
2018 Credit Facility | Maximum | |||||
Line of Credit Facility [Line Items] | |||||
Interest rate during period | 7.50% | ||||
2018 Credit Facility | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Minimum | |||||
Line of Credit Facility [Line Items] | |||||
Basis spread on variable rate | 1.50% | ||||
2018 Credit Facility | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Maximum | |||||
Line of Credit Facility [Line Items] | |||||
Basis spread on variable rate | 2.50% | ||||
2018 Credit Facility | Term loan | |||||
Line of Credit Facility [Line Items] | |||||
Aggregate principal amount | $ 25,000,000 | ||||
2018 Credit Facility | Revolving credit facility | |||||
Line of Credit Facility [Line Items] | |||||
Maximum borrowing capacity | $ 125,000,000 | $ 100,000,000 | $ 100,000,000 | 65,000,000 | |
2018 Credit Facility | Letter of credit subfacility | |||||
Line of Credit Facility [Line Items] | |||||
Maximum borrowing capacity | 15,000,000 | ||||
2018 Credit Facility | Swingline subfacility | |||||
Line of Credit Facility [Line Items] | |||||
Maximum borrowing capacity | $ 10,000,000 |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 27, 2022 |
Sep. 28, 2021 |
Sep. 27, 2022 |
Sep. 28, 2021 |
|
Income Tax Disclosure [Abstract] | ||||
(Benefit from) provision for income taxes | $ (1) | $ 29 | $ (40) | $ 48 |
Effective tax rate | (0.10%) | 0.60% | 0.90% | 0.60% |
Stock-Based Compensation (Details) - USD ($) $ in Thousands, shares in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 27, 2022 |
Sep. 28, 2021 |
Sep. 27, 2022 |
Sep. 28, 2021 |
|
Share-Based Payment Arrangement [Abstract] | ||||
Shares awards available to be granted (in shares) | 2.0 | 2.0 | ||
Stock-based compensation expense | $ 751 | $ 1,177 | $ 3,419 | $ 3,590 |
Capitalized stock-based compensation expense | $ 18 | $ 11 | $ 56 | $ 45 |
Restaurant Impairments, Closure Costs and Asset Disposals - Activity (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 27, 2022 |
Sep. 28, 2021 |
Sep. 27, 2022 |
Sep. 28, 2021 |
|
Discontinued Operations and Disposal Groups [Abstract] | ||||
Restaurant impairments | $ 412 | $ 536 | $ 1,186 | $ 1,216 |
Closure costs | 370 | 236 | 1,224 | 829 |
Loss on disposal of assets and other | 890 | 354 | 2,622 | 702 |
Restaurant impairments, closure costs and asset disposals | $ 1,672 | $ 1,126 | $ 5,032 | $ 2,747 |
Restaurant Impairments, Closure Costs and Asset Disposals - Narrative (Details) - restaurant |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 27, 2022 |
Sep. 28, 2021 |
Sep. 27, 2022 |
Sep. 28, 2021 |
|
Discontinued Operations and Disposal Groups [Abstract] | ||||
Number of restaurants impaired | 2 | 1 | 4 | 2 |
Number of restaurants closed | 0 | 2 | 8 |
Earnings (Loss) Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 27, 2022 |
Sep. 28, 2021 |
Sep. 27, 2022 |
Sep. 28, 2021 |
|
Earnings Per Share [Abstract] | ||||
Net (loss) income | $ 795 | $ 4,697 | $ (4,289) | $ 8,403 |
Shares: | ||||
Basic weighted average shares outstanding (in shares) | 46,010,824 | 45,635,455 | 45,872,893 | 45,414,332 |
Effect of dilutive securities (in shares) | 186,687 | 747,054 | 0 | 720,662 |
Diluted weighted average shares outstanding (in shares) | 46,197,511 | 46,382,509 | 45,872,893 | 46,134,994 |
Earnings (loss) per share: | ||||
Basic earnings (loss) per share (USD per share) | $ 0.02 | $ 0.10 | $ (0.09) | $ 0.19 |
Diluted earnings (loss) per share (USD per share) | $ 0.02 | $ 0.10 | $ (0.09) | $ 0.18 |
Anti-dilutive securities | ||||
Antidilutive securities excluded from computation of earnings (loss) per share | 1,810,346 | 359,211 | 2,364,003 | 479,494 |
Leases - Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands |
Sep. 27, 2022 |
Dec. 28, 2021 |
---|---|---|
Assets | ||
Operating lease assets, net | $ 188,044 | $ 188,440 |
Finance lease assets, net | 5,792 | 6,394 |
Total leased assets | $ 193,836 | $ 194,834 |
Finance lease assets, line item [Extensible Enumeration] | Property and equipment, net | Property and equipment, net |
Liabilities | ||
Current operating lease liabilities | $ 27,942 | $ 26,617 |
Current portion of finance lease liabilities | 2,207 | 1,956 |
Long-term operating lease liabilities, net | 195,971 | 200,243 |
Long-term finance lease liabilities | 4,026 | 4,654 |
Total lease liabilities | $ 230,146 | $ 233,470 |
Current finance lease liabilities, line item [Extensible Enumeration] | Accrued expenses and other current liabilities | Accrued expenses and other current liabilities |
Long-term finance lease liabilities, line item [Extensible Enumeration] | Other long-term liabilities | Other long-term liabilities |
Leases - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 27, 2022 |
Sep. 28, 2021 |
Sep. 27, 2022 |
Sep. 28, 2021 |
|
Leases [Abstract] | ||||
Sublease income | $ 0.8 | $ 0.4 | $ 2.4 | $ 1.4 |
Leases - Supplemental Disclosures of Cash Flow Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 27, 2022 |
Sep. 28, 2021 |
Sep. 27, 2022 |
Sep. 28, 2021 |
|
Leases [Abstract] | ||||
Cash paid for operating lease liabilities | $ 10,459 | $ 11,285 | $ 31,318 | $ 30,880 |
Cash paid for finance lease liabilities | 538 | 583 | 1,751 | 1,807 |
Cash paid for lease liabilities | 10,997 | 11,868 | 33,069 | 32,687 |
Right-of-use assets obtained in exchange for operating lease liabilities | 9,351 | 4,110 | 17,458 | 10,806 |
Right-of-use assets obtained in exchange for finance lease liabilities | 444 | 0 | 1,287 | 700 |
Right-of-use assets obtained in exchange for lease liabilities | $ 9,795 | $ 4,110 | $ 18,745 | $ 11,506 |
Supplemental Disclosures to Condensed Consolidated Statements of Cash Flows (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 27, 2022 |
Sep. 28, 2021 |
|
Supplemental Cash Flow Elements [Abstract] | ||
Interest paid (net of amounts capitalized) | $ 749 | $ 1,163 |
Income taxes paid | 123 | 30 |
Purchases of property and equipment accrued in accounts payable | $ 5,970 | $ 3,777 |
Revenue Recognition (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 27, 2022 |
Sep. 28, 2021 |
Sep. 27, 2022 |
Sep. 28, 2021 |
Dec. 28, 2021 |
|
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |||||
Expected unredeemed percent | 13.00% | ||||
Estimated redemption period | 24 months | ||||
Gift card liability, current | $ 2,095 | $ 2,095 | $ 2,850 | ||
Revenue recognized for redemption of gift cards | 800 | $ 600 | $ 2,600 | $ 2,500 | |
Period in which initial fees received from franchisees will be recognized as revenue | 20 years | ||||
Loyalty program deferred revenue | 500 | $ 500 | 400 | ||
Accrued Expenses and Other Current Liabilities | |||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |||||
Gift card liability, current | 2,100 | 2,100 | 2,900 | ||
Other Long-term Liabilities | |||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |||||
Gift card liability, non-current | $ 400 | $ 400 | $ 600 |
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