ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (IRS 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 |
Page | ||||||||
PART I | ||||||||
ITEM 1. | ||||||||
ITEM 1A. | ||||||||
ITEM 1B. | ||||||||
ITEM 2. | ||||||||
ITEM 3. | ||||||||
ITEM 4. | ||||||||
PART II | ||||||||
ITEM 5. | ||||||||
ITEM 6. | ||||||||
ITEM 7. | ||||||||
ITEM 7A. | ||||||||
ITEM 8. | ||||||||
ITEM 9. | ||||||||
ITEM 9A. | ||||||||
ITEM 9B. | ||||||||
ITEM 9C. | ||||||||
PART III | ||||||||
ITEM 10. | ||||||||
ITEM 11. | ||||||||
ITEM 12. | ||||||||
ITEM 13. | ||||||||
ITEM 14. | ||||||||
PART IV | ||||||||
ITEM 15. | ||||||||
ITEM 16. | ||||||||
SIGNATURES | ||||||||
EXHIBITS |
State | Company- owned | Franchised | Total | |||||||||||||||||
Arizona | 6 | — | 6 | |||||||||||||||||
California | — | 14 | 14 | |||||||||||||||||
Colorado | 58 | — | 58 | |||||||||||||||||
Connecticut | — | 5 | 5 | |||||||||||||||||
Florida | — | 6 | 6 | |||||||||||||||||
Idaho | 6 | — | 6 | |||||||||||||||||
Illinois | 51 | 5 | 56 | |||||||||||||||||
Indiana | 22 | 1 | 23 | |||||||||||||||||
Iowa | 9 | 1 | 10 | |||||||||||||||||
Kansas | 9 | — | 9 | |||||||||||||||||
Kentucky | 1 | 4 | 5 | |||||||||||||||||
Maryland | 22 | — | 22 | |||||||||||||||||
Michigan | — | 23 | 23 | |||||||||||||||||
Minnesota | 45 | 1 | 46 | |||||||||||||||||
Missouri | 3 | 7 | 10 | |||||||||||||||||
Montana | — | 2 | 2 | |||||||||||||||||
Nebraska | — | 5 | 5 | |||||||||||||||||
Nevada | 1 | — | 1 | |||||||||||||||||
New York | 2 | — | 2 | |||||||||||||||||
North Carolina | 8 | 4 | 12 | |||||||||||||||||
North Dakota | — | 5 | 5 | |||||||||||||||||
Ohio | 18 | — | 18 | |||||||||||||||||
Oregon | 6 | — | 6 | |||||||||||||||||
Pennsylvania | 9 | — | 9 | |||||||||||||||||
South Carolina | — | 1 | 1 | |||||||||||||||||
South Dakota | — | 2 | 2 | |||||||||||||||||
Tennessee | — | 4 | 4 | |||||||||||||||||
Utah | 16 | — | 16 | |||||||||||||||||
Virginia | 25 | — | 25 | |||||||||||||||||
Washington | 2 | — | 2 | |||||||||||||||||
Wisconsin | 49 | 3 | 52 | |||||||||||||||||
368 | 93 | 461 |
Fiscal Year | ||||||||||||||
2022 | 2021 | |||||||||||||
(in thousands) | ||||||||||||||
Net (loss) income | $ | (3,314) | $ | 3,665 | ||||||||||
Depreciation and amortization | 23,268 | 22,333 | ||||||||||||
Interest expense, net | 2,445 | 2,082 | ||||||||||||
Provision for income taxes | 37 | 70 | ||||||||||||
EBITDA | $ | 22,436 | $ | 28,150 | ||||||||||
Restaurant impairments, closure costs and asset disposals (1) | 6,164 | 5,727 | ||||||||||||
Fees and costs related to transactions and other acquisition/disposition costs | 70 | — | ||||||||||||
Stock-based compensation expense | 4,395 | 4,271 | ||||||||||||
Adjusted EBITDA | $ | 33,065 | $ | 38,148 |
Fiscal Year | ||||||||||||||
2022 | 2021 | |||||||||||||
Company-Owned Restaurants | ||||||||||||||
Beginning of period | 372 | 378 | ||||||||||||
Openings (1) | 16 | 6 | ||||||||||||
Divestitures (2) | (15) | — | ||||||||||||
Closures and relocations | (5) | (12) | ||||||||||||
End of period | 368 | 372 | ||||||||||||
Franchise Restaurants | ||||||||||||||
Beginning of period | 76 | 76 | ||||||||||||
Openings | 3 | 1 | ||||||||||||
Acquisitions (2) | 15 | — | ||||||||||||
Closures | (1) | (1) | ||||||||||||
End of period | 93 | 76 | ||||||||||||
Total restaurants | 461 | 448 |
Fiscal Year | ||||||||||||||
2022 | 2021 | |||||||||||||
Revenue: | ||||||||||||||
Restaurant revenue | 97.8 | % | 98.4 | % | ||||||||||
Franchising royalties and fees, and other | 2.2 | % | 1.6 | % | ||||||||||
Total revenue | 100.0 | % | 100.0 | % | ||||||||||
Costs and expenses: | ||||||||||||||
Restaurant operating costs (exclusive of depreciation and amortization, shown separately below): | ||||||||||||||
Cost of sales | 27.7 | % | 25.2 | % | ||||||||||
Labor | 31.1 | % | 31.2 | % | ||||||||||
Occupancy | 9.1 | % | 9.8 | % | ||||||||||
Other restaurant operating costs | 18.3 | % | 17.9 | % | ||||||||||
General and administrative | 9.8 | % | 10.0 | % | ||||||||||
Depreciation and amortization | 4.6 | % | 4.7 | % | ||||||||||
Pre-opening | 0.3 | % | 0.1 | % | ||||||||||
Restaurant impairments, closure costs and asset disposals | 1.2 | % | 1.2 | % | ||||||||||
Total costs and expenses | 100.2 | % | 98.8 | % | ||||||||||
(Loss) income from operations | (0.2) | % | 1.2 | % | ||||||||||
Interest expense, net | 0.5 | % | 0.4 | % | ||||||||||
(Loss) income before income taxes | (0.6) | % | 0.8 | % | ||||||||||
Provision for income taxes | 0.1 | % | — | % | ||||||||||
Net (loss) income | (0.7) | % | 0.8 | % |
Fiscal Year | Increase / (Decrease) | |||||||||||||||||||||||||
2022 | 2021 | $ | % | |||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||||
Restaurant revenue | $ | 498,359 | $ | 467,336 | $ | 31,023 | 6.6 | % | ||||||||||||||||||
Franchising royalties and fees, and other | 11,121 | 7,816 | 3,305 | 42.3 | % | |||||||||||||||||||||
Total revenue | 509,480 | 475,152 | 34,328 | 7.2 | % | |||||||||||||||||||||
Costs and Expenses: | ||||||||||||||||||||||||||
Restaurant operating costs (exclusive of depreciation and amortization, shown separately below): | ||||||||||||||||||||||||||
Cost of sales | 137,859 | 117,894 | 19,965 | 16.9 | % | |||||||||||||||||||||
Labor | 155,023 | 145,622 | 9,401 | 6.5 | % | |||||||||||||||||||||
Occupancy | 45,213 | 45,956 | (743) | (1.6) | % | |||||||||||||||||||||
Other restaurant operating costs | 91,220 | 83,603 | 7,617 | 9.1 | % | |||||||||||||||||||||
General and administrative | 49,903 | 47,535 | 2,368 | 5.0 | % | |||||||||||||||||||||
Depreciation and amortization | 23,268 | 22,333 | 935 | 4.2 | % | |||||||||||||||||||||
Pre-opening | 1,662 | 665 | 997 | 149.9 | % | |||||||||||||||||||||
Restaurant impairments, closure costs and asset disposals | 6,164 | 5,727 | 437 | 7.6 | % | |||||||||||||||||||||
Total costs and expenses | 510,312 | 469,335 | 40,977 | 8.7 | % | |||||||||||||||||||||
(Loss) income from operations | (832) | 5,817 | (6,649) | * | ||||||||||||||||||||||
Interest expense, net | 2,445 | 2,082 | 363 | 17.4 | % | |||||||||||||||||||||
(Loss) income before income taxes | (3,277) | 3,735 | (7,012) | * | ||||||||||||||||||||||
Provision for income taxes | 37 | 70 | (33) | (47.1) | % | |||||||||||||||||||||
Net (loss) income | $ | (3,314) | $ | 3,665 | $ | (6,979) | * | |||||||||||||||||||
Company-owned: | ||||||||||||||||||||||||||
Average unit volumes | $ | 1,360 | $ | 1,300 | $ | 60 | 4.6 | % | ||||||||||||||||||
Comparable restaurant sales | 6.0 | % | 21.3 | % |
Fiscal Year Ended | ||||||||||||||
January 3, 2023 | December 28, 2021 | |||||||||||||
(in thousands) | ||||||||||||||
Net cash provided by operating activities | $ | 9,557 | $ | 36,165 | ||||||||||
Net cash used in investing activities | (32,309) | (18,370) | ||||||||||||
Net cash provided by (used in) financing activities | 22,020 | (23,380) | ||||||||||||
Net decrease in cash and cash equivalents | $ | (732) | $ | (5,585) |
Consolidated Financial Statements | |||||
Report of Independent Registered Public Accounting Firm (PCAOB ID: |
January 3, 2023 | December 28, 2021 | |||||||||||||
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 | ||||||||||||||
Commitments and contingencies | ||||||||||||||
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 Year Ended | ||||||||||||||||||||
January 3, 2023 | December 28, 2021 | December 29, 2020 | ||||||||||||||||||
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 | ||||||||||||||||||||
(Loss) income from operations | ( | ( | ||||||||||||||||||
Interest expense, net | ||||||||||||||||||||
(Loss) income before income taxes | ( | ( | ||||||||||||||||||
Provision for income taxes | ||||||||||||||||||||
Net (loss) income | $ | ( | $ | $ | ( | |||||||||||||||
(Loss) earnings per Class A and Class B common stock, combined | ||||||||||||||||||||
Basic | $ | ( | $ | $ | ( | |||||||||||||||
Diluted | $ | ( | $ | $ | ( | |||||||||||||||
Weighted average Class A and Class B common stock outstanding, combined | ||||||||||||||||||||
Basic | ||||||||||||||||||||
Diluted |
Common Stock(1) | Treasury | Additional Paid-In Capital | Retained Earnings (Accumulated Deficit) | Total Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||
Balance—December 31, 2019 | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||
Stock plan transactions and other | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||
Balance—December 29, 2020 | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
L Catterton warrants exercised(2) | — | — | ( | — | ||||||||||||||||||||||||||||||||||||||||
Stock plan transactions and other | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Balance—December 28, 2021 | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
Stock plan transactions and other | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||
Balance—January 3, 2023 | $ | $ | ( | $ | $ | ( | $ |
Fiscal Year Ended | ||||||||||||||||||||
January 3, 2023 | December 28, 2021 | December 29, 2020 | ||||||||||||||||||
Operating activities | ||||||||||||||||||||
Net (loss) income | $ | ( | $ | $ | ( | |||||||||||||||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||||||||||||||||||
Depreciation and amortization | ||||||||||||||||||||
Deferred income taxes, net | ( | |||||||||||||||||||
Restaurant impairments, closure costs and asset disposals | ||||||||||||||||||||
Amortization of debt issuance costs | ||||||||||||||||||||
Stock-based compensation | ||||||||||||||||||||
Gain on insurance proceeds received for property damage | ( | ( | ||||||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||||||
Accounts receivable | ( | ( | ( | |||||||||||||||||
Inventories | ( | ( | ||||||||||||||||||
Prepaid expenses and other assets | ( | ( | ||||||||||||||||||
Accounts payable | ( | ( | ||||||||||||||||||
Operating lease assets and liabilities | ( | ( | ||||||||||||||||||
Income taxes | ( | ( | ||||||||||||||||||
Accrued expenses and other liabilities | ( | |||||||||||||||||||
Net cash provided by operating activities | ||||||||||||||||||||
Investing activities | ||||||||||||||||||||
Purchases of property and equipment | ( | ( | ( | |||||||||||||||||
Proceeds from restaurant refranchising | ||||||||||||||||||||
Insurance proceeds received for property damage | ||||||||||||||||||||
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 | ( | ( | ( | |||||||||||||||||
Debt issuance costs | ( | ( | ||||||||||||||||||
Payment of finance leases | ( | ( | ( | |||||||||||||||||
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 year | ||||||||||||||||||||
End of year | $ | $ | $ |
Property and Equipment | Estimated Useful Lives | |||||||
Leasehold improvements | Shorter of lease term or estimated useful life, not to exceed | |||||||
Furniture and fixtures | ||||||||
Equipment |
2022 | 2021 | |||||||||||||
Delivery program receivables | $ | $ | ||||||||||||
Vendor rebate receivables | ||||||||||||||
Franchise receivables(1) | ||||||||||||||
Other receivables | ||||||||||||||
Accounts receivable | $ | $ |
2022 | 2021 | |||||||||||||
Prepaid occupancy related costs | $ | $ | ||||||||||||
Prepaid insurance | ||||||||||||||
Current assets held for sale | ||||||||||||||
Prepaid expenses | ||||||||||||||
Other current assets | ||||||||||||||
Prepaid expenses and other assets | $ | $ |
2022 | 2021 | |||||||||||||
Leasehold improvements | $ | $ | ||||||||||||
Furniture, fixtures and equipment | ||||||||||||||
Construction in progress | ||||||||||||||
Accumulated depreciation and amortization | ( | ( | ||||||||||||
Property and equipment, net | $ | $ |
2022 | 2021 | |||||||||||||
Accrued payroll and related liabilities | $ | $ | ||||||||||||
Accrued bonus | ||||||||||||||
Insurance liabilities | ||||||||||||||
Accrued payroll and benefits | $ | $ |
2022 | 2021 | |||||||||||||
Gift card liability | $ | $ | ||||||||||||
Occupancy related | ||||||||||||||
Utilities | ||||||||||||||
Current portion of finance lease liability | ||||||||||||||
Liabilities held for sale | ||||||||||||||
Accrued interest | ||||||||||||||
Insurance liabilities | ||||||||||||||
Other restaurant expense accruals | ||||||||||||||
Other corporate expense accruals | ||||||||||||||
Accrued expenses and other current liabilities | $ | $ |
2021 | ||||||||
Assets | ||||||||
Current assets, total | $ | |||||||
Operating lease assets | ||||||||
Current assets held for sale | ||||||||
Liabilities | ||||||||
Operating lease liabilities | ||||||||
Net assets held for sale | $ |
2022 | 2021 | |||||||||||||
Amortized intangible assets: | ||||||||||||||
Reacquired franchise rights | $ | $ | ||||||||||||
Accumulated amortization | ( | ( | ||||||||||||
Amortized intangible assets, net | ||||||||||||||
Non-amortized intangible assets: | ||||||||||||||
Trademark rights | ||||||||||||||
Intangibles, net | $ | $ |
2023 | $ | |||||||
2024 | ||||||||
2025 | ||||||||
2026 | ||||||||
2027 | ||||||||
Thereafter | ||||||||
$ |
2022 | 2021 | 2020 | |||||||||||||||
Restaurant impairments(1) | $ | $ | $ | ||||||||||||||
Closure costs(1) | |||||||||||||||||
Loss on disposal of assets and other | |||||||||||||||||
Total restaurant impairments, closure costs and asset disposals | $ | $ | $ |
2022 | 2021 | 2020 | ||||||||||||||||||
Current tax provision: | ||||||||||||||||||||
Federal | $ | $ | $ | |||||||||||||||||
State | ||||||||||||||||||||
Deferred tax (benefit) provision: | ||||||||||||||||||||
Federal | ( | |||||||||||||||||||
State | ( | |||||||||||||||||||
( | ||||||||||||||||||||
Total provision for income taxes | $ | $ | $ |
2022 | 2021 | 2020 | ||||||||||||||||||
Federal income tax (benefit) provision at federal rate | $ | ( | $ | $ | ( | |||||||||||||||
State income tax (benefit) provision, net of federal tax | ( | ( | ||||||||||||||||||
Other permanent differences | ( | |||||||||||||||||||
Tax credits | ( | ( | ( | |||||||||||||||||
Change in valuation allowance | ||||||||||||||||||||
Tax rate change | ( | |||||||||||||||||||
Deferred tax asset write-off | ||||||||||||||||||||
Other items, net | ( | |||||||||||||||||||
Provision for income taxes | $ | $ | $ | |||||||||||||||||
Effective income tax rate | ( | % | % | ( | % |
2022 | 2021 | |||||||||||||
Deferred tax assets | $ | $ | ||||||||||||
Deferred tax liabilities | ( | ( | ||||||||||||
Total deferred tax assets | ||||||||||||||
Valuation allowance | ( | ( | ||||||||||||
Net deferred tax liabilities | $ | ( | $ | ( |
2022 | 2021 | |||||||||||||
Deferred tax assets (liabilities): | ||||||||||||||
Loss carry forwards | $ | $ | ||||||||||||
Deferred franchise revenue | ||||||||||||||
Property, equipment and intangible assets | ( | ( | ||||||||||||
Stock-based compensation | ||||||||||||||
Tax credit carry forwards | ||||||||||||||
Interest expense | ||||||||||||||
Inventory smallwares | ( | ( | ||||||||||||
Other accrued expenses | ||||||||||||||
Operating lease assets | ( | ( | ||||||||||||
Operating lease liabilities | ||||||||||||||
Other | ||||||||||||||
Total net deferred tax assets | ||||||||||||||
Valuation allowance | ( | ( | ||||||||||||
Net deferred tax liabilities | $ | ( | $ | ( |
Awards | Weighted- Average Exercise Price | Weighted-Average Remaining Contractual Term | Aggregate Intrinsic Value (1) (in thousands) | |||||||||||||||||||||||
Outstanding—December 28, 2021 | $ | |||||||||||||||||||||||||
Granted | ||||||||||||||||||||||||||
Forfeited or expired | ( | |||||||||||||||||||||||||
Exercised | ||||||||||||||||||||||||||
Outstanding—January 3, 2023 | $ | $ | ||||||||||||||||||||||||
Vested and expected to vest | $ | $ | ||||||||||||||||||||||||
Exercisable as of January 3, 2023 | $ | $ |
Awards | Weighted- Average Grant Date Fair Value | |||||||||||||
Outstanding—December 28, 2021 | $ | |||||||||||||
Granted | ||||||||||||||
Vested | ( | |||||||||||||
Forfeited | ( | |||||||||||||
Non-vested at January 3, 2023 | $ |
2022 | 2021 | 2020 | ||||||||||||||||||
Net (loss) income attributable to common stockholders | $ | ( | $ | $ | ( | |||||||||||||||
Shares: | ||||||||||||||||||||
Basic weighted average shares outstanding | ||||||||||||||||||||
Effect of dilutive securities | ||||||||||||||||||||
Diluted weighted average number of shares outstanding | ||||||||||||||||||||
(Loss) earnings per share: | ||||||||||||||||||||
Basic (loss) earnings per share | $ | ( | $ | $ | ( | |||||||||||||||
Diluted (loss) earnings per share | $ | ( | $ | $ | ( |
Classification | 2022 | 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 | $ | $ |
Year Ended | Year Ended | ||||||||||||||||
Classification | January 3, 2023 | December 28, 2021 | |||||||||||||||
Operating lease cost | Occupancy, other restaurant operating costs, general and administrative expenses, and pre-opening costs | $ | $ | ||||||||||||||
Closure costs, loss on disposals and other | |||||||||||||||||
Finance lease cost | |||||||||||||||||
Amortization of lease assets | Depreciation and amortization | ||||||||||||||||
Interest on lease liabilities | Interest expense, net | ||||||||||||||||
Sublease income | Franchising royalties and fees, and other | ( | ( | ||||||||||||||
Total lease cost, net | $ | $ |
Operating Leases | Finance Leases | Total | |||||||||||||||
2023 | $ | $ | $ | ||||||||||||||
2024 | |||||||||||||||||
2025 | |||||||||||||||||
2026 | |||||||||||||||||
2027 | |||||||||||||||||
Thereafter | |||||||||||||||||
Total lease payments | |||||||||||||||||
Less: Imputed interest | |||||||||||||||||
Present value of lease liabilities | $ | $ | $ |
January 3, 2023 | December 28, 2021 | ||||||||||
Weighted average remaining lease term (years): | |||||||||||
Operating | |||||||||||
Finance | |||||||||||
Weighted average discount rate: | |||||||||||
Operating | % | % | |||||||||
Finance | % | % |
Cash paid for lease liabilities: | 2022 | 2021 | ||||||||||||
Operating leases | $ | $ | ||||||||||||
Finance leases | ||||||||||||||
$ | $ | |||||||||||||
Right-of-use assets obtained in exchange for new lease liabilities: | ||||||||||||||
Operating leases | $ | $ | ||||||||||||
Finance leases | ||||||||||||||
$ | $ |
2022 | 2021 | 2020 | ||||||||||||||||||
Interest paid (net of amounts capitalized) | $ | $ | $ | |||||||||||||||||
Income taxes paid (refunded) | ( | |||||||||||||||||||
Purchases of property and equipment accrued in accounts payable |
Impairment of long-lived assets | ||||||||
Description of the Matter | As more fully described in Notes 1 and 6 to the consolidated financial statements, during the year ended January 3, 2023, the Company recorded impairment charges of $1.4 million related to its restaurants. The Company evaluates its long-lived assets for impairment whenever events or changes indicate that the carrying amount of an asset may not be recoverable. Management groups and evaluates long-lived assets for impairment at the individual restaurant level, which is the lowest level at which independent identifiable cash flows are available. The Company estimates the future undiscounted cash flows expected to be generated by the assets and compares those estimates to the carrying value of the related assets. If the assets are determined to be impaired, they are written down to their fair values. When indicators of impairment were identified, auditing the Company’s long-lived asset impairment analyses involved subjective auditor judgment in evaluating the expected restaurant revenues included in the future undiscounted cash flows. This assumption is subjective in nature and is affected by expectations about future market conditions for a given store. | |||||||
How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s assessment of the projected undiscounted cash flows to be generated by restaurants with indicators of impairment. This included testing controls over management’s review of the significant assumption of future restaurant revenues described above. To test the significant assumption described above, our audit procedures included, among others, comparing estimated revenue trends to historical results for similar restaurants and evaluating current trends by restaurant and testing the data used in the calculations for completeness and accuracy. We inquired of the Company’s management to understand the business initiatives supporting the revenue assumption in the future cash flows. We performed a sensitivity analysis of the forecasted restaurant revenues to evaluate the change in future undiscounted cash flow estimates that would result from changes in the assumption. |
/s/ |
/s/ Ernst & Young LLP |
Description of Exhibit Incorporated Herein by Reference | ||||||||||||||||||||||||||||||||||||||
Exhibit Number | Exhibit Description | Form | File No. | Filing Date | Exhibit Number | Filed Herewith | ||||||||||||||||||||||||||||||||
3.1 | S-1 | 333-192402 | November 19, 2013 | 3.1 | ||||||||||||||||||||||||||||||||||
3.2 | 8-K | 001-35987 | August 24, 2015 | 3.1 | ||||||||||||||||||||||||||||||||||
4.1 | S-1/A | 333-188783 | June 17, 2013 | 4.1 | ||||||||||||||||||||||||||||||||||
4.2 | 8-K | 001-35987 | February 9, 2017 | 4.1 | ||||||||||||||||||||||||||||||||||
4.3 | 8-K | 001-35987 | February 9, 2017 | 4.2 | ||||||||||||||||||||||||||||||||||
4.4 | 10-K | 001-35987 | February 26, 2021 | 4.4 | ||||||||||||||||||||||||||||||||||
10.1 | S-1/A | 333-188783 | June 17, 2013 | 10.1 | ||||||||||||||||||||||||||||||||||
10.2 | S-1/A | 333-188783 | June 17, 2013 | 10.2 | ||||||||||||||||||||||||||||||||||
10.3 | 8-K | 001-35987 | July 27, 2022 | 10.1 | ||||||||||||||||||||||||||||||||||
10.4 | 10-Q | 001-35987 | May 11, 2018 | 10.2 | ||||||||||||||||||||||||||||||||||
10.5 | 10-Q | 001-35987 | May 11, 2018 | 10.3 | ||||||||||||||||||||||||||||||||||
10.6 | S-1/A | 333-188783 | June 17, 2013 | 10.15 | ||||||||||||||||||||||||||||||||||
10.7 | 10-K | 001-35987 | February 24, 2015 | 10.9 | ||||||||||||||||||||||||||||||||||
10.8 | 10-K | 001-35987 | February 24, 2015 | 10.10 | ||||||||||||||||||||||||||||||||||
10.9 | 10-Q | 001-35987 | November 9, 2017 | 10.7 | ||||||||||||||||||||||||||||||||||
10.10 | 10-Q | 001-35987 | November 9, 2017 | 10.8 | ||||||||||||||||||||||||||||||||||
10.11 | 10-Q | 001-35987 | November 9, 2017 | 10.9 | ||||||||||||||||||||||||||||||||||
10.12 | S-1/A | 333-188783 | June 17, 2013 | 10.22 | ||||||||||||||||||||||||||||||||||
10.13* | 8-K | 001-35987 | September 25, 2017 | 10.1 |
10.14 | 8-K | 001-35987 | March 14, 2017 | 10.2 | ||||||||||||||||||||||||||||||||||
10.15 | 8-K | 001-35987 | March 14, 2017 | 10.1 | ||||||||||||||||||||||||||||||||||
10.16* | 10-Q | 001-35987 | November 9, 2017 | 10.4 | ||||||||||||||||||||||||||||||||||
10.17* | 10-Q | 001-35987 | November 9, 2017 | 10.5 | ||||||||||||||||||||||||||||||||||
10.18* | 10-Q | 001-35987 | November 9, 2017 | 10.6 | ||||||||||||||||||||||||||||||||||
10.19* | 10-K | 001-35987 | March 15, 2019 | 10.32 | ||||||||||||||||||||||||||||||||||
10.20* | 10-K | 001-35987 | March 15, 2019 | 10.34 | ||||||||||||||||||||||||||||||||||
10.21* | 10-Q | 001-35987 | June 17, 2020 | 10.2 | ||||||||||||||||||||||||||||||||||
10.22* | 10-K | 001-35987 | February 26, 2020 | 10.34 | ||||||||||||||||||||||||||||||||||
10.23 | 10-K | 001-35987 | February 26, 2020 | 10.35 | ||||||||||||||||||||||||||||||||||
10.24* | 10-Q | 001-35987 | October 29, 2020 | 10.1 | ||||||||||||||||||||||||||||||||||
10.25* | 10-Q | 001-35987 | October 29, 2020 | 10.2 | ||||||||||||||||||||||||||||||||||
10.26* | 10-Q | 001-35987 | October 29, 2020 | 10.3 | ||||||||||||||||||||||||||||||||||
10.27* | 10-Q | 001-35987 | October 29, 2020 | 10.4 | ||||||||||||||||||||||||||||||||||
10.28* | 8-K | 001-35987 | November 2, 2020 | 10.1 | ||||||||||||||||||||||||||||||||||
10.29* | 8-K | 001-35987 | November 2, 2020 | 10.2 | ||||||||||||||||||||||||||||||||||
10.30* | 10-Q | 001-35987 | April 30, 2021 | 10.1 | ||||||||||||||||||||||||||||||||||
10.31* | 10-Q | 001-35987 | August 4, 2021 | 10.1 | ||||||||||||||||||||||||||||||||||
10.32* | 10-Q | 001-35987 | August 4, 2021 | 10.2 | ||||||||||||||||||||||||||||||||||
10.33* | 10-Q | 001-35987 | August 4, 2021 | 10.3 |
10.34* | 10-K | 001-35987 | February 24, 2022 | 10.40 | ||||||||||||||||||||||||||||||||||
10.35* | 10-Q | 001-35987 | April 28, 2022 | 10.1 | ||||||||||||||||||||||||||||||||||
10.36 | 10-Q | 001-35987 | November 4, 2022 | 10.1 | ||||||||||||||||||||||||||||||||||
21.1 | X | |||||||||||||||||||||||||||||||||||||
23.1 | X | |||||||||||||||||||||||||||||||||||||
24.1 | X | |||||||||||||||||||||||||||||||||||||
31.1 | X | |||||||||||||||||||||||||||||||||||||
31.2 | X | |||||||||||||||||||||||||||||||||||||
32.1 | X | |||||||||||||||||||||||||||||||||||||
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 | X | ||||||||||||||||||||||||||||||||||||
101.SCH | Inline XBRL Taxonomy Extension Schema Document | X | ||||||||||||||||||||||||||||||||||||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | X | ||||||||||||||||||||||||||||||||||||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | X | ||||||||||||||||||||||||||||||||||||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | X | ||||||||||||||||||||||||||||||||||||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | X | ||||||||||||||||||||||||||||||||||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | X |
NOODLES & COMPANY | |||||
By: /s/ DAVE BOENNIGHAUSEN | |||||
Dave Boennighausen | |||||
Chief Executive Officer |
Signature | Title | Date | ||||||
/s/ DAVE BOENNIGHAUSEN | ||||||||
Dave Boennighausen | Director, Chief Executive Officer (principal executive officer) | March 9, 2023 | ||||||
/s/ CARL LUKACH | ||||||||
Carl Lukach | Chief Financial Officer (principal financial officer) | March 9, 2023 | ||||||
/s/ KATHY LOCKHART | ||||||||
Kathy Lockhart | Chief Accounting Officer (principal accounting officer) | March 9, 2023 | ||||||
/s/ JEFFREY JONES | ||||||||
Jeffrey Jones | Chairman | March 9, 2023 | ||||||
/s/ ROBERT HARTNETT | ||||||||
Robert Hartnett | Director | March 9, 2023 | ||||||
/s/ MARY EGAN | ||||||||
Mary Egan | Director | March 9, 2023 | ||||||
/s/ DREW MADSEN | ||||||||
Drew Madsen | Director | March 9, 2023 | ||||||
/s/ ELISA SCHREIBER | ||||||||
Elisa Schreiber | Director | March 9, 2023 | ||||||
/s/ SHAWN TAYLOR | ||||||||
Shawn Taylor | Director | March 9, 2023 |
Subsidiaries of the Registrant | Jurisdiction of Incorporation | ||||
TNSC, Inc. | Colorado, United States | ||||
The Noodle Shop, Co. - Colorado, Inc. | Colorado, United States | ||||
The Noodle Shop, Co. - Delaware, Inc. | Delaware, United States | ||||
The Noodle Shop, Co. - Illinois, Inc. | Illinois, United States | ||||
The Noodle Shop, Co. - Kansas, LLC | Kansas, United States | ||||
The Noodle Shop, Co. - Virginia, Inc. | Virginia, United States | ||||
The Noodle Shop, Co. - Wisconsin, Inc. | Wisconsin, United States |
(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/ 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 |
Audit Information |
12 Months Ended |
---|---|
Jan. 03, 2023 | |
Audit Information [Abstract] | |
Auditor Name | Ernst & Young LLP |
Auditor Location | Denver, Colorado |
Auditor Firm ID | 42 |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Jan. 03, 2023 |
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 | 48,464,298 | 48,125,151 |
Common stock outstanding | 46,040,427 | 45,701,280 |
Treasury stock, shares | 2,423,871 | 2,423,871 |
Consolidated Statements of Cash Flows - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 03, 2023 |
Dec. 28, 2021 |
Dec. 29, 2020 |
|
Operating activities | |||
Net (loss) income | $ (3,314) | $ 3,665 | $ (23,259) |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||
Depreciation and amortization | 23,268 | 22,333 | 21,709 |
Deferred income taxes, net | (40) | 29 | 40 |
Restaurant impairments, closure costs and asset disposals | 2,261 | 3,538 | 4,782 |
Amortization of debt issuance costs | 723 | 444 | 371 |
Stock-based compensation | 4,328 | 4,110 | 2,497 |
Gain on insurance proceeds received for property damage | 0 | (406) | (200) |
Changes in operating assets and liabilities: | |||
Accounts receivable | (2,576) | (491) | (392) |
Inventories | (743) | (382) | 61 |
Prepaid expenses and other assets | 1,244 | (492) | (14) |
Accounts payable | (563) | 4,689 | (1,287) |
Operating lease assets and liabilities | (5,417) | (1,759) | 2,847 |
Income taxes | (68) | (64) | 59 |
Accrued expenses and other liabilities | (9,546) | 951 | 1,910 |
Net cash provided by operating activities | 9,557 | 36,165 | 9,124 |
Investing activities | |||
Purchases of property and equipment | (33,886) | (18,776) | (11,782) |
Proceeds from restaurant refranchising | 1,577 | 0 | 0 |
Insurance proceeds received for property damage | 0 | 406 | 837 |
Net cash used in investing activities | (32,309) | (18,370) | (10,945) |
Financing activities | |||
Proceeds from Lines of Credit | 4,781 | 0 | 0 |
Proceeds from borrowings on long-term debt | 53,512 | 0 | 55,500 |
Payments on long-term debt | (32,850) | (21,556) | (54,313) |
Debt issuance costs | (1,077) | 0 | (731) |
Payment of finance leases | (1,990) | (1,925) | (1,080) |
Stock plan transactions and tax withholding on share-based compensation awards | (356) | 101 | (174) |
Net cash provided by (used in) financing activities | 22,020 | (23,380) | (798) |
Net decrease in cash and cash equivalents | (732) | (5,585) | (2,619) |
Cash and cash equivalents | |||
Beginning of year | 2,255 | 7,840 | 10,459 |
End of year | $ 1,523 | $ 2,255 | $ 7,840 |
Business and Summary of Significant Accounting Policies |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Jan. 03, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Business and Summary and Basis of Presentation | Business and Summary of Significant Accounting Policies Business Noodles & Company (the “Company” or “Noodles & Company”), a Delaware corporation, develops and operates fast-casual restaurants that serve globally-inspired noodle and pasta dishes, soups, salads and appetizers. As of January 3, 2023, the Company had 368 company-owned restaurants and 93 franchise restaurants in 31 states. The Company operates its business as one operating and reportable segment. Principles of Consolidation and Basis of Presentation The accompanying consolidated financial statements include the accounts of Noodles & Company and its subsidiaries. All intercompany balances and transactions are eliminated in consolidation. Fiscal Year The Company operates on a 52- or 53-week fiscal year ending on the Tuesday closest to December 31. Fiscal year 2022 which ended on January 3, 2023 contained 53 weeks. Fiscal years 2021 and 2020, which ended on December 28, 2021 and December 29, 2020, respectively, each contained 52 weeks. Risks and Uncertainties The Company has been subject to risks and uncertainties as a result of the COVID-19 Pandemic and its variants ("COVID-19 Pandemic") since March 2022. Our business has been adversely affected by the COVID-19 Pandemic in varying degrees through occasional temporarily closed restaurants and reduced operating hours, disruption in our supply chain and shortages in the labor required to operate our restaurants. As such, we experienced a substantial decline in our revenues, profitability and cash flows from operations during the years ended December 28, 2021 and December 29, 2020. During the year ended January 3, 2023, the effects of the COVID-19 Pandemic diminished and we experienced improvement in our business. Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents The Company considers all highly liquid investment instruments with an initial maturity of three months or less when purchased to be cash equivalents. Amounts receivable from credit card processors are converted to cash shortly after the related sales transaction and are considered to be cash equivalents because they are both short-term and highly liquid in nature. Amounts receivable from credit card processors as of January 3, 2023 and December 28, 2021, which are included in cash and cash equivalents, were $1.0 million in both years. Additionally, the Company records “book overdrafts” when outstanding checks at year end are in excess of cash and cash equivalents. Such book overdrafts are recorded within accounts payable in the accompanying Consolidated Balance Sheets and within operating activities in the accompanying Consolidated Statements of Cash Flows. Accounts Receivable Accounts receivable consists primarily of franchise receivables and vendor rebates, as well as insurance receivables and other miscellaneous receivables arising from the normal course of business. The Company believes all amounts to be collectible and does not have a history of losses. Accordingly, no allowance for doubtful accounts has been recorded as of January 3, 2023 or December 28, 2021. Inventories Inventories consist of food, beverages, supplies and smallwares, and are stated at the lower of cost (first-in, first-out method) or net realizable value. Smallwares inventory, which consist of the plates, silverware and cooking utensils used in the restaurants, are frequently replaced and are therefore considered current assets. Replacement costs of smallwares inventory are recorded as other restaurant operating costs in the Consolidated Statements of Operations and are expensed as incurred. As of January 3, 2023 and December 28, 2021, smallwares inventory of $6.5 million and $6.3 million, was included in the accompanying Consolidated Balance Sheets. Property and Equipment Property and equipment are stated at cost, less accumulated depreciation. Expenditures for major renewals and improvements are capitalized, while expenditures for minor replacements and maintenance and repairs are expensed as incurred. Upon retirement or disposal of assets, the accounts are relieved of cost and accumulated depreciation and the related gain or loss is reflected in earnings. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the shorter of the estimated useful life or the lease term, which generally includes option periods that are reasonably certain to be exercised. Depreciation and amortization expense on property and equipment, including assets recorded as finance leases, was $23.2 million, $22.3 million and $21.6 million in 2022, 2021 and 2020, respectively. The estimated useful lives for property and equipment are:
The Company capitalizes internal payroll and payroll-related costs directly related to the successful acquisition, development, design and construction of its new restaurants. Capitalized internal costs were $0.4 million, $0.2 million and $0.2 million in 2022, 2021 and 2020, respectively. Interest incurred on funds used to construct company-owned restaurants is capitalized and amortized over the estimated useful life of the related assets. Capitalized interest totaled $0.6 million, $0.3 million and $0.2 million in 2022, 2021 and 2020, respectively. Goodwill Goodwill represents the excess of purchase price over the fair value of identifiable net assets acquired. Goodwill is not subject to amortization, but instead is tested for impairment at least annually (or more often, if necessary) as of the first day of the Company’s fourth fiscal quarter. Goodwill is evaluated at the level of the Company’s single operating segment, which also represents the Company’s only reporting unit. In 2022, 2021 and 2020, the Company performed a qualitative impairment assessment. Under this approach, the Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of its reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent. If after performing the qualitative assessment, the Company determines there is less than a 50 percent chance that the fair value of its reporting unit is less than its carrying amount, then performing the two-step test is unnecessary. Based on the qualitative assessment performed, management did not believe that it is more likely than not that the Company’s goodwill has been impaired. Based on the Company’s analysis, no impairment charges were recognized on goodwill in 2022, 2021 or 2020. Intangibles, net Intangibles, net consists primarily of reacquired franchise rights and trademarks. The Company amortizes the reacquired franchise rights over the remaining contractual terms of the reacquired franchise area development agreements at the time of acquisition, which ranged from approximately three years to 10 years as of January 3, 2023. Trademark rights are considered indefinite-lived intangible assets, the carrying value of which are analyzed for impairment at least annually (or more often, if necessary). Impairment of Long-Lived Assets Long-lived assets are reviewed for impairment on a regular basis, in addition to whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets is measured by a comparison of the carrying amount of the assets to the future undiscounted net cash flows expected to be generated by the assets. Identifiable cash flows are measured at the lowest level for which they are largely independent of the cash flows of other groups of assets and liabilities, generally at the restaurant level. If the assets are determined to be impaired, the amount of impairment recognized is measured by the amount by which the carrying amount of the assets exceeds their fair value. Estimates of future cash flows are based on the Company’s experience and knowledge of local operations. During 2022, 2021 and 2020, the Company recorded impairment charges of certain long-lived assets which are included in restaurant impairments, closure costs and asset disposals in the Consolidated Statements of Operations. See Note 6, Restaurant Impairments, Closure Costs and Asset Disposals. Fair value of the restaurant assets was determined using Level 3 inputs (as described in Note 5, Fair Value Measurements). Debt Issuance Costs Certain fees and costs incurred to obtain long-term financing are capitalized and included as a reduction in the net carrying value of long-term debt, net of accumulated amortization. These costs are amortized to interest expense over the term of the related debt. When debt is extinguished prior to its maturity date, the amortization of the remaining unamortized debt issuance costs, or pro-rata portion thereof, is charged to loss on extinguishment of debt. Debt issuance costs of $1.6 million and $1.3 million, net of accumulated amortization, as of January 3, 2023 and December 28, 2021, respectively, are included as a reduction of long-term debt in the Consolidated Balance Sheets. Self-Insurance Programs The Company self-insures for health, workers’ compensation, general liability and property damage. Predetermined loss limits have been arranged with insurance companies to limit the Company’s per occurrence cash outlay. Estimated costs to settle reported claims and incurred but unreported claims for health and workers’ compensation self-insured plans are recorded in accrued payroll and benefits and for general liability and property damage in accrued expenses and other liabilities in the Consolidated Balance Sheets. Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company’s cash balances may exceed federally insured limits. Credit card transactions at the Company’s restaurants are processed by one service provider. Concentration of credit risk related to accounts receivable are limited, as the Company’s receivables are primarily amounts due from franchisees and the Company directly pulls the amounts owed from the franchisees bank accounts. Revenue Recognition Revenue consists of sales from restaurant operations and franchise royalties and fees. Revenue from the operation of company-owned restaurants is recognized when sales occur. The Company reports revenue net of sales and use taxes 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, which is recognized ratably over the estimated redemption period of the gift card, approximately 24 months. 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. Points generally expire after six months. Revenue is recognized in a future period when the reward points are redeemed. Franchise Royalties 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. 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, such fees 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. As of January 3, 2023, December 28, 2021 and December 29, 2020, there were 93, 76 and 76 franchise restaurants in operation, respectively. Franchisees opened three restaurants in 2022 and one restaurant in 2021. There were no franchise restaurants opened in 2020. Also, one franchise restaurant closed in each of 2022, 2021 and 2020. In addition, there were fifteen company-owned locations acquired by a franchisee in 2022 and nine locations acquired in 2020. Pre-Opening Costs Pre-opening costs, including rent, wages, benefits and travel for the training and opening teams, food, beverage and other restaurant operating costs, are expensed as incurred prior to a restaurant opening for business. Advertising and Marketing Costs Advertising and marketing costs are expensed as incurred and were $9.3 million, $7.7 million and $7.9 million in 2022, 2021 and 2020, respectively. These costs are included in restaurant operating costs, general and administrative expenses and pre-opening costs based on the nature of the advertising and marketing costs incurred. Rent Rent expense for the Company’s leases, which generally have escalating rentals over the term of the lease, is recorded on a straight-line basis over the lease term. Additionally, tenant incentives used to fund leasehold improvements are recognized when earned and reduce the right-of-use asset related to the lease. These are amortized through the right-of-use asset as reductions of expense over the lease term. Some of the Company’s leases include rent escalations based on inflation indexes and fair market value adjustments. Certain leases contain contingent rental provisions that include a fixed base rent plus an additional percentage of the restaurant’s sales in excess of stipulated amounts. Lease expense associated with rent escalation and contingent rental provisions is not material and is included within operating lease cost. Operating lease liabilities are calculated using the prevailing index or rate at lease commencement. Subsequent escalations in the index or rate and contingent rental payments are recognized as variable lease expenses. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. As most of the Company’s leases do not provide an implicit rate, the Company used its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Provision (Benefit) for Income Taxes Provision (benefit) for income taxes is accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those deferred amounts are expected to be recovered or settled. Valuation allowances are recorded for deferred tax assets that more likely than not will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company’s policy is to recognize interest to be paid on an underpayment of income taxes in interest expense and any related statutory penalties in provision (benefit) for income taxes in the Consolidated Statements of Operations. Stock-Based Compensation Expense Stock-based compensation expense is measured at the grant date based upon the estimated fair value of the portion of the award that is ultimately expected to vest and is recognized as expense over the applicable vesting period of the award generally using the straight-line method (see Note 9, Stock-Based Compensation for more information). Recently Adopted Accounting Pronouncements In March 2020, the FASB issued ASU No. 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The ASU 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 adopted this pronouncement in the third quarter of 2022. The adoption of ASU 2020-04 did not have a material impact to the Company’s consolidated financial statements.
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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):
_____________________ (1) Franchise receivables in 2022 include amounts related to equipment purchased in advance at a discount for franchisees. Prepaid expenses and other assets consist of the following (in thousands):
Property and equipment, net, consist 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):
Assets and Liabilities Held for Sale In November 2021, the Company entered into a definitive agreement to sell fifteen restaurants to a new franchisee (“Warner Sale”). In January 2022, the Company closed the Warner Sale. The assets and liabilities associated with the Warner Sale have been recorded in “Prepaid expenses and other assets” and “Accrued expenses and other current liabilities” on the Consolidated Balance Sheets as of December 28, 2021. In addition, the Company recorded a $0.5 million write down of assets related to this transaction during the year ended December 28, 2021, included in "Restaurant impairments, closure costs and asset disposals" on the Consolidated Statements of Operations. The following table presents the carrying amounts of the major classes of assets and liabilities classified as held for sale (in thousands):
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Goodwill and Intangible Assets |
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Goodwill and Intangible Assets | Goodwill and Intangible Assets The Company had no goodwill impairment charges in 2022, 2021 or 2020. As of January 3, 2023 and December 28, 2021, the goodwill balance remained at $7.2 million. The following table presents intangible assets subject to amortization as of January 3, 2023 and December 28, 2021, (in thousands):
The estimated aggregate future amortization expense as of January 3, 2023 is as follows, (in thousands):
No impairment charges were recorded related to non-amortized intangible assets in 2022, 2021 or 2020.
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Long-Term Debt |
12 Months Ended |
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Jan. 03, 2023 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt 2018 Credit Facility 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 line of credit 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. The 2018 Credit Facility was subsequently amended on November 20, 2019 (as amended, the First Amended Credit Facility) and June 16, 2020 (as amended, 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 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. The Third Amended Credit Facility is secured by a pledge of stock of substantially all of the Company’s subsidiaries and a lien on substantially all of the personal property assets of the Company and its subsidiaries. As of January 3, 2023, the Company had $47.7 million of indebtedness (excluding $1.6 million of unamortized debt issuance costs) and $3.0 million of letters of credit outstanding under the Third Amended Credit Facility. The Company also maintains outstanding letters of credit to secure obligations under its workers’ compensation program and certain lease obligations. As of January 3, 2023, the Company was in compliance with all of its debt covenants. The Company’s indebtedness bore interest at a range of 2.35% to 8.75% during 2022. The Company recorded interest expense of $2.4 million, $2.1 million and $3.1 million for 2022, 2021 and 2020, respectively, of which each year included $0.4 million of amortization of debt issuance costs.
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Fair Value Measurements |
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Jan. 03, 2023 | |
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 fair values due to their short-term nature. The carrying amounts of borrowings approximate fair value as the line of credit and 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 borrowings is 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 consolidated financial statements on a non-recurring basis include items such as 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 January 3, 2023 and December 28, 2021, are discussed in Note 6, Restaurant Impairments, Closure Costs and Asset Disposals. Assets held for sale are measured at fair value on a non-recurring basis using Level 3 inputs. The fair values are assigned a level within the fair value hierarchy, depending on the source of the inputs into the calculation. Level 1—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Level 2—Quoted prices in markets that are not active or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability. Level 3—Prices or valuation techniques which require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).
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Restaurant Impairments, Closure Costs and Asset Disposals |
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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 for fiscal years 2022, 2021 and 2020 (in thousands):
_____________________ (1)Restaurant impairments and closure costs in all periods presented above include amounts related to restaurants previously impaired or closed. Restaurant Impairments During 2022, 2021 and 2020, four restaurants, six restaurants and eight restaurants were identified as impaired, respectively. In 2022, the Company recognized a $0.3 million (discussed in Note 2, Supplemental Financial Information). In 2021, the assets held in connection to the Warner Sale were written down by $0.5 million. All periods include ongoing equipment costs for restaurants previously impaired. Impairment is based on management’s current assessment of the expected future cash flows of various restaurants based on recent results and other specific market factors. Impairment expense is a Level 3 fair value measure and was determined by comparing the carrying value of restaurant assets to the estimated fair market value of the restaurant assets at resale value. The onset of the COVID-19 Pandemic during 2020 resulted in significant disruption to the restaurant industry and adversely affected the Company’s business. The Company will continue to monitor the impact from the COVID-19 Pandemic as it relates to recoverability of long-lived assets. In performing its impairment testing, the Company forecasts the future undiscounted cash flows by looking at recent restaurant level performance, restaurant level operating plans, sales trends and cost trends for cost of sales, labor and operating expenses. The Company compares this cash flow forecast to the asset’s carrying value at the restaurant. Based on this analysis, if the carrying amount of the assets is greater than the estimated future undiscounted cash flows, an impairment charge is recognized, measured as the amount by which the carrying amount exceeds the fair value of the asset. Restaurant Closures Closure costs during 2022, 2021 and 2020 pertain to ongoing costs of restaurants that closed in previous years, as well as costs related to the closure of five, twelve, and six restaurants, respectively. These closure costs were offset by gains of $0.1 million in 2022, $0.2 million in 2021 and $0.6 million in 2020 resulting from the adjustments to liabilities as lease terminations occur. Closure costs can include fees from real estate advisors and brokers related to terminations of the leases and charges resulting from final adjustments to liabilities as lease terminations occur. Loss on disposal of assets and other includes expenses related to the divestiture of company-owned restaurants in 2022 and 2020 as well as lease related costs. Both years include disposals of assets in the normal course of business. Loss on disposal of assets and other for 2021 includes a gain on insurance proceeds from property damage.
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Income Taxes |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes The components of the provision (benefit) for income taxes are as follows for 2022, 2021 and 2020 (in thousands):
The reconciliation of income tax provision (benefit) that would result from applying the federal statutory rate to pre-tax income as shown in the accompanying Consolidated Statements of Operations is as follows for 2022, 2021 and 2020 (in thousands):
The Company’s total deferred tax assets and liabilities are as follows (in thousands):
Deferred income taxes arise because of the differences in the book and tax bases of certain assets and liabilities. Deferred income tax liabilities and assets consist of the following (in thousands):
For the year ended January 3, 2023, the Company determined that it was appropriate to maintain a valuation allowance of $47.3 million against U.S. deferred tax assets due to uncertainty regarding the realizability of future tax benefits. The valuation allowance is recorded against net deferred tax assets, exclusive of indefinite-lived assets and liabilities. The Company will maintain the remaining valuation allowance 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 to the effective tax rate. As of January 3, 2023 and December 28, 2021, net operating loss (“NOL”) carry forwards for federal income tax purposes of approximately $153.5 million and $145.0 million, respectively, were available to offset future taxable income. Of these amounts, $106.8 million is available to offset future taxable income through 2037. Federal NOLs of $46.7 million created during the year ended January 1, 2019 and all subsequent years after can be carried forward indefinitely, but can only offset 80% of future taxable income. The Internal Revenue Code Section 382 generally limits the utilization of NOLs when there is an ownership change. The Company completed an analysis under Section 382 through January 3, 2023 and determined that there isn’t a current year limitation on utilization of tax attributes. Prior to the utilization of NOLs in the future, the Company will determine whether there are any limitations under Section 382. If such a limitation exists, it is possible that a portion of the NOLs may not be available for use before expiration. Uncertain tax positions are recognized if it is more likely than not that the Company will be able to sustain the tax position taken, and the measurement of the benefit is calculated as the largest amount that is more than 50% likely to be realized upon resolution of the benefit. The Company has analyzed filing positions in all of the federal and state jurisdictions where it is required to file income tax returns, as well as all open tax years in these jurisdictions. There were no uncertain tax positions for the years ended January 3, 2023 or December 28, 2021. For federal and state income tax purposes, the Company’s 2019 through 2021 tax years remain open for examination by the authorities under the normal three year statute of limitations. Should the Company utilize any of its U.S. or state NOLs, the tax year to which the original loss relates will remain open to examination.
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Stockholders' Equity |
12 Months Ended |
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Jan. 03, 2023 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders’ Equity Common Stock The Company has 181,000,000 shares of stock authorized, consisting of 150,000,000 shares of Class A common stock, par value $0.01 per share; 30,000,000 shares of Class B common stock, par value $0.01 and 1,000,000 shares of preferred stock, par value $0.01 per share. Preferred stock rights are determined by the Company’s Board of Directors when preferred shares are issued. The following summarizes the rights of common stock: Voting—Shares of Class A common stock and Class B common stock are entitled to one vote per share in all voting matters, with the exception that Class B common stock does not vote on the election or removal of directors. Conversion—Each share of Class B common stock is convertible, at the option of the holder, into one share of Class A common stock. Dividends—Class A common stock and Class B common stock share equally if a dividend is declared or paid to either class, but they do not have rights to any special dividend. Liquidation, Dissolution or Winding Up—Class A common stock and Class B common stock share equally in distributions in liquidation, dissolution or winding up of the corporation. Securities Purchase Agreement with L Catterton On February 8, 2017, the Company entered into a securities purchase agreement with L Catterton, pursuant to which the Company agreed, in return for aggregate gross proceeds of $18.5 million, to sell to L Catterton an aggregate of 18,500 shares of preferred stock convertible into 4,252,873 shares of the Company’s Class A common stock, par value $0.01 per share, at a price per share of $1,000, plus warrants exercisable for five years beginning six months following their issuance for the purchase of 1,913,793 shares of the Company’s Class A common stock, at a price per share of $4.35. On January 6, 2021, L Catterton exercised their warrants and sold 837,948 shares of Class A Common Stock, pursuant to a private transaction. Upon completion of the transaction, L Catterton did not hold any shares of the Company’s Class A Common Stock.
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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 2010 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 (“SARs”), restricted stock, restricted stock units (“RSUs”), performance stock units (“PSUs”) and incentive bonuses to employees, officers, non-employee directors and other service providers. The Plan is administered by the Compensation Committee of the Company’s Board of Directors (the “Board”) or another committee designated by the Board, or in the absence of any such committee, the Board itself (the “administrator”). Stock options are granted at a price determined by the administrator at an exercise price that is not less than the fair market value of the underlying stock on the date of grant. The administrator may also grant SARs and RSUs with terms determined by the administrator in accordance with the Plan. All share-based awards (except for RSUs) granted under the Plan have a life of ten years. Most awards vest ratably over four years; however, some have been granted with different vesting schedules. Of the awards outstanding, none have been granted to non-employees (except those granted to non-employee members of the Board of Directors of the Company) under the Plan. In 2022, the Company launched the General Manager (“GM”) Equity program which granted RSUs to top performing general managers with a year cliff vesting. At January 3, 2023, approximately 1.5 million share-based awards were available to be granted under the Plan. Stock-based compensation expense is generally recognized on a straight-line basis over the service period of the awards. In 2022, 2021 and 2020, non-cash stock-based compensation expense of $4.4 million, $4.3 million and $2.6 million, respectively, was included in general and administrative expense. Expense recognized in 2021 was higher than previous years due to the increase in performance share compensation expense as a result of improved Company performance compared to previous years. As of January 3, 2023, there was $7.4 million of unrecognized compensation costs related to non-vested share-based compensation arrangements granted under the Plan, which is expected to be recognized over 2.4 years. The estimated fair value of each option granted is calculated using the Black-Scholes option-pricing model. Expected volatilities are based on the Company’s historical data and implied volatility. The Company uses historical data to estimate expected employee forfeitures of stock options. The expected life of options granted is management’s best estimate using recent and expected transactions. The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The Company did not grant any options in 2022, 2021 or 2020. The Company has estimated forfeiture rates that average 21% based upon the class of employees receiving stock-based compensation in its calculation of stock-based compensation expense for the year ended January 3, 2023. These estimates are based on historical forfeiture behavior exhibited by employees of the Company. A summary of aggregate option award activity under the Plan as of January 3, 2023, and changes during the fiscal year then ended is presented below:
_____________ (1)Aggregate intrinsic value represents the amount by which fair value of the Company’s stock exceeds the exercise price of the option as of January 3, 2023. There were no options granted in the years ended January 3, 2023, December 28, 2021 and December 29, 2020. The Company had 57,147, 90,590 and 120,349 options that vested during the years ended January 3, 2023, December 28, 2021 and December 29, 2020, respectively. These awards had a total estimated fair value of $0.3 million, $1.1 million, and $0.8 million at the date of vesting for the years ended January 3, 2023, December 28, 2021 and December 29, 2020, respectively. Performance Stock Units The Company grants PSUs to its executive officers under the Plan. These PSU awards are earned over a three-year performance period subject to the achievement of certain target performance conditions. The number of shares eligible to vest ranges from 0% to 200%, however no share shall vest if the defined minimum targets are not met. The PSUs granted during fiscal years 2019 to 2022 were based on target performance measures over the Company’s comparable sales growth and Adjusted EBITDA (“Financial PSU”). In 2022 and 2021, the Company also awarded a total shareholder return based metric (“TSR”), which compares the stock price of the Company’s shares to a group of peer companies. Each share of the Financial PSU has a fair value equal to the Company’s stock price at the date of grant while the fair value of each share of TSR is determined using a Monte Carlo valuation model. The Financial PSU stock-based compensation expense is recognized during the three-year period and is adjusted for the number of shares that are expected to vest based on the probability of achieving the targeted performance measures. Stock-based compensation expense for TSR awards is recognized straight-line over the term of the award. PSUs remain unvested until the end of the performance period and through the post-vest holding period of three to six months (“vest date”). PSUs are forfeited in the event of termination prior to the vest date. The stock-based compensation expense recognized from the PSUs amounted to $0.9 million and $1.5 million during 2022 and 2021, respectively. There was no stock-based compensation expense recognized from the PSUs in 2020. A summary of the status of the Company’s non-vested restricted share units as of January 3, 2023 and changes during the year then ended is presented below:
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Earnings (Loss) Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings (Loss) Per Share | (Loss) Earnings Per Share Basic (loss) earnings per share (“EPS”) is calculated by dividing net (loss) income available to common shareholders by the weighted-average number of shares of common stock outstanding during each period. Diluted EPS is calculated using net (loss) income 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 and restricted common stock. 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):
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Employee Benefit Plans |
12 Months Ended |
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Jan. 03, 2023 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plans | Employee Benefit Plans Defined Contribution Plan In October 2003, the Company adopted a defined contribution plan, The Noodles & Company 401(k) Plan (the “401(k) Plan”). Company employees aged 21 or older, are eligible to participate in the 401(k) Plan beginning on the first day of the calendar month following 30 days of employment. Under the provisions of the 401(k) Plan, the Company may, at its discretion, make contributions to the 401(k) Plan. Participants are 100% vested in their own contributions. In 2019, the board of directors authorized matching contributions equal to 25% of the first 4% of compensation that is deferred by the participant. The Company recognized matching contribution expense of $0.4 million, $0.3 million and $0.1 million in 2022, 2021 and 2020, respectively. Deferred Compensation Plan The Company’s deferred compensation plan, under which compensation deferrals began in 2013, is a non-qualified deferred compensation plan which allows highly compensated employees to defer a portion of their base salary and variable compensation each plan year. To offset its obligation, the Company purchases Company-owned whole-life insurance contracts on certain employees. As of January 3, 2023 and December 28, 2021, $0.7 million and $2.5 million, respectively, were included in other assets, net, which represents the cash surrender value of the associated life insurance policies, and $0.7 million and $0.5 million, respectively, were included in accrued expenses and other current liabilities and other long-term liabilities, which represents the carrying value of the liability for deferred compensation. Employee Stock Purchase Plan In 2013, the Company adopted an Employee Stock Purchase Plan (the “ESPP”) under which eligible team members may voluntarily contribute up to 15% of their salaries, subject to limitations, to purchase common stock at a price equal to 85% of the fair market value of a share of the Company’s common stock on the first day of each offering period or 85% of the fair market value of a share of the Company’s common stock on the last day of each offering period, whichever amount is less. In general, all non-highly compensated employees who have been employed by the Company for at least 30 days prior to the offering period and who are regularly scheduled to work more than 20 hours per week and for more than five months in any calendar year, are eligible to participate in the ESPP which operates in-line with the Company’s fiscal quarters. A total of 750,000 shares of common stock are available for issuance under the ESPP. The Company has issued a total of 267,729 shares under this plan, of which 40,838 shares were issued during 2022. A total of 482,271 shares remain available for future issuance. For 2022, in accordance with the guidance for accounting for stock compensation, the Company estimated the fair value of the stock purchase plan using the Black-Scholes multiple-option pricing model. The average assumptions used in the model included a 3.31% risk-free interest rate; 0.25 years year expected life; expected volatility of 66.4%; and a zero percent dividend yield. The weighted average fair value per share at grant date was $1.12. In 2022, the Company recognized $46,000 of compensation expense related to the ESPP.
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Leases |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases The Company leases restaurant facilities, office space and certain equipment that expire on various dates through April 2038. Lease terms for restaurants in traditional shopping centers generally include a base term of 10 years, with options to extend these leases for additional periods of to 15 years. The Company’s leases typically contain rent escalations over the lease term. The Company recognizes expense for these leases on a straight-line basis over the lease term. Additionally, tenant incentives used to fund leasehold improvements are recognized when earned and reduce the right-of-use asset related to the lease. These are amortized through the right-of-use asset as reductions of expense over the lease term. Total rent expense for operating leases for 2022, 2021 and 2020 was approximately $38.5 million, $39.1 million and $39.9 million, respectively. Some of the Company’s leases include rent escalations based on inflation indexes and fair market value adjustments. Certain leases contain contingent rental provisions that include a fixed base rent plus an additional percentage of the restaurant’s sales in excess of stipulated amounts. Lease expense associated with rent escalation and contingent rental provisions is not material and is included within operating lease cost. Operating lease liabilities are calculated using the prevailing index or rate at lease commencement. Subsequent escalations in the index or rate and contingent rental payments are recognized as variable lease expenses. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company elected the practical expedient to account for lease and non-lease components as a single component for substantially all lease types. As most of the Company’s leases do not provide an implicit rate, the Company used its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. During 2020, the onset of the COVID-19 Pandemic impacted the Company’s business significantly, including temporary closures of our dining rooms starting in March 2020. The COVID-19 Pandemic had impacted certain of our restaurant operating results and the changes in the market trend of the trade area affected the underlying asset values of the restaurant lease. The Company recorded right-of-use asset impairment charges on two restaurants in 2022 and one restaurant in 2021 which reduced the carrying value of operating lease assets to their respective estimated fair value by $0.2 million and $0.1 million, respectively. Supplemental balance sheet information related to leases is as follows (in thousands):
The components of lease costs are as follows (in thousands):
Future minimum lease payments required under existing leases as of January 3, 2023 are as follows (in thousands):
Operating lease payments include $98.6 million related to options to extend lease terms that are reasonably certain of being exercised and exclude $17.8 million of legally binding minimum lease payments for leases signed but not yet commenced. Lease term and discount rate are as follows:
Supplemental disclosures of cash flow information related to leases are as follows (in thousands):
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Leases | Leases The Company leases restaurant facilities, office space and certain equipment that expire on various dates through April 2038. Lease terms for restaurants in traditional shopping centers generally include a base term of 10 years, with options to extend these leases for additional periods of to 15 years. The Company’s leases typically contain rent escalations over the lease term. The Company recognizes expense for these leases on a straight-line basis over the lease term. Additionally, tenant incentives used to fund leasehold improvements are recognized when earned and reduce the right-of-use asset related to the lease. These are amortized through the right-of-use asset as reductions of expense over the lease term. Total rent expense for operating leases for 2022, 2021 and 2020 was approximately $38.5 million, $39.1 million and $39.9 million, respectively. Some of the Company’s leases include rent escalations based on inflation indexes and fair market value adjustments. Certain leases contain contingent rental provisions that include a fixed base rent plus an additional percentage of the restaurant’s sales in excess of stipulated amounts. Lease expense associated with rent escalation and contingent rental provisions is not material and is included within operating lease cost. Operating lease liabilities are calculated using the prevailing index or rate at lease commencement. Subsequent escalations in the index or rate and contingent rental payments are recognized as variable lease expenses. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company elected the practical expedient to account for lease and non-lease components as a single component for substantially all lease types. As most of the Company’s leases do not provide an implicit rate, the Company used its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. During 2020, the onset of the COVID-19 Pandemic impacted the Company’s business significantly, including temporary closures of our dining rooms starting in March 2020. The COVID-19 Pandemic had impacted certain of our restaurant operating results and the changes in the market trend of the trade area affected the underlying asset values of the restaurant lease. The Company recorded right-of-use asset impairment charges on two restaurants in 2022 and one restaurant in 2021 which reduced the carrying value of operating lease assets to their respective estimated fair value by $0.2 million and $0.1 million, respectively. Supplemental balance sheet information related to leases is as follows (in thousands):
The components of lease costs are as follows (in thousands):
Future minimum lease payments required under existing leases as of January 3, 2023 are as follows (in thousands):
Operating lease payments include $98.6 million related to options to extend lease terms that are reasonably certain of being exercised and exclude $17.8 million of legally binding minimum lease payments for leases signed but not yet commenced. Lease term and discount rate are as follows:
Supplemental disclosures of cash flow information related to leases are as follows (in thousands):
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Supplemental Disclosures to Consolidated Statements of Cash Flows |
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Supplemental Disclosures to Consolidated Statements of Cash Flows | Supplemental Disclosures to Consolidated Statements of Cash Flows The following table presents the supplemental disclosures to the Consolidated Statements of Cash Flows for 2022, 2021 and 2020 (in thousands):
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Commitments and Contingencies |
12 Months Ended |
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Jan. 03, 2023 | |
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 January 3, 2023. 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. |
Related Party Transactions |
12 Months Ended |
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Jan. 03, 2023 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions Securities Purchase Agreements Under the securities purchase agreement with Mill Road Capital II, L.P. (“Mill Road”), if at any time Mill Road owns 10.0% or more of our outstanding common stock, Mill Road has the right to designate one nominee for election to our Board of Directors. If Mill Road’s ownership level falls below 10.0% of our outstanding common stock, Mill Road will no longer have a right to designate a nominee. As of January 3, 2023 and December 28, 2021, Mill Road did not hold a position on the Company’s Board of Directors.
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Revenue Recognition |
12 Months Ended |
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Jan. 03, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition Gift Cards As of January 3, 2023 and December 28, 2021, the current portion of the gift card liability, $2.4 million and $2.8 million, respectively, is included in accrued expenses and other current liabilities, and the long-term portion, $0.7 million and $0.6 million, respectively, is included in other long-term liabilities in the Consolidated Balance Sheets. Revenue recognized in the Consolidated Statements of Operations for the redemption of gift cards was $3.4 million, $3.2 million and $3.5 million in 2022, 2021 and 2020, respectively. The Company recognized gift card breakage in restaurant revenue of approximately $0.5 million, $0.3 million and $0.3 million in 2022, 2021 and 2020, respectively. Franchise Fees Initial fees received from franchisees are recognized as revenue over the term of each respective franchise agreement, which is typically 20 years. The Company recognized revenue of $0.1 million in 2022, 2021 and 2020 related to initial fees from franchisees that were included in the contract liability balance at the beginning of the year. The Company expects to recognize approximately $0.1 million each fiscal year through fiscal 2027 and approximately $0.9 million thereafter related to performance obligations that are unsatisfied as of January 3, 2023. 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. Points generally expire after six months. Revenue is recognized in a future period when the reward points are redeemed. Deferred revenue related to the rewards was $0.3 million and $0.4 million as of January 3, 2023 and December 28, 2021, respectively, and was included in accrued expenses and other current liabilities in the Consolidated Balance Sheets.
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Business and Summary of Significant Accounting Policies (Policies) |
12 Months Ended |
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Jan. 03, 2023 | |
Accounting Policies [Abstract] | |
Principles of Consolidation and Basis of Presentation | Principles of Consolidation and Basis of PresentationThe accompanying consolidated financial statements include the accounts of Noodles & Company and its subsidiaries. All intercompany balances and transactions are eliminated in consolidation. |
Fiscal Year | Fiscal YearThe Company operates on a 52- or 53-week fiscal year ending on the Tuesday closest to December 31. Fiscal year 2022 which ended on January 3, 2023 contained 53 weeks. Fiscal years 2021 and 2020, which ended on December 28, 2021 and December 29, 2020, respectively, each contained 52 weeks. |
Estimates | Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
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Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investment instruments with an initial maturity of three months or less when purchased to be cash equivalents. Amounts receivable from credit card processors are converted to cash shortly after the related sales transaction and are considered to be cash equivalents because they are both short-term and highly liquid in nature. Amounts receivable from credit card processors as of January 3, 2023 and December 28, 2021, which are included in cash and cash equivalents, were $1.0 million in both years. Additionally, the Company records “book overdrafts” when outstanding checks at year end are in excess of cash and cash equivalents. Such book overdrafts are recorded within accounts payable in the accompanying Consolidated Balance Sheets and within operating activities in the accompanying Consolidated Statements of Cash Flows.
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Accounts Receivable | Accounts ReceivableAccounts receivable consists primarily of franchise receivables and vendor rebates, as well as insurance receivables and other miscellaneous receivables arising from the normal course of business. The Company believes all amounts to be collectible and does not have a history of losses. |
Inventories | Inventories Inventories consist of food, beverages, supplies and smallwares, and are stated at the lower of cost (first-in, first-out method) or net realizable value. Smallwares inventory, which consist of the plates, silverware and cooking utensils used in the restaurants, are frequently replaced and are therefore considered current assets. Replacement costs of smallwares inventory are recorded as other restaurant operating costs in the Consolidated Statements of Operations and are expensed as incurred.
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Property and Equipment | Property and EquipmentProperty and equipment are stated at cost, less accumulated depreciation. Expenditures for major renewals and improvements are capitalized, while expenditures for minor replacements and maintenance and repairs are expensed as incurred. Upon retirement or disposal of assets, the accounts are relieved of cost and accumulated depreciation and the related gain or loss is reflected in earnings. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the shorter of the estimated useful life or the lease term, which generally includes option periods that are reasonably certain to be exercised. |
Goodwill | Goodwill Goodwill represents the excess of purchase price over the fair value of identifiable net assets acquired. Goodwill is not subject to amortization, but instead is tested for impairment at least annually (or more often, if necessary) as of the first day of the Company’s fourth fiscal quarter. Goodwill is evaluated at the level of the Company’s single operating segment, which also represents the Company’s only reporting unit. In 2022, 2021 and 2020, the Company performed a qualitative impairment assessment. Under this approach, the Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of its reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent. If after performing the qualitative assessment, the Company determines there is less than a 50 percent chance that the fair value of its reporting unit is less than its carrying amount, then performing the two-step test is unnecessary. Based on the qualitative assessment performed, management did not believe that it is more likely than not that the Company’s goodwill has been impaired. Based on the Company’s analysis, no impairment charges were recognized on goodwill in 2022, 2021 or 2020.
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Intangibles, net | Intangibles, netIntangibles, net consists primarily of reacquired franchise rights and trademarks. The Company amortizes the reacquired franchise rights over the remaining contractual terms of the reacquired franchise area development agreements at the time of acquisition, which ranged from approximately three years to 10 years as of January 3, 2023. Trademark rights are considered indefinite-lived intangible assets, the carrying value of which are analyzed for impairment at least annually (or more often, if necessary). |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets Long-lived assets are reviewed for impairment on a regular basis, in addition to whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets is measured by a comparison of the carrying amount of the assets to the future undiscounted net cash flows expected to be generated by the assets. Identifiable cash flows are measured at the lowest level for which they are largely independent of the cash flows of other groups of assets and liabilities, generally at the restaurant level. If the assets are determined to be impaired, the amount of impairment recognized is measured by the amount by which the carrying amount of the assets exceeds their fair value. Estimates of future cash flows are based on the Company’s experience and knowledge of local operations. During 2022, 2021 and 2020, the Company recorded impairment charges of certain long-lived assets which are included in restaurant impairments, closure costs and asset disposals in the Consolidated Statements of Operations. See Note 6, Restaurant Impairments, Closure Costs and Asset Disposals. Fair value of the restaurant assets was determined using Level 3 inputs (as described in Note 5, Fair Value Measurements).
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Debt Issuance Costs | Debt Issuance CostsCertain fees and costs incurred to obtain long-term financing are capitalized and included as a reduction in the net carrying value of long-term debt, net of accumulated amortization. These costs are amortized to interest expense over the term of the related debt. When debt is extinguished prior to its maturity date, the amortization of the remaining unamortized debt issuance costs, or pro-rata portion thereof, is charged to loss on extinguishment of debt. |
Self Insurance Programs | Self-Insurance Programs The Company self-insures for health, workers’ compensation, general liability and property damage. Predetermined loss limits have been arranged with insurance companies to limit the Company’s per occurrence cash outlay. Estimated costs to settle reported claims and incurred but unreported claims for health and workers’ compensation self-insured plans are recorded in accrued payroll and benefits and for general liability and property damage in accrued expenses and other liabilities in the Consolidated Balance Sheets.
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Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company’s cash balances may exceed federally insured limits. Credit card transactions at the Company’s restaurants are processed by one service provider. Concentration of credit risk related to accounts receivable are limited, as the Company’s receivables are primarily amounts due from franchisees and the Company directly pulls the amounts owed from the franchisees bank accounts.
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Revenue Recognition | Revenue Recognition Revenue consists of sales from restaurant operations and franchise royalties and fees. Revenue from the operation of company-owned restaurants is recognized when sales occur. The Company reports revenue net of sales and use taxes 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, which is recognized ratably over the estimated redemption period of the gift card, approximately 24 months. 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. Points generally expire after six months. Revenue is recognized in a future period when the reward points are redeemed. Franchise RoyaltiesRoyalties 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. 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, such fees 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.
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Pre-Opening Costs | Pre-Opening Costs Pre-opening costs, including rent, wages, benefits and travel for the training and opening teams, food, beverage and other restaurant operating costs, are expensed as incurred prior to a restaurant opening for business.
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Advertising and Marketing Costs | Advertising and Marketing Costs Advertising and marketing costs are expensed as incurred and were $9.3 million, $7.7 million and $7.9 million in 2022, 2021 and 2020, respectively. These costs are included in restaurant operating costs, general and administrative expenses and pre-opening costs based on the nature of the advertising and marketing costs incurred.
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Rent | Rent Rent expense for the Company’s leases, which generally have escalating rentals over the term of the lease, is recorded on a straight-line basis over the lease term. Additionally, tenant incentives used to fund leasehold improvements are recognized when earned and reduce the right-of-use asset related to the lease. These are amortized through the right-of-use asset as reductions of expense over the lease term. Some of the Company’s leases include rent escalations based on inflation indexes and fair market value adjustments. Certain leases contain contingent rental provisions that include a fixed base rent plus an additional percentage of the restaurant’s sales in excess of stipulated amounts. Lease expense associated with rent escalation and contingent rental provisions is not material and is included within operating lease cost. Operating lease liabilities are calculated using the prevailing index or rate at lease commencement. Subsequent escalations in the index or rate and contingent rental payments are recognized as variable lease expenses. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. As most of the Company’s leases do not provide an implicit rate, the Company used its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.
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Provision (Benefit) for Income Taxes | Provision (Benefit) for Income Taxes Provision (benefit) for income taxes is accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those deferred amounts are expected to be recovered or settled. Valuation allowances are recorded for deferred tax assets that more likely than not will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company’s policy is to recognize interest to be paid on an underpayment of income taxes in interest expense and any related statutory penalties in provision (benefit) for income taxes in the Consolidated Statements of Operations.
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Stock-Based Compensation Expense | Stock-Based Compensation Expense Stock-based compensation expense is measured at the grant date based upon the estimated fair value of the portion of the award that is ultimately expected to vest and is recognized as expense over the applicable vesting period of the award generally using the straight-line method (see Note 9, Stock-Based Compensation for more information).
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Recent Accounting Pronouncements | Recently Adopted Accounting Pronouncements In March 2020, the FASB issued ASU No. 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The ASU 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 adopted this pronouncement in the third quarter of 2022. The adoption of ASU 2020-04 did not have a material impact to the Company’s consolidated financial statements.
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Business and Summary of Significant Accounting Policies (Tables) |
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Jan. 03, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Estimated Useful Life of Property and Equipment | The estimated useful lives for property and equipment are:
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Supplemental Financial Information (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 03, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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):
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Schedule of Property and Equipment | Property and equipment, net, consist 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):
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Schedule of Net Assets Held For Sale | The following table presents the carrying amounts of the major classes of assets and liabilities classified as held for sale (in thousands):
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Goodwill and Intangible Assets (Tables) |
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Jan. 03, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Intangible Assets | The following table presents intangible assets subject to amortization as of January 3, 2023 and December 28, 2021, (in thousands):
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Schedule of Net Intangible Assets | The following table presents intangible assets subject to amortization as of January 3, 2023 and December 28, 2021, (in thousands):
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Schedule of Estimated Aggregate Future Amortization Expense | The estimated aggregate future amortization expense as of January 3, 2023 is as follows, (in thousands):
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Restaurant Impairments, Closure Costs and Asset Disposals (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 03, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restaurant Impairments, Closure Costs and Asset Disposals | The following table presents restaurant impairments, closure costs and asset disposals for fiscal years 2022, 2021 and 2020 (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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Income Taxes (Tables) |
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Jan. 03, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of the Components of the Provision for Income Taxes | The components of the provision (benefit) for income taxes are as follows for 2022, 2021 and 2020 (in thousands):
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Schedule of Effective Income Tax Rate Reconciliation | The reconciliation of income tax provision (benefit) that would result from applying the federal statutory rate to pre-tax income as shown in the accompanying Consolidated Statements of Operations is as follows for 2022, 2021 and 2020 (in thousands):
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Schedule of Deferred Tax Assets and Liabilities | The Company’s total deferred tax assets and liabilities are as follows (in thousands):
Deferred income taxes arise because of the differences in the book and tax bases of certain assets and liabilities. Deferred income tax liabilities and assets consist of the following (in thousands):
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Stock-Based Compensation (Tables) |
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Jan. 03, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Option Award Activity | A summary of aggregate option award activity under the Plan as of January 3, 2023, and changes during the fiscal year then ended is presented below:
_____________ (1)Aggregate intrinsic value represents the amount by which fair value of the Company’s stock exceeds the exercise price of the option as of January 3, 2023.
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Schedule of Non-vested Restricted Share Units | A summary of the status of the Company’s non-vested restricted share units as of January 3, 2023 and changes during the year then ended is presented below:
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Earnings (Loss) Per Share (Tables) |
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Jan. 03, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share | 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) |
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Jan. 03, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Lease Costs and Supplemental Information | Supplemental balance sheet information related to leases is as follows (in thousands):
The components of lease costs are as follows (in thousands):
Lease term and discount rate are as follows:
Supplemental disclosures of cash flow information related to leases are as follows (in thousands):
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Schedule of Future Minimum Lease Payments for Finance Leases | Future minimum lease payments required under existing leases as of January 3, 2023 are as follows (in thousands):
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Schedule of Future Minimum Lease Payments for Operating Leases | Future minimum lease payments required under existing leases as of January 3, 2023 are as follows (in thousands):
|
Supplemental Disclosures to Consolidated Statements of Cash Flows (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 03, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Supplemental Disclosures to Consolidated Statements of Cash Flows | The following table presents the supplemental disclosures to the Consolidated Statements of Cash Flows for 2022, 2021 and 2020 (in thousands):
|
Business and Summary of Significant Accounting Policies - Business (Details) |
12 Months Ended | ||
---|---|---|---|
Jan. 03, 2023
state
restaurant
segment
|
Dec. 28, 2021
restaurant
|
Dec. 29, 2020
restaurant
|
|
Description of business and summary of significant accoutning policies | |||
Number of states in which Noodles & Company operates | state | 31 | ||
Number of operating segments | segment | 1 | ||
Number of reportable segments | segment | 1 | ||
Company-owned | |||
Description of business and summary of significant accoutning policies | |||
Number of restaurants | restaurant | 368 | ||
Franchise | |||
Description of business and summary of significant accoutning policies | |||
Number of restaurants | restaurant | 93 | 76 | 76 |
Business and Summary of Significant Accounting Policies - Cash and Cash Equivalents (Details) $ in Millions |
Jan. 03, 2023
USD ($)
|
---|---|
Receivables from credit card processors | |
Cash and Cash Equivalents [Line Items] | |
Cash equivalents | $ 1.0 |
Business and Summary of Significant Accounting Policies - Accounts Receivable (Details) - USD ($) |
Jan. 03, 2023 |
Dec. 28, 2021 |
---|---|---|
Accounting Policies [Abstract] | ||
Allowance for doubtful accounts | $ 0 | $ 0 |
Business and Summary of Significant Accounting Policies - Inventories (Details) - USD ($) $ in Thousands |
Jan. 03, 2023 |
Dec. 28, 2021 |
---|---|---|
Inventory [Line Items] | ||
Inventories | $ 10,044 | $ 9,404 |
Smallwares Inventory | ||
Inventory [Line Items] | ||
Inventories | $ 6,500 | $ 6,300 |
Business and Summary of Significant Accounting Policies - Property and Equipment (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jan. 03, 2023 |
Dec. 28, 2021 |
Dec. 29, 2020 |
|
Property, Plant and Equipment [Line Items] | |||
Depreciation | $ 23.2 | $ 22.3 | $ 21.6 |
Internal payroll costs capitalized | 0.4 | 0.2 | 0.2 |
Interest costs capitalized | $ 0.6 | $ 0.3 | $ 0.2 |
Leasehold Improvements | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, useful life | 20 years | ||
Furniture and Fixtures | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, useful life | 15 years | ||
Furniture and Fixtures | Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, useful life | 3 years | ||
Equipment | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, useful life | 7 years | ||
Equipment | Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, useful life | 3 years |
Business and Summary of Significant Accounting Policies - Goodwill and Intangibles (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Jan. 03, 2023 |
Dec. 28, 2021 |
Dec. 29, 2020 |
|
Accounting Policies [Abstract] | |||
Goodwill impairment charges | $ 0 | $ 0 | $ 0 |
Franchise rights | Minimum | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Weighted average remaining contractual term (in years) | 3 years | ||
Franchise rights | Maximum | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Weighted average remaining contractual term (in years) | 10 years |
Business and Summary of Significant Accounting Policies - Debt Issuance Costs (Details) - USD ($) $ in Millions |
Jan. 03, 2023 |
Dec. 28, 2021 |
---|---|---|
Accounting Policies [Abstract] | ||
Debt issuance costs | $ 1.6 | $ 1.3 |
Business and Summary of Significant Accounting Policies - Revenue Recognition and Franchise (Details) - restaurant |
12 Months Ended | ||
---|---|---|---|
Jan. 03, 2023 |
Dec. 28, 2021 |
Dec. 29, 2020 |
|
Franchisor Disclosure [Line Items] | |||
Percent of gift cards expected to be unredeemed (percent) | 13.00% | ||
Gift card estimated redemption period | 24 months | ||
Number of restaurants closed | 5 | 12 | 6 |
Franchise | |||
Franchisor Disclosure [Line Items] | |||
Number of restaurants | 93 | 76 | 76 |
Number of restaurants opened during period | 3 | 1 | 0 |
Number of restaurants closed | 1 | 1 | 1 |
Number of company-owned restaurants acquired by franchisees | 15 | 9 |
Business and Summary of Significant Accounting Policies - Advertising and Marketing Costs (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jan. 03, 2023 |
Dec. 28, 2021 |
Dec. 29, 2020 |
|
Accounting Policies [Abstract] | |||
Advertising and marketing costs | $ 9.3 | $ 7.7 | $ 7.9 |
Supplemental Financial Information - Accounts Receivable (Details) - USD ($) $ in Thousands |
Jan. 03, 2023 |
Dec. 28, 2021 |
---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable | $ 6,443 | $ 3,958 |
Delivery program receivables | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable | 2,027 | 1,467 |
Vendor rebate receivables | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable | 801 | 695 |
Franchise Receivable [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable | 2,050 | 644 |
Other receivables | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable | $ 1,565 | $ 1,152 |
Supplemental Financial Information - Prepaid Expenses and Other Assets (Details) - USD ($) $ in Thousands |
Jan. 03, 2023 |
Dec. 28, 2021 |
---|---|---|
Supplemental Financial Information [Abstract] | ||
Prepaid occupancy related costs | $ 711 | $ 73 |
Prepaid insurance | 882 | 853 |
Current assets held for sale | 0 | 3,514 |
Prepaid expenses | 1,802 | 2,272 |
Other current assets | 55 | 125 |
Prepaid expenses and other assets | $ 3,450 | $ 6,837 |
Supplemental Financial Information - Property and Equipment (Details) - USD ($) $ in Thousands |
Jan. 03, 2023 |
Dec. 28, 2021 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 371,843 | $ 344,726 |
Accumulated depreciation and amortization | (242,457) | (225,450) |
Property and equipment, net | 129,386 | 119,276 |
Leasehold Improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 212,319 | 197,722 |
Furniture, fixtures and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 152,786 | 140,698 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 6,738 | $ 6,306 |
Supplemental Financial Information - Accrued Payroll and Benefits (Details) - USD ($) $ in Thousands |
Jan. 03, 2023 |
Dec. 28, 2021 |
---|---|---|
Supplemental Financial Information [Abstract] | ||
Accrued payroll and related liabilities | $ 5,004 | $ 9,851 |
Accrued bonus | 2,007 | 5,078 |
Insurance liabilities | 2,208 | 3,671 |
Accrued payroll and benefits | $ 9,219 | $ 18,600 |
Supplemental Financial Information - Accrued Expense and Other Liabilities (Details) - USD ($) $ in Thousands |
Jan. 03, 2023 |
Dec. 28, 2021 |
---|---|---|
Supplemental Financial Information [Abstract] | ||
Gift card liability | $ 2,430 | $ 2,850 |
Occupancy related | 1,001 | 1,615 |
Utilities | 1,612 | 1,302 |
Current portion of finance lease liability | 2,210 | 1,956 |
Liabilities held for sale | 0 | 1,671 |
Accrued interest | 70 | 271 |
Insurance liabilities | 415 | 393 |
Other restaurant expense accruals | 1,128 | 995 |
Other corporate expense accruals | 2,139 | 2,738 |
Accrued expenses and other current liabilities | $ 11,005 | $ 13,791 |
Supplemental Financial Information - Assets and Liabilities Held for Sale (Details) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 28, 2021
USD ($)
restaurant
|
Jan. 03, 2023
USD ($)
|
|
Assets | ||
Current assets held for sale | $ 3,514 | $ 0 |
Liabilities | ||
Operating lease liabilities | 1,671 | $ 0 |
Other information | ||
Write down related to assets held for sale | 500 | |
Warner Sale | ||
Assets | ||
Current assets, total | 2,494 | |
Operating lease assets | 1,020 | |
Current assets held for sale | 3,514 | |
Liabilities | ||
Operating lease liabilities | 1,671 | |
Net assets held for sale | $ 1,843 | |
Other information | ||
Number of restaurants with write down related to sale | restaurant | 15 | |
Write down related to assets held for sale | $ 500 |
Goodwill and Intangible Assets - Narrative (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Jan. 03, 2023 |
Dec. 28, 2021 |
Dec. 29, 2020 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Goodwill impairment charges | $ 0 | $ 0 | $ 0 |
Goodwill | 7,154,000 | 7,154,000 | |
Impairment charges related to non-amortized intangible assets | $ 0 | $ 0 | $ 0 |
Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands |
Jan. 03, 2023 |
Dec. 28, 2021 |
---|---|---|
Amortized intangible assets: | ||
Reacquired franchise rights | $ 933 | $ 933 |
Accumulated amortization | (560) | (493) |
Amortized intangible assets, net | 373 | 440 |
Non-amortized intangible assets: | ||
Trademark rights | 235 | 228 |
Intangibles, net | $ 608 | $ 668 |
Goodwill and Intangible Assets - Estimated Aggregate Future Amortization Expense (Details) - USD ($) $ in Thousands |
Jan. 03, 2023 |
Dec. 28, 2021 |
---|---|---|
Estimated aggregate future amortization expense | ||
2023 | $ 67 | |
2024 | 66 | |
2025 | 66 | |
2026 | 52 | |
2027 | 43 | |
Thereafter | 79 | |
Amortized intangible assets, net | $ 373 | $ 440 |
Long-Term Debt - Narrative (Details) - USD ($) |
3 Months Ended | 12 Months Ended | |||||
---|---|---|---|---|---|---|---|
Jul. 27, 2022 |
Sep. 27, 2022 |
Jan. 03, 2023 |
Dec. 28, 2021 |
Dec. 29, 2020 |
Nov. 20, 2019 |
May 09, 2018 |
|
Debt Instrument [Line Items] | |||||||
Interest expense | $ 2,445,000 | $ 2,082,000 | $ 3,146,000 | ||||
Amortization of debt issuance costs | 723,000 | 444,000 | 371,000 | ||||
2018 Credit Facility | |||||||
Debt Instrument [Line Items] | |||||||
Unamortized debt issuance costs | 1,600,000 | ||||||
Indebtedness | 47,700,000 | ||||||
Letters of credit outstanding | 3,000,000 | ||||||
Interest expense | 2,400,000 | 2,100,000 | 3,100,000 | ||||
Amortization of debt issuance costs | $ 400,000 | $ 400,000 | $ 400,000 | ||||
2018 Credit Facility | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate during period | 2.35% | ||||||
2018 Credit Facility | Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate during period | 8.75% | ||||||
2018 Credit Facility | SOFR | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 1.50% | ||||||
2018 Credit Facility | SOFR | Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 2.50% | ||||||
2018 Credit Facility | Term loan | |||||||
Debt Instrument [Line Items] | |||||||
Aggregate principal amount | $ 25,000,000 | ||||||
2018 Credit Facility | Revolving credit facility | |||||||
Debt Instrument [Line Items] | |||||||
Maximum borrowing capacity | $ 125,000,000 | $ 100,000,000 | 65,000,000 | ||||
Write off of Deferred Debt Issuance Cost | $ 300,000 | ||||||
2018 Credit Facility | Letter of credit | |||||||
Debt Instrument [Line Items] | |||||||
Maximum borrowing capacity | 15,000,000 | ||||||
2018 Credit Facility | Swingline subfacility | |||||||
Debt Instrument [Line Items] | |||||||
Maximum borrowing capacity | $ 10,000,000 |
Restaurant Impairments, Closure Costs and Asset Disposals - Activity (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 03, 2023 |
Dec. 28, 2021 |
Dec. 29, 2020 |
|
Restructuring and Related Activities [Abstract] | |||
Restaurant impairments | $ 1,362 | $ 3,424 | $ 4,113 |
Closure costs | 1,285 | 1,239 | 535 |
Loss on disposal of assets and other | 3,517 | 1,064 | 1,892 |
Restaurant impairments, closure costs and asset disposals | $ 6,164 | $ 5,727 | $ 6,540 |
Restaurant Impairments, Closure Costs and Asset Disposals - Narrative (Details) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jan. 03, 2023
USD ($)
restaurant
|
Dec. 28, 2021
USD ($)
restaurant
|
Dec. 29, 2020
USD ($)
restaurant
|
|
Restructuring and Related Activities [Abstract] | |||
Number of restaurants impaired | restaurant | 4 | 6 | 8 |
Loss on disposal | $ 0.3 | ||
Write down related to assets held for sale | $ 0.5 | ||
Number of restaurants closed | restaurant | 5 | 12 | 6 |
Offset adjustment to closure costs related to lease terminations | $ (0.1) | $ 0.2 | $ 0.6 |
Disposal Group, Not Discontinued Operation, Gain (Loss) on Disposal, Statement of Income or Comprehensive Income [Extensible Enumeration] | Restaurant impairments, closure costs and asset disposals |
Income Taxes - Components of Provision for Income Taxes (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 03, 2023 |
Dec. 28, 2021 |
Dec. 29, 2020 |
|
Current tax provision: | |||
Federal | $ 0 | $ 0 | $ 0 |
State | 77 | 41 | 44 |
Total current tax provision | 77 | 41 | 44 |
Deferred tax (benefit) provision: | |||
Federal | (27) | 23 | 30 |
State | (13) | 6 | 10 |
Total deferred tax provision (benefit) | (40) | 29 | 40 |
Total provision for income taxes | $ 37 | $ 70 | $ 84 |
Income Taxes - Tax Rate Reconciliation (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 03, 2023 |
Dec. 28, 2021 |
Dec. 29, 2020 |
|
Income Tax Disclosure [Abstract] | |||
Federal income tax (benefit) provision at federal rate | $ (688) | $ 784 | $ (4,867) |
State income tax (benefit) provision, net of federal tax | (112) | 162 | (1,191) |
Other permanent differences | 368 | (17) | 288 |
Tax credits | (1,608) | (1,297) | (390) |
Change in valuation allowance | 1,558 | 244 | 6,104 |
Tax rate change | 0 | 6 | (25) |
Deferred tax asset write-off | 320 | 207 | 157 |
Other items, net | 199 | (19) | 8 |
Total provision for income taxes | $ 37 | $ 70 | $ 84 |
Effective income tax rate | (1.10%) | 1.90% | (0.40%) |
Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands |
Jan. 03, 2023 |
Dec. 28, 2021 |
---|---|---|
Income Tax Disclosure [Abstract] | ||
Deferred tax assets | $ 113,054 | $ 110,098 |
Deferred tax liabilities | (65,961) | (64,603) |
Total deferred tax assets | 47,093 | 45,495 |
Valuation allowance | (47,322) | (45,764) |
Net deferred tax liabilities | $ (229) | $ (269) |
Income Taxes - Components of Deferred Income Taxes (Details) - USD ($) $ in Thousands |
Jan. 03, 2023 |
Dec. 28, 2021 |
---|---|---|
Deferred tax assets (liabilities): | ||
Loss carry forwards | $ 39,339 | $ 37,534 |
Deferred franchise revenue | 2,411 | 1,128 |
Property, equipment and intangible assets | (14,802) | (11,821) |
Stock-based compensation | 1,970 | 1,676 |
Tax credit carry forwards | 7,231 | 5,624 |
Interest expense | 617 | 0 |
Inventory smallwares | (1,700) | (1,646) |
Other accrued expenses | 391 | 1,154 |
Operating lease assets | (49,459) | (51,136) |
Operating lease liabilities | 59,747 | 61,844 |
Other | 1,348 | 1,138 |
Total deferred tax assets | 47,093 | 45,495 |
Valuation allowance | (47,322) | (45,764) |
Net deferred tax liabilities | $ (229) | $ (269) |
Income Taxes - Narrative (Details) - USD ($) $ in Thousands |
Jan. 03, 2023 |
Dec. 28, 2021 |
---|---|---|
Operating Loss Carryforwards [Line Items] | ||
Valuation allowance | $ (47,322) | $ (45,764) |
Federal | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss carryforwards | 153,500 | $ 145,000 |
Operating loss carryforwards subject to expiration | 106,800 | |
Operating loss carryforwards indefinite lived | $ 46,700 |
Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Millions |
Jan. 06, 2021 |
Feb. 08, 2017 |
Jan. 03, 2023 |
Dec. 28, 2021 |
---|---|---|---|---|
Class of Stock [Line Items] | ||||
Shares of stock authorized | 181,000,000 | |||
Common stock authorized (in shares) | 180,000,000 | 180,000,000 | ||
Common stock, par value | $ 0.01 | $ 0.01 | ||
Preferred stock authorized (in shares) | 1,000,000 | 1,000,000 | ||
Preferred stock, par value | $ 0.01 | $ 0.01 | ||
L Catterton agreement warrants | ||||
Class of Stock [Line Items] | ||||
Warrants term | 5 years | |||
Number of shares called by warrants | 1,913,793 | |||
Warrant exercise price (USD per share) | $ 4.35 | |||
Securities Purchase Agreement - L Catterton | ||||
Class of Stock [Line Items] | ||||
Proceeds from securities purchase agreement | $ 18.5 | |||
Class A common stock | ||||
Class of Stock [Line Items] | ||||
Common stock authorized (in shares) | 150,000,000 | |||
Common stock, par value | $ 0.01 | |||
Common shares issued upon exercise of warrants | 837,948 | |||
Class A common stock | Securities Purchase Agreement - L Catterton | ||||
Class of Stock [Line Items] | ||||
Common stock, par value | $ 0.01 | |||
Common shares into which preferred stock can be converted (shares) | 4,252,873 | |||
Class B common stock | ||||
Class of Stock [Line Items] | ||||
Common stock authorized (in shares) | 30,000,000 | |||
Common stock, par value | $ 0.01 | |||
Preferred stock | ||||
Class of Stock [Line Items] | ||||
Preferred stock authorized (in shares) | 1,000,000 | |||
Preferred stock, par value | $ 0.01 | |||
Preferred stock | Securities Purchase Agreement - L Catterton | ||||
Class of Stock [Line Items] | ||||
Number of shares sold | 18,500 | |||
Price per share (USD per share) | $ 1,000 |
Stock-Based Compensation - Narrative (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jan. 03, 2023 |
Dec. 28, 2021 |
Dec. 29, 2020 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares available for grant | 1,500,000 | ||
Unrecognized compensation cost | $ 7.4 | ||
Period for recognition of compensation cost | 2 years 4 months 24 days | ||
Stock options granted (in share) | 0 | 0 | 0 |
Estimated average forfeiture rate (percent) | 21.00% | ||
Stock options vested (in shares) | 57,147 | 90,590 | 120,349 |
Estimated fair value of stock options vested | $ 0.3 | $ 1.1 | $ 0.8 |
General and Administrative Expense | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | $ 4.4 | 4.3 | 2.6 |
Restricted share units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Restricted share units vested (in shares) | 393,062 | ||
Estimated fair value of restricted share units vested | $ 2.2 | ||
Performance Stock Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | $ 0.9 | $ 1.5 | $ 0.0 |
Performance period | 3 years | ||
Performance Stock Units | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Eligible to vest range (percent) | 0.00% | ||
Performance Stock Units | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Eligible to vest range (percent) | 200.00% | ||
Stock Incentive Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based awards term | ten years | ||
Share-based awards vesting period | 4 years | ||
General Manager (GM) Equity Program | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based awards vesting period | 3 years |
Stock-Based Compensation - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 03, 2023 |
Dec. 28, 2021 |
Dec. 29, 2020 |
|
Stock Options | |||
Outstanding, beginning balance (in shares) | 783,412 | ||
Granted (in shares) | 0 | 0 | 0 |
Forfeited or expired (in shares) | (90,807) | ||
Exercised (in shares) | 0 | ||
Outstanding, ending balance (in shares) | 692,605 | 783,412 | |
Vested and expected to vest | 686,785 | ||
Exercisable | 657,625 | ||
Weighted Average Exercise Price | |||
Outstanding, beginning of period (USD per share) | $ 12.26 | ||
Granted (USD per share) | 0 | ||
Forfeited or expired (USD per share) | 12.07 | ||
Exercised (USD per share) | 0 | ||
Outstanding, end of period (USD per share) | 12.36 | $ 12.26 | |
Vested and expected to vest (USD per share) | 12.40 | ||
Exercisable (USD per share) | $ 12.62 | ||
Weighted- Average Remaining Contractual Term | |||
Outstanding | 3 years 11 months 8 days | ||
Vested and expected to vest | 3 years 11 months 1 day | ||
Exercisable | 3 years 9 months 18 days | ||
Aggregate Intrinsic Value | |||
Outstanding | $ 141 | ||
Vested and expected to vest | 141 | ||
Exercisable | $ 141 |
Stock-Based Compensation - Non-vested Restricted Share Unit Activity (Details) - Restricted share units |
12 Months Ended |
---|---|
Jan. 03, 2023
$ / shares
shares
| |
Restricted Share Units | |
Beginning balance (in shares) | shares | 1,164,827 |
Granted (in shares) | shares | 1,678,080 |
Vested (in shares) | shares | (393,062) |
Forfeited (in shares) | shares | (126,171) |
Ending balance (in shares) | shares | 2,323,674 |
Weighted-Average Grant Date Fair Value | |
Beginning balance (USD per share) | $ / shares | $ 8.23 |
Granted (USD per share) | $ / shares | 5.57 |
Vested (USD per share) | $ / shares | 7.51 |
Forfeited (USD per share) | $ / shares | 6.39 |
Ending balance (USD per share) | $ / shares | $ 6.45 |
Earnings (Loss) Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 03, 2023 |
Dec. 28, 2021 |
Dec. 29, 2020 |
|
Earnings Per Share [Abstract] | |||
Net income (loss) attributable to common stockholders | $ (3,314) | $ 3,665 | $ (23,259) |
Shares: | |||
Basic weighted average shares outstanding (in shares) | 45,913,787 | 45,483,029 | 44,272,474 |
Dilutive stock options and warrants (in shares) | 0 | 642,357 | 0 |
Diluted weighted average number of shares outstanding (in shares) | 45,913,787 | 46,125,386 | 44,272,474 |
Earnings per share: | |||
Basic EPS (USD per share) | $ (0.07) | $ 0.08 | $ (0.53) |
Diluted EPS (USD per share) | $ (0.07) | $ 0.08 | $ (0.53) |
Anti-dilutive securities excluded from computation of diluted earnings per share | 2,402,238 | 503,142 | 3,175,472 |
Employee Benefit Plans (Details) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | 115 Months Ended | ||
---|---|---|---|---|
Jan. 03, 2023 |
Dec. 28, 2021 |
Dec. 29, 2020 |
Jan. 03, 2023 |
|
Employee Benefit Plans [Line Items] | ||||
Required employee age | 21 years | |||
Percentage of participants contributions vested | 100.00% | |||
Employer matching contribution | 25.00% | |||
Participant deferred compensation percentage for match | 4.00% | |||
Matching contribution expense | $ 400 | $ 300 | $ 100 | |
ESPP | ||||
Employee Benefit Plans [Line Items] | ||||
Maximum employee salary percentage | 15.00% | 15.00% | ||
Offering date percentage | 85.00% | |||
Purchase date percentage | 85.00% | |||
Number of shares available for issuance | 750,000 | 750,000 | ||
Shares issued under ESPP | 40,838 | 267,729 | ||
Shares remaining for future issuance | 482,271 | 482,271 | ||
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 3.31% | |||
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Term | 3 months | |||
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 66.40% | |||
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Dividend Rate | 0.00% | |||
Weighted-average fair value per share at grant date (USD per share) | $ 1.12 | |||
Compensation expense | $ 46 | |||
Other assets | ||||
Employee Benefit Plans [Line Items] | ||||
Deferred compensation plan asset | 700 | 2,500 | $ 700 | |
Accrued expenses and other current liabilities | ||||
Employee Benefit Plans [Line Items] | ||||
Deferred compensation plan liability | $ 700 | $ 500 | $ 700 |
Leases - Narrative (Details) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jan. 03, 2023
USD ($)
lease
|
Dec. 28, 2021
USD ($)
lease
|
Dec. 29, 2020
USD ($)
|
|
Lessee, Lease, Description [Line Items] | |||
Base lease term (in years) | 10 years | ||
Operating lease expense | $ 38.5 | $ 39.1 | $ 39.9 |
Number of restaurant lease assets impaired | lease | 2 | 1 | |
Right-of-use asset impairment charges | $ 0.2 | $ 0.1 | |
Options to extend lease term included in operating lease payments | 98.6 | ||
Minimum lease payments for leases signed but not yet commenced | $ 17.8 | ||
Minimum | |||
Lessee, Lease, Description [Line Items] | |||
Lease extension term (in years) | 5 years | ||
Maximum | |||
Lessee, Lease, Description [Line Items] | |||
Lease extension term (in years) | 15 years |
Leases - Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands |
Jan. 03, 2023 |
Dec. 28, 2021 |
---|---|---|
Assets | ||
Operating lease assets, net | $ 183,392 | $ 188,440 |
Finance lease assets, net | 5,258 | 6,394 |
Total leased assets | $ 188,650 | $ 194,834 |
Finance lease assets, line item [Extensible Enumeration] | Property and equipment, net | Property and equipment, net |
Liabilities | ||
Current operating lease liabilities | $ 28,581 | $ 26,617 |
Current portion of finance lease liability | 2,210 | 1,956 |
Long-term operating lease liabilities | 187,320 | 200,243 |
Long-term finance lease liabilities | 3,520 | 4,654 |
Total lease liabilities | $ 221,631 | $ 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 - Components of Lease Costs (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Jan. 03, 2023 |
Dec. 28, 2021 |
|
Lease Cost | ||
Operating lease cost | $ 38,514 | $ 39,075 |
Closure costs, loss on disposals and other | 3,071 | 1,598 |
Finance lease cost - Amortization of lease assets | 2,250 | 2,128 |
Finance lease cost - Interest on lease liabilities | 401 | 487 |
Operating and finance lease costs | 44,236 | 43,288 |
Sublease income | (3,242) | (1,832) |
Total lease cost, net | $ 40,994 | $ 41,456 |
Leases - Future Minimum Lease Payments (Details) $ in Thousands |
Jan. 03, 2023
USD ($)
|
---|---|
Operating Leases | |
2023 | $ 38,869 |
2024 | 43,107 |
2025 | 41,592 |
2026 | 37,879 |
2027 | 33,483 |
Thereafter | 94,198 |
Total lease payments | 289,128 |
Less: Imputed interest | 73,227 |
Present value of lease liabilities | 215,901 |
Finance Leases | |
2023 | 2,591 |
2024 | 2,350 |
2025 | 1,119 |
2026 | 37 |
2027 | 34 |
Thereafter | 64 |
Total lease payments | 6,195 |
Less: Imputed interest | 465 |
Present value of lease liabilities | 5,730 |
Total | |
2023 | 41,460 |
2024 | 45,457 |
2025 | 42,711 |
2026 | 37,916 |
2027 | 33,517 |
Thereafter | 94,262 |
Total lease payments | 295,323 |
Less: Imputed interest | 73,692 |
Present value of lease liabilities | $ 221,631 |
Leases - Lease Term and Discount Rate (Details) |
Jan. 03, 2023 |
Dec. 28, 2021 |
---|---|---|
Leases [Abstract] | ||
Weighted average remaining lease term - operating leases (in years) | 7 years 10 months 24 days | 8 years 1 month 6 days |
Weighted average remaining lease term - finance leases (in years) | 2 years 7 months 6 days | 3 years 4 months 24 days |
Weighted average discount rate - operating leases (percent) | 8.00% | 8.20% |
Weighted average discount rate - finance leases (percent) | 6.40% | 6.50% |
Leases - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Jan. 03, 2023 |
Dec. 28, 2021 |
|
Leases [Abstract] | ||
Cash paid for lease operating liabilities | $ 45,158 | $ 42,231 |
Cash paid for lease finance liabilities | 2,391 | 2,413 |
Cash paid for lease liabilities | 47,549 | 44,644 |
Right-of-use assets obtained in exchange for new operating lease liabilities | 19,584 | 15,642 |
Right-of-use assets obtained in exchange for new finance lease liabilities | 1,346 | 701 |
Right-of-use assets obtained in exchange for new lease liabilities | $ 20,930 | $ 16,343 |
Supplemental Disclosures to Consolidated Statements of Cash Flows (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 03, 2023 |
Dec. 28, 2021 |
Dec. 29, 2020 |
|
Supplemental Cash Flow Elements [Abstract] | |||
Interest paid (net of amounts capitalized) | $ 1,500 | $ 1,400 | $ 2,500 |
Income taxes paid (refunded) | 123 | 106 | (66) |
Purchases of property and equipment accrued in accounts payable | $ 5,640 | $ 5,335 | $ 891 |
Related Party Transactions (Details) |
12 Months Ended |
---|---|
Jan. 03, 2023 | |
Securities Purchase Agreement | Mill Road | |
Related Party Transaction [Line Items] | |
Stock ownership threshold for board member designation (percent) | 10.00% |
Revenue Recognition - Narrative (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 03, 2023 |
Dec. 28, 2021 |
Dec. 29, 2020 |
|
Disaggregation of Revenue [Line Items] | |||
Gift card liability, current | $ 2,430 | $ 2,850 | |
Revenue recognized for redemption of gift cards | 3,400 | 3,200 | $ 3,500 |
Gift card breakage | $ 500 | 300 | 300 |
Period in which initial fees received from franchisees will be recognized as revenue | 20 years | ||
Deferred revenue | $ 300 | 400 | |
Initial fees from franchisees | |||
Disaggregation of Revenue [Line Items] | |||
Revenue recognized that was included in contract liability | 100 | 100 | $ 100 |
Accrued expenses and other current liabilities | |||
Disaggregation of Revenue [Line Items] | |||
Gift card liability, current | 2,400 | 2,800 | |
Other long-term liabilities | |||
Disaggregation of Revenue [Line Items] | |||
Gift card liability, non-current | $ 700 | $ 600 |
Revenue Recognition - Performance Obligation (Details) $ in Millions |
Jan. 03, 2023
USD ($)
|
---|---|
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
Performance obligation | $ 0.1 |
Performance obligation, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
Performance obligation | $ 0.1 |
Performance obligation, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
Performance obligation | $ 0.1 |
Performance obligation, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-01 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
Performance obligation | $ 0.1 |
Performance obligation, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-01-01 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
Performance obligation | $ 0.1 |
Performance obligation, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2028-01-01 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
Performance obligation | $ 0.9 |
Performance obligation, period |
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