Income Taxes (Tables)

12 Months Ended

Jan. 03, 2023

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):


	2022		2021		2020
Current tax provision:
Federal	$	—	$	—	$	—
State	77		41		44
	77		41		44
Deferred tax (benefit) provision:
Federal	(27)		23		30
State	(13)		6		10
	(40)		29		40
Total provision for income taxes	$	37	$	70	$	84

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):


	2022			2021			2020
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	—			6			(25)
Deferred tax asset write-off	320			207			157
Other items, net	199			(19)			8
Provision for income taxes	$	37		$	70		$	84
Effective income tax rate	(1.1)		%	1.9		%	(0.4)		%

Schedule of Deferred Tax Assets and Liabilities

The Company’s total deferred tax assets and liabilities are as follows (in thousands):


	2022		2021
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)

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):


	2022		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		—
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 net deferred tax assets	47,093		45,495
Valuation allowance	(47,322)		(45,764)
Net deferred tax liabilities	$	(229)	$	(269)