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Derivative Instruments
 12 Months Ended
Dec. 31, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments Derivative Instruments
The Company is exposed to certain risks relating to its ongoing business operations. Management evaluates various strategies in managing its exposure to market-based risks, such as entering into transactions to manage its exposure to commodity price risk and floating interest rates. The Company does not hold or issue derivative instruments for trading purposes. The Company is exposed to credit-related losses in the event of non-performance by the counterparties to its derivative instruments. The Company mitigates this risk of nonperformance by dealing with highly rated counterparties.
Commodity Price Risk
The Company uses forward contracts to protect against the effects of commodity price fluctuations in the cost of ingredients of its products, of which flour, sugar, and shortening are the most significant, and the cost of fuel used by its delivery vehicles. Management has not designated these forward contracts as hedges. As of December 31, 2023 and January 1, 2023 the total notional amount of commodity derivatives was 1.8 million and 1.7 million gallons of fuel, respectively. They were scheduled to mature between January 1, 2024 and December 31, 2024, and January 2, 2023 and December 1, 2024, respectively. As of December 31, 2023 and January 1, 2023, the Company has recorded a liability of $0.1 million and an asset of $0.5 million, respectively, related to the fair market values of its commodity derivatives. The settlement of commodity derivative contracts is reported in the Consolidated Statements of Cash Flows as a cash flow from operating activities.
Interest Rate Risk
The Company is exposed to market risk from increases in interest rates on any borrowings under its debt facilities. As of the end of fiscal 2020, the Company was entered into various interest rate swap agreements with a notional amount totaling $505.0 million. Under these interest rate swap agreements, the Company made payments based on a fixed rate of 1.99% for $300.0 million of the hedged notional, 2.72% for $155.0 million of the hedged notional, and 0.95% for $50.0 million of the hedged notional, and in exchange received payments at a variable rate based on the one-month LIBOR. These agreements were all due to mature in June 2024.
In the fourth quarter of fiscal 2022, the Company cancelled certain interest rate swap agreements with an aggregate notional amount of $240.0 million, collecting $8.5 million in cash proceeds, and entered into new agreements with the same counterparties. The only difference between these new agreements and the prior versions included the setting of a new payment rate on the fixed component of the swaps (4.64%).
In the first quarter of fiscal 2023, the Company cancelled certain interest rate swap agreements with an aggregate notional amount of $265.0 million, collecting $7.7 million in cash proceeds, and entered into new agreements with the same counterparties. The primary difference between these new agreements and the prior versions included the setting of a new payment rate on the fixed component of the swaps (4.38%). At the same time, the Company also amended the benchmark interest rate on the floating component of all $505.0 million hedged notional to one-month SOFR, corresponding to the new
interest rate on its refinanced credit facility discussed in Note 8, Long-Term Debt, to the audited Consolidated Financial Statements.
The net effect of the interest rate swap arrangements will be to fix the interest rate on the term loan under the 2023 Facility up to the notional amount outstanding at the rates payable under the swap agreements plus the Applicable Rate (as defined by the 2023 Facility), through the swap maturity dates in June 2024. Management has designated the interest rate swap agreements as cash flow hedges and recognized the changes in the fair value of these swaps in other comprehensive income. As of December 31, 2023 and January 1, 2023, the Company has recorded assets of $1.6 million and $10.5 million, respectively, related to the fair market values of its interest rate derivatives. The cash flows associated with the interest rate swaps are reflected in the operating activities in the Consolidated Statements of Cash Flows, which is consistent with the classification as operating activities of the interest payments on the term loan.
All of the interest rate swap derivatives have certain early termination triggers caused by an event of default or termination. The events of default include failure to make payments when due, failure to give notice of a termination event, failure to comply with or perform obligations under the agreements, bankruptcy or insolvency, and defaults under other agreements (cross-default provisions).
Foreign Currency Exchange Rate Risk
The Company is exposed to foreign currency risk primarily from its investments in consolidated subsidiaries that operate in Canada, the U.K., Ireland, Australia, New Zealand, Mexico, and Japan. In order to mitigate foreign exchange fluctuations, the Company enters into foreign exchange forward contracts. Management has not designated these forward contracts as hedges. As of December 31, 2023 and January 1, 2023, the total notional amount of foreign exchange derivatives was $49.8 million and $59.0 million, respectively. They were scheduled to mature in January 2024 and between January 2023 and February 2023, respectively. As of December 31, 2023 and January 1, 2023, the Company has recorded liabilities of $0.3 million and $0.2 million, respectively, related to the fair market values of its foreign exchange derivatives.
Quantitative Summary of Derivative Positions and Their Effect on Results of Operations
The following tables present the fair values of derivative instruments included in the Consolidated Balance Sheets as of December 31, 2023 and January 1, 2023 for derivatives not designated as hedging instruments and derivatives designed as hedging instruments, respectively. The Company only has cash flow hedges that are designated as hedging instruments.
Derivatives Fair Value
Derivatives Not Designated as Hedging
Instruments		December 31, 2023January 1, 2023Balance Sheet Location
Commodity derivatives$— $514 Prepaid expense and other current assets
Total Assets$— $514 
Foreign currency derivatives$345 $170 Accrued liabilities
Commodity derivatives113 — Accrued liabilities
Total Liabilities$458 $170 
Derivatives Fair Value
Derivatives Designated as Hedging
Instruments		December 31, 2023January 1, 2023Balance Sheet Location
Interest rate derivatives (current)$1,596 $7,218 Prepaid expense and other current assets
Interest rate derivatives (noncurrent)— 3,243 Other assets
Total Assets$1,596 $10,461 
The effect of derivative instruments on the Consolidated Statements of Operations for the fiscal years ended December 31, 2023, January 1, 2023, and January 2, 2022 is as follows:
Derivative Gain/(Loss) Recognized in Income in Fiscal Years Ended
Derivatives Designated as Hedging InstrumentsDecember 31, 2023January 1, 2023January 2, 2022Location of Derivative Gain/(Loss) Recognized in Income
Gain/(loss) on interest rate derivatives$8,624 $(2,727)$(10,291)Interest expense, net
$8,624 $(2,727)$(10,291)
Derivative (Loss)/Gain Recognized in Income in Fiscal Years Ended
Derivatives Not Designated as Hedging InstrumentsDecember 31, 2023January 1, 2023January 2, 2022Location of Derivative (Loss)/Gain Recognized in Income
Loss on foreign currency derivatives$(175)$(90)$(62)Other non-operating expense, net
(Loss)/gain on commodity derivatives(627)(972)1,066 Other non-operating expense, net
$(802)$(1,062)$1,004