Reorganization and Realignment Costs

12 Months Ended

Dec. 31, 2023

Restructuring and Related Activities [Abstract]

The following is a summary of the initiatives included in “Reorganization and realignment costs:”


	Year Ended
	2023		2022		2021
Organizational Redesign Plan	$	9,064	$	—	$	—
System optimization initiative	136		611		6,852
Other reorganization and realignment plans	—		87		1,696
Reorganization and realignment costs	$	9,200	$	698	$	8,548

Organizational Redesign

In February 2023, the Board of Directors approved a plan to redesign the Company’s organizational structure to better support the execution of the Company’s long-term growth strategy by maximizing organizational efficiency and streamlining decision making (the “Organizational Redesign Plan”). As a result of the Organizational Redesign Plan, the Company held its general and administrative expense in 2023 relatively flat compared with 2022. Additionally, in January 2024, the Board of Directors announced the appointment of Kirk Tanner as the Company’s new President and Chief Executive Officer, effective February 5, 2024. Mr. Tanner succeeded Todd A. Penegor, the Company’s previous President and Chief Executive Officer, who departed from the Company in February. As a result of the succession of the President and Chief Executive Officer, the Company now expects to incur total costs of approximately $17,000 to $19,000 related to the Organizational Redesign Plan. During 2023, the Company recognized costs totaling $9,064, which primarily included severance and related employee costs and share-based compensation. The Company expects to incur additional costs aggregating approximately $8,000 to $10,000, comprised of (1) severance and related employee costs of approximately $7,000, (2) share-based compensation of approximately $2,000 and (3) recruitment and relocation costs of approximately $500. The Company expects costs related to the Organizational Redesign Plan to continue into 2026.

The following is a summary of the costs recorded as a result of the Organizational Redesign Plan:


	Year Ended
	2023
Severance and related employee costs	$	6,243
Recruitment and relocation costs	554
Third-party and other costs	996
	7,793
Share-based compensation (a)	1,271
Total organizational redesign	$	9,064

_______________

(a)Primarily represents the accelerated recognition of share-based compensation resulting from the termination of employees under the Organizational Redesign Plan.

The table below presents a rollforward of our accruals for the Organizational Redesign Plan, which are included in “Accrued expenses and other current liabilities” as of December 31, 2023.


	Balance January 1, 2023		Charges		Payments		Balance December 31, 2023
Severance and related employee costs	$	—	$	6,243	$	(4,551)	$	1,692
Recruitment and relocation costs	—		554		(554)		—
Third-party and other costs	—		996		(996)		—
	$	—	$	7,793	$	(6,101)	$	1,692

System Optimization Initiative

The Company recognizes costs related to acquisitions and dispositions under its system optimization initiative. During 2023, the Company recognized costs totaling $136. During 2022, the Company recognized costs totaling $611, which were primarily comprised of professional fees and other costs associated with the Company’s acquisition of 93 franchise-operated restaurants in Florida during the fourth quarter of 2021. During 2021, the Company recognized costs totaling $6,852, which were primarily comprised of the write-off of certain lease assets, lease termination fees and transaction fees associated with the NPC bankruptcy sale process, as well as professional fees and transaction fees associated with the Company’s acquisition of 93 franchise-operated restaurants in Florida during the fourth quarter of 2021. See Note 3 for further information on the NPC bankruptcy sale process. The Company expects to recognize a gain of approximately $150, primarily related to the write-off of certain NPC-related lease liabilities upon final termination of the leases. As of December 31, 2023, January 1, 2023 and January 2, 2022 there were no accruals for our system optimization initiative.

The following is a summary of the costs recorded as a result of our system optimization initiative:


	Year Ended						Total Incurred Since Inception
	2023		2022		2021
Severance and related employee costs	$	—	$	4	$	661	$	18,902
Professional fees	3		395		1,570		24,075
Other (a)	73		145		1,765		7,836
	76		544		3,996		50,813
Accelerated depreciation and amortization (b)	—		—		—		25,398
NPC lease termination costs (c)	60		67		2,856		2,983
Share-based compensation (d)	—		—		—		5,013
Total system optimization initiative	$	136	$	611	$	6,852	$	84,207

_______________

(a)2021 includes transaction fees of $1,350 associated with the NPC bankruptcy sale process.

(b)Primarily includes accelerated amortization of previously acquired franchise rights related to the Company-operated restaurants in territories that have been sold to franchisees in connection with our system optimization initiative.

(d)Represents incremental share-based compensation resulting from the modification of stock options and performance-based awards in connection with the termination of employees under our system optimization initiative.

Other Reorganization and Realignment

For 2022 and 2021, costs incurred under the Company’s other reorganization and realignment plans were $87 and $1,696, respectively. No costs were incurred under the Company’s other reorganization and realignment plans in 2023. The Company does not expect to incur any material additional costs under these plans.