Subsequent Event

6 Months Ended

Jun. 29, 2022

Subsequent Events [Abstract]

Subsequent Event

Subsequent EventsOn July 20, 2022, the Company completed its previously announced acquisition of Keke's Breakfast Cafe ("Keke's") pursuant to the Asset Purchase Agreement (the "Purchase Agreement"), dated May 3, 2022, which was subsequently amended by the First Amendment to Asset Purchase Agreement (the "First Amendment"), dated July 11, 2022, by and between the Company, as purchaser, and K2 Restaurants, Inc. together with the other sellers and principals party thereto for the acquisition of certain assets and assumption of certain liabilities of the franchise business, Keke's, and eight Keke’s restaurants owned and operated by the sellers.

Keke’s is the franchisor and operator of a full-service A.M. eatery concept, currently consisting of 52 domestic restaurants in Florida, including 44 franchised locations. We believe Keke’s is a brand with attractive unit economics and strong potential. This acquisition provides an opportunity to participate in the fast-growing A.M. eatery segment through a complementary concept we believe our experienced team can develop across multiple states with the goal of becoming the A.M. eatery franchisor of choice. We believe this acquisition will also enhance value for our shareholders.

Pursuant to the Purchase Agreement, we agreed to purchase Keke's for an aggregate purchase price of $82.5 million. Of the aggregate purchase price, $81.5 million was funded by utilizing cash on hand as well as funds from the Company's revolving credit facility, with the remaining $1.0 million to be paid as part of the post closing adjustments.

We estimate that approximately $2.0 million of the purchase price will be allocated to fixed assets and leasehold improvements, $0.7 million to deferred franchise revenue, with the balance allocated to intangible assets as follows: $34.9 million to trade names, $9.3 million to franchise rights and $37.0 million to goodwill. In addition, we recorded approximately $8.6 million of operating lease right-of-use assets and liabilities. These amounts are subject to subsequent adjustment as we continue to gather information during the measurement period.

The Company’s Consolidated Balance Sheet as of June 29, 2022 and the Consolidated Statements of Operations and Consolidated Statements of Cash Flows for the periods ended June 29, 2022 do not reflect the impacts of Keke’s as the acquisition was completed after the balance sheet date.