Strategic Corporate Reorganization for Long-term Growth

3 Months Ended

Mar. 28, 2021

Strategic Corporate Reorganization for Long-term Growth

Strategic Corporate Reorganization for Long-term Growth

10.  Strategic Corporate Reorganization for Long-term Growth

On September 17, 2020, we announced plans to open an office in Atlanta, Georgia located in Three Ballpark Center at The Battery Atlanta.  The 60,000 square foot modern space will be designed to drive continued menu innovation and optimized integration across marketing, communications, customer experience, operations, human resources, diversity, equity and inclusion, communications, financial planning and analysis, investor relations and development functions.  Our information technology, finance, supply chain, and legal teams will continue to operate in our Louisville, Kentucky office, which remains critical to our success. We also maintain an office outside of London, UK, where our international operations are managed.

The opening of the office in Atlanta and related organizational changes are projected to be completed by the summer of 2021. All affected employees were either offered an opportunity to continue with the organization or were offered a severance package. As a result, we expect to incur certain one-time corporate reorganization costs of approximately $15.0 to $20.0 million related to employee severance and transition, recruitment and relocation, and third party and other costs through 2021.  Of these costs, we have cumulatively incurred approximately $9.9 million through March 28, 2021 which include $6.8 million of employee severance and other employee transition costs, $2.5 million of recruiting and professional fees, $0.8 million of relocation costs, and $0.7 million of other costs, offset by ($0.9) million of stock-based compensation forfeitures on unvested awards.

We record severance as a one-time termination benefit and recognize the expense ratably over the employees’ required future service period. All other costs, including employee transition costs, recruitment and relocation costs, and third-party costs, are recognized in the period incurred. All strategic corporate reorganization costs have been recorded in General and administrative expenses on the Condensed Consolidated Statement of Operations.

As of March 28, 2021 and December 27, 2020, the estimate of incurred but unpaid strategic corporate reorganization costs are included in Accrued expenses and other current liabilities on the Condensed Consolidated Balance Sheets.  The following table summarizes the activity for the three months ended March 28, 2021:

	Balance at						Balance at
	Dec. 27						Mar. 28,
	2020		Charges		Payments		2021
Employee severance and other employee transition costs	$	4,615	$	2,037	$	(3,847)	$	2,805
Recruiting and professional fees		145		860		(884)		121
Relocation costs		101		546		(133)		514
Other costs		—		440		(440)		—
Total strategic corporate reorganization liability	$	4,861	$	3,883	$	(5,304)	$	3,440

We expect to recognize additional costs associated with the corporate reorganization in the remainder of 2021 of approximately $5.0 to $10.0 million, including expenditures related to (i) employee severance and other employee transition costs of approximately $2.0 million to $3.0 million, (ii) relocation and recruiting costs of $2.0 million to $5.0 million, and (iii) third-party and other costs of $1.0 million to $2.0 million.