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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________ 
FORM 10-Q
__________________________________ 
þQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 29,September 27, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File No. 001-35603
__________________________________  
CHUY’S HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
 __________________________________ 
DELAWAREDelaware20-5717694
(State of Incorporation

or Organization)
(I.R.S. Employer

Identification No.)
1623 TOOMEY ROAD
AUSTIN, TEXAS
78704
(Address of Principal Executive Offices)(Zip Code)
1623 Toomey Rd.
Austin, Texas 78704
(Address of Principal Executive Offices) (Zip Code)
Registrant’s Telephone Number, Including Area Code: (512) 473-2783
 __________________________________ 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, par value $0.01 per shareCHUYNasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes þ   No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes  þ     No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filerAccelerated filerþEmerging growth company¨
Non-accelerated filerSmaller reporting company
¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes      No  þ
The number of shares of the registrant’s common stock outstanding at May 8,October 30, 2020 was 16,643,361.19,694,512.








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Explanatory Note
On May 8, 2020 (the “Original Due Date”), Chuy's Holdings, Inc. (the “Company”) filed a Current Report on Form 8-K, and is filing this Quarterly Report on Form 10-Q (the “Quarterly Report”), in reliance on the Order of the Securities and Exchange Commission (the “SEC”), dated March 25, 2020, pursuant to Section 36 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") granting exemptions from the specified provisions of the Exchange Act and certain rules thereunder (the "Order").
The Company's operations have experienced disruptions due to the circumstances surrounding the COVID-19 pandemic including, but not limited to, suggested and mandated social distancing and shelter-in place orders. The COVID-19 related shelter-in-place orders and resulting office closures have severely limited access by our financial reporting and accounting staff to our facilities and our ability to finalize our quarterly review processes and procedures. In light of the impact of the factors described above, the Company was unable to compile and review certain information required in order to permit the Company to timely file its Quarterly Report by the Original Due Date.




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Part I—Financial Information
Item 1.    Financial Statements
Chuy's Holdings, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)
 
September 27, 2020December 29, 2019
Assets(Unaudited)
Current assets:
Cash and cash equivalents$77,775 $10,074 
Accounts receivable776 1,426 
Lease incentives receivable400 250 
Inventories1,401 1,657 
Prepaid expenses and other current assets3,884 3,376 
Total current assets84,236 16,783 
Property and equipment, net188,692 210,750 
Operating lease assets158,659 169,299 
Deferred tax asset9,111 2,601 
Other assets and intangible assets, net1,019 667 
Tradename21,900 21,900 
Goodwill24,069 24,069 
Total assets$487,686 $446,069 
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable$3,670 $4,253 
Accrued liabilities22,928 21,107 
Operating lease liabilities14,966 10,307 
Income tax payable267 532 
Total current liabilities41,831 36,199 
Operating lease liabilities, less current portion206,232 214,541 
Other liabilities673 393 
Total liabilities248,736 251,133 
Contingencies (Note 8)
Stockholders’ equity:
Common stock, $0.01 par value; 60,000,000 shares authorized; 19,694,512 shares issued and outstanding at September 27, 2020 and 16,636,464 shares issued and outstanding at December 29, 2019197 166 
Preferred stock, $0.01 par value; 15,000,000 shares authorized and 0 shares issued or outstanding at September 27, 2020 and December 29, 2019
Paid-in capital143,771 94,712 
Retained earnings94,982 100,058 
Total stockholders’ equity238,950 194,936 
Total liabilities and stockholders’ equity$487,686 $446,069 
 March 29, 2020 December 29, 2019
Assets(Unaudited)  
Current assets:   
Cash and cash equivalents$28,023
 $10,074
Accounts receivable957
 1,426
Lease incentives receivable400
 250
Income tax receivable1,214
 
Inventories1,519
 1,657
Prepaid expenses and other current assets4,109
 3,376
Total current assets36,222
 16,783
Property and equipment, net196,436
 210,750
Operating lease assets162,859
 169,299
Deferred tax asset7,168
 2,601
Other assets and intangible assets, net760
 667
Tradename21,900
 21,900
Goodwill24,069
 24,069
Total assets$449,414
 $446,069
Liabilities and Stockholders' Equity   
Current liabilities:   
Accounts payable$6,196
 $4,253
Accrued liabilities15,132
 21,107
Operating lease liabilities10,939
 10,307
Income tax payable
 532
Total current liabilities32,267
 36,199
Operating lease liabilities, less current portion210,120
 214,541
Other liabilities631
 393
Long-term debt25,000
 
Total liabilities268,018
 251,133
    
Commitments and contingencies (Note 8)
 
Stockholders’ equity:   
Common stock, $0.01 par value; 60,000,000 shares authorized; 16,640,190 shares issued and outstanding at March 29, 2020 and 16,636,464 shares issued and outstanding at December 29, 2019166
 166
Preferred stock, $0.01 par value; 15,000,000 shares authorized and no shares issued or outstanding at March 29, 2020 and December 29, 2019
 
Paid-in capital93,576
 94,712
Retained earnings87,654
 100,058
Total stockholders’ equity181,396
 194,936
Total liabilities and stockholders’ equity$449,414
 $446,069









See notes to the Unaudited Condensed Consolidated Financial Statements



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Chuy's Holdings, Inc.
Unaudited Condensed Consolidated Income Statements
(In thousands, except share and per share data)
 
 Thirteen Weeks EndedThirty-Nine Weeks Ended
September 27, 2020September 29, 2019September 27, 2020September 29, 2019
Revenue$82,032 $109,082 $242,244 $324,325 
Costs and expenses:
Cost of sales19,819 28,673 59,791 83,562 
Labor23,891 38,770 74,808 114,323 
Operating12,659 16,127 37,964 46,583 
Occupancy7,480 8,206 22,563 24,340 
General and administrative5,701 5,975 16,195 18,010 
Marketing514 1,492 1,888 4,487 
Restaurant pre-opening345 457 1,483 2,357 
Legal settlement775 
Impairment, closed restaurant and other costs3,444 7,300 23,999 7,888 
Gain on insurance settlements(1,000)
Depreciation and amortization4,844 5,284 15,028 15,485 
Total costs and expenses78,697 112,284 252,719 317,810 
Income (loss) from operations3,335 (3,202)(10,475)6,515 
Interest expense, net33 28 238 90 
Income (loss) before income taxes3,302 (3,230)(10,713)6,425 
Income tax expense (benefit)476 (1,413)(5,637)(1,220)
Net income (loss)$2,826 $(1,817)$(5,076)$7,645 
Net income (loss) per common share:
Basic$0.14 $(0.11)$(0.28)$0.46 
Diluted$0.14 $(0.11)$(0.28)$0.45 
Weighted-average shares outstanding:
Basic19,692,181 16,615,927 17,961,008 16,764,010 
Diluted19,784,364 16,720,662 17,961,008 16,836,430 
 Thirteen Weeks Ended
 March 29, 2020 March 31, 2019
Revenue$94,500
 $102,111
Costs and expenses:   
Cost of sales24,562
 25,715
Labor33,580
 36,699
Operating14,585
 14,559
Occupancy7,986
 7,982
General and administrative5,720
 6,167
Marketing1,009
 1,451
Restaurant pre-opening860
 718
Impairment and closed restaurant costs18,773
 372
Depreciation and amortization5,289
 5,077
Total costs and expenses112,364
 98,740
(Loss) income from operations(17,864) 3,371
Interest expense, net52
 39
(Loss) income before income taxes(17,916) 3,332
Income tax (benefit) expense(5,512) 115
Net (loss) income$(12,404) $3,217
Net (loss) income per common share:   
Basic$(0.75) $0.19
Diluted$(0.75) $0.19
Weighted-average shares outstanding:   
Basic16,635,340
 16,870,154
Diluted16,635,340
 16,955,324








































See notes to the Unaudited Condensed Consolidated Financial Statements



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Chuy's Holdings, Inc.
Unaudited Condensed Consolidated Statements of Stockholders' Equity
(In thousands, except share and per share data)
Thirteen Weeks Ended
 Common StockRetained 
 SharesAmountPaid-in CapitalEarningsTotal
Balance, June 30, 201916,698,652 $167 $94,820 $103,305 $198,292 
Stock-based compensation— 856 856 
Proceeds from exercise of stock options9,574 85 85 
Settlement of restricted stock units2,642 
Repurchase of shares of common stock(95,294)(1)(2,099)(2,100)
Indirect repurchase of shares for minimum tax withholdings(930)(23)(23)
Net loss— (1,817)(1,817)
Balance, September 29, 201916,614,644 $166 $93,639 $101,488 $195,293 
Balance, June 28, 202019,689,892 $197 $142,762 $92,156 $235,115 
Stock-based compensation— 987 987 
Proceeds from exercise of stock options2,850 39 39 
Settlement of restricted stock units2,670 
Indirect repurchase of shares for minimum tax withholdings(900)(17)(17)
Net income— 2,826 2,826 
Balance, September 27, 202019,694,512 $197 $143,771 $94,982 $238,950 
Thirty-Nine Weeks Ended
Common StockRetained 
SharesAmountPaid-in CapitalEarningsTotal
Balance, December 30, 201816,856,373 $169 $99,490 $94,192 $193,851 
Adoption of ASC 842 (Leases)
— (349)(349)
Stock-based compensation— 2,582 2,582 
Proceeds from exercise of stock options26,217 218 218 
Settlement of restricted stock units121,823 (1)
Repurchase of shares of common stock(351,774)(4)(7,789)(7,793)
Indirect repurchase of shares for minimum tax withholdings(37,995)(861)(861)
Net income— 7,645 7,645 
Balance, September 29, 201916,614,644 $166 $93,639 $101,488 $195,293 
Balance, December 29, 201916,636,464 166 $94,712 $100,058 $194,936 
Stock-based compensation— 2,944 2,944 
Proceeds from exercise of stock options6,021 73 73 
Sale of common stock from ATM offering, net of fees and expenses3,041,256 31 48,136 48,167 
Settlement of restricted stock units144,601 (1)
Repurchase of shares of common stock(90,144)(1)(1,421)(1,422)
Indirect repurchase of shares for minimum tax withholdings(43,686)(672)(672)
Net loss— (5,076)(5,076)
Balance, September 27, 202019,694,512 $197 $143,771 $94,982 $238,950 
 Thirteen Weeks Ended
 Common Stock   Retained  
 Shares Amount Paid-in Capital Earnings Total
Balance, December 29, 201916,636,464
 $166
 $94,712
 $100,058
 $194,936
Stock-based compensation
 
 912
 
 912
Settlement of restricted stock units134,530
 1
 (1) 
 
Repurchase of shares of common stock(90,144) (1) (1,421) 
 (1,422)
Indirect repurchase of shares for minimum tax withholdings(40,660) 
 (626) 
 (626)
Net loss
 
 
 (12,404) (12,404)
Balance, March 31, 202016,640,190
 $166
 $93,576
 $87,654
 $181,396
          
Balance, December 30, 201816,856,373
 $169
 $99,490
 $94,192
 $193,851
Adoption of ASU 2016-02 Leases (Topic 842)
 
 
 (349) (349)
Stock-based compensation
 
 798
 
 798
Proceeds from exercise of stock options4,687
 
 34
 
 34
Settlement of restricted stock units115,688
 1
 
 
 1
Repurchase of shares of common stock(80,309) (1) (1,817) 
 (1,818)
Indirect repurchase of shares for minimum tax withholdings(35,800) 
 (811) 
 (811)
Net income
 
 
 3,217
 3,217
Balance, March 31, 201916,860,639
 $169
 $97,694
 $97,060
 $194,923


















See notes to the Unaudited Condensed Consolidated Financial Statements



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Chuy's Holdings, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(In thousands)
 Thirty-Nine Weeks Ended
 September 27, 2020September 29, 2019
Cash flows from operating activities:
Net (loss) income$(5,076)$7,645 
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization15,028 15,485 
Operating lease assets7,507 (303)
Amortization of loan origination costs36 25 
Loss on asset impairment and closed restaurant costs20,869 7,114 
Stock-based compensation2,764 2,423 
Loss on disposal of property and equipment414 220 
Deferred income taxes(6,510)(2,494)
Changes in operating assets and liabilities:
Accounts receivable650 855 
Lease incentive receivable(150)1,239 
Income tax receivable and payable(265)603 
Inventories256 (94)
Prepaid expenses and other current assets(508)(3,087)
Accounts payable(617)(2,434)
Accrued liabilities2,101 5,343 
Operating lease liabilities(3,650)89 
Net cash provided by operating activities32,849 32,629 
Cash flows from investing activities:
Purchase of property and equipment(10,905)(21,487)
Purchase of other assets(389)(429)
Net cash used in investing activities(11,294)(21,916)
Cash flows from financing activities:
Net proceeds from sale of common stock48,167 
Borrowings under revolving line of credit25,000 5,000 
Payments under revolving line of credit(25,000)(5,000)
Repurchase of shares of common stock(1,422)(7,793)
Proceeds from the exercise of stock options73 218 
Indirect repurchase of shares for minimum tax withholdings(672)(861)
Net cash provided by (used in) financing activities46,146 (8,436)
Net increase in cash and cash equivalents67,701 2,277 
Cash and cash equivalents, beginning of period10,074 8,199 
Cash and cash equivalents, end of period$77,775 $10,476 
Supplemental disclosure of non-cash investing and financing activities:
Property and equipment and other assets acquired by accounts payable$34 $734 
Supplemental cash flow disclosures:
Cash paid for interest$185 $53 
Cash paid for income taxes$1,166 $593 
 Thirteen Weeks Ended
 March 29, 2020 March 31, 2019
Cash flows from operating activities:   
Net (loss) income$(12,404) $3,217
Adjustments to reconcile net (loss) income to net cash provided by operating activities:   
Depreciation and amortization5,289
 5,077
Amortization of operating lease assets3,307
 3,228
Amortization of loan origination costs8
 8
Loss on asset impairment18,277
 
Stock-based compensation856
 750
Loss on disposal of property and equipment196
 181
Deferred income taxes(4,567) (274)
Changes in operating assets and liabilities:   
Accounts receivable469
 597
Lease incentive receivable(150) 315
Income tax receivable and payable(1,746) 388
Inventories138
 (40)
Prepaid expenses and other current assets(733) (1,853)
Accounts payable1,181
 (2,603)
Accrued liabilities(5,737) 1,943
Operating lease liabilities(3,789) (3,275)
Net cash provided by operating activities595
 7,659
Cash flows from investing activities:   
Purchase of property and equipment(5,498) (5,866)
Purchase of other assets(100) (53)
Net cash used in investing activities(5,598) (5,919)
Cash flows from financing activities:   
Borrowings under revolving line of credit25,000
 5,000
Payments under revolving line of credit
 (5,000)
Repurchase of shares of common stock(1,422) (1,817)
Proceeds from the exercise of stock options
 34
Indirect repurchase of shares for minimum tax withholdings(626) (811)
Net cash provided by (used in) financing activities22,952
 (2,594)
Net increase (decrease) in cash and cash equivalents17,949
 (854)
Cash and cash equivalents, beginning of period10,074
 8,199
Cash and cash equivalents, end of period$28,023
 $7,345
    
Supplemental disclosure of non-cash investing and financing activities:   
Property and equipment and other assets acquired by accounts payable$762
 $174
    
Supplemental cash flow disclosures:   
Cash paid for interest$30
 $17
Cash paid for income taxes$829
 $

See notes to the Unaudited Condensed Consolidated Financial Statements



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Chuy's Holdings, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
(Tabular dollar amounts in thousands, except share and per share data)

1.
1. Basis of Presentation
Chuy’s Holdings, Inc. (the “Company” or “Chuy’s”) develops and operates Chuy’s restaurants throughout the United States. Chuy’s is a growing, full-service restaurant concept offering a distinct menu of authentic, freshly-prepared Mexican and Tex-Mex inspired food. As of March 29,September 27, 2020, the Company operated 92 restaurants across 19 states and had nine9 restaurants temporarily closed due to the Coronavirus ("COVID-19") pandemic.
In the opinion of management, the accompanying unaudited condensed consolidated financial statements and the related notes reflect all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods presented. The unaudited condensed consolidated financial statements have been prepared in accordance with Generally Accepted Accounting Principles (“GAAP”), except that certain information and notes have been condensed or omitted pursuant to rules and regulations of the Securities and Exchange Commission (the “SEC”). Results for interim periods are not necessarily indicative of the results that may be expected for the full fiscal year. The unaudited condensed consolidated financial statements should be read in conjunction with consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2019. The accompanying condensed consolidated balance sheet as of December 29, 2019, has been derived from our audited consolidated financial statements.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the period. Actual results could differ from those estimates.
Certain prior year amounts have been reclassified in our unaudited condensed consolidated financial statements and notes thereto to conform to current year presentation.
The Company operates on a 52- or 53- week fiscal year that ends on the last Sunday of the calendar year. Each quarterly period has 13 weeks, except for a 53-week year when the fourth quarter has 14 weeks. Our 2020 and 2019 fiscal years both consist of 52 weeks.
COVID-19 Pandemic
During March 2020, the World Health Organization declared the COVID-19 outbreak to be a global pandemic and the United States declared a National Public Health Emergency. The COVID-19 pandemic has significantly impacted health and economic conditions throughout the United States. Federal, state and local governments took a variety of actions to contain the spread of COVID-19. Many jurisdictions where our restaurants are located required mandatory closures or imposed capacity limitations and other restrictions affecting our operations. As a resultDuring the third quarter of these developments,2020, the Company is experiencingsaw sequential improvement in comparable restaurant sales as state and local restrictions, while still in effect, were eased in many states, including Texas. As of September 27, 2020, the Company had reopened dining rooms at varying degrees of operating capacity in 92 of its 101 restaurants and 9 restaurants remained temporarily closed.
During the thirty-nine weeks ended September 27, 2020, the Company had taken various steps to reduce non-essential spend, postpone restaurant development and rightsize operations in light of reduced sales volume to improve our store level profitability and increase our cash flows. The Company also enhanced its liquidity position by repaying the $25.0 million outstanding under its revolving credit facility with a significant negative impact onportion of the net proceeds from the sale of its revenues, resultscommon stock in its "At-The-Market" ("ATM") offering. As of operationsSeptember 27, 2020, the Company had $77.8 million in cash and cash flows which could negatively impactequivalents, no debt and $25.0 million of availability under its abilityrevolving credit facility. Management believes the Company's strong financial position, combined with the measures taken during the pandemic, will allow the Company to meet its financial obligations over the next twelve months.
In response to the business disruption caused by the COVID-19 pandemic, the Company has taken the following actions, which management expects will enable it to meet its obligations over the next twelve months:
Transitioned its restaurants to an off-premise operating model starting the last week of March 2020 and temporarily closed 9 locations. The Company started to reopen some of its dining rooms during the week ending May 10, 2020 and as of May 21, 2020, the Company had reopened the dining rooms at approximately 70 restaurants at varying levels of limited capacity as allowed by federal, state and local governments.
Canceled or delayed all non-essential planned capital expenditures for the remainder of 2020.
Furloughed approximately 80% of hourly employees and approximately 40% of store management personnel, while enacting temporary salary reductions for remaining managers. In addition, the Company also furloughed certain corporate and administrative staff, temporarily reduced the pay of all remaining corporate and administrative staff by 25% to 50%, temporarily reduced senior management salaries by 50% to 75%, and temporarily suspended all board fees.
Temporarily suspended any further activity under its share repurchase program.
Fully drew down its $25.0 million revolving credit facility to preserve financial flexibility and liquidity. Subsequent to the first quarter of 2020, the Company amended its revolving credit facility to extend its maturity to April 30, 2022 and relax the financial covenants through the new maturity date.
Suspended the lease payments for months of April through June 2020. Currently in negotiations of rent concessions, abatements and deferrals with its landlords to reduce these lease payments. While some landlords have agreed to certain concessions, there can be no assurance that the Company will be successful in obtaining all of the relief it is seeking.
Engaged in and are continuing to engage in, discussions with various parties to explore financing opportunities to enhance liquidity. On May 5, 2020, the Company filed a $100.0 million shelf registration statement with the Securities and Exchange


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Commission. Once this registration statement becomes effective, the Company may offer and sell its common stock, preferred stock, debt securities and warrants in one or more offerings at prices and terms determined at the time of each offering.
We cannot predict how soon we will be able to reopen all of our restaurants at full capacity, and our ability to reopen and stay open will depend in part on the actions of a number of governmental bodies over which we have no control. Moreover, once restrictions are lifted, it is unclear how quickly customers will return to our restaurants, which may be a function of continued concerns over safety and/or depressed consumer sentiment due to adverse economic conditions, including job losses.
2. Recent Accounting Pronouncements
The Company reviewed all recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact on the Company's consolidated financial statements.

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Table of Contents
Chuy's Holdings, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
(Tabular dollar amounts in thousands, except share and per share data)
3. Net Income (Loss) Income Per Share
The number of shares and net income (loss) income per share data for all periods presented are based on the historical weighted-average shares of common stock outstanding.
Basic net income (loss) income per share of the Company's common stock is computed by dividing net income (loss) income by the weighted-average number of shares of common stock outstanding for the period.
Diluted net income (loss) income per share of the Company's common stock is computed on the basis of the weighted-average number of shares of common stock plus the effect of dilutive potential shares of common stock equivalents outstanding during the period using the treasury stock method for dilutive options and deferred sharesrestricted stock units (these deferred sharesrestricted stock units were granted under the Chuy's Holdings, Inc. 2012 Omnibus Equity Incentive Plan (the "2012 Plan"), and are referred to herein as "restricted stock units"the Chuy's Holdings, Inc. 2020 Omnibus Incentive Plan (the "2020 Plan")). For the thirteen weeks ended March 29,September 27, 2020 and March 31,September 29, 2019, there were approximately 70,98691,100 and 37,00020,900 shares, respectively, of common stock equivalents that were excluded from the calculation of diluted net income (loss) per share because their inclusion would have been anti-dilutive. For the thirty-nine weeks ended September 27, 2020 and September 29, 2019, there were approximately 25,300 and 32,200 shares, respectively, of common stock equivalents that were excluded from the calculation of diluted net income (loss) per share because their inclusion would have been anti-dilutive.
The computation of basic and diluted net income (loss) income per share is as follows:
Thirteen Weeks Ended Thirteen Weeks EndedThirty-Nine Weeks Ended
March 29, 2020 March 31, 2019 September 27, 2020September 29, 2019September 27, 2020September 29, 2019
BASIC   BASIC
Net (loss) income$(12,404) $3,217
Net income (loss)Net income (loss)$2,826 $(1,817)$(5,076)$7,645 
   
Weighted-average common shares outstanding16,635,340
 16,870,154
Weighted-average common shares outstanding19,692,181 16,615,927 17,961,008 16,764,010 
Basic net (loss) income per common share$(0.75) $0.19
Basic net income (loss) per common shareBasic net income (loss) per common share$0.14 $(0.11)$(0.28)$0.46 
   

DILUTED   DILUTED
Net (loss) income$(12,404) $3,217
Net income (loss)Net income (loss)$2,826 $(1,817)$(5,076)$7,645 
   
Weighted-average common shares outstanding16,635,340
 16,870,154
Weighted-average common shares outstanding19,692,181 16,615,927 17,961,008 16,764,010 
Dilutive effect of stock options and restricted stock units
 85,170
Dilutive effect of stock options and restricted stock units92,183 104,735 72,420 
Weighted-average of diluted shares16,635,340
 16,955,324
Weighted-average of diluted shares19,784,364 16,720,662 17,961,008 16,836,430 
Diluted net (loss) income per common share$(0.75) $0.19
Diluted net income (loss) per common shareDiluted net income (loss) per common share$0.14 $(0.11)$(0.28)$0.45 
4.
4. Stock-Based Compensation
The Company has outstanding awards under the Chuy's Holdings, Inc. 2006 Stock Option Plan (the "2006 Plan")("the "2006" Plan), the 2012 Plan and the 2020 Plan. On July 30, 2020, the Company’s stockholders approved the 2020 Plan, which replaced the 2012 Plan. The termination of the 2012 Plan did not affect outstanding awards granted under the 2012 Plan. The 2006 Plan was terminated by the board effective July 27, 2012, and no further awards may be granted under the plan after such date. However, theThe termination of the 2006 Plan did not affect outstanding awards granted.granted under the 2006 Plan. Options granted under these plans vest over five years from the date of grant and have a maximum term of 10ten years. As of March 29,September 27, 2020 the Company had 198,512192,097 of stock options outstanding and exercisable with a remaining weighted average contractual term of 2.45two years.

Restricted stock units granted under the 2012 Plan and 2020 Plan vest over four to five years from the date of grant. As of September 27, 2020, a total of 1,115,070 shares of common stock were reserved and remained available for issuance under the 2020 Plan.
Stock-based compensation expense recognized in the accompanying condensed consolidated income statements was approximately $941,000 and $801,000 for the thirteen weeks ended September 27, 2020 and September 29, 2019, respectively, and $2,764,000 and $2,423,000 for the thirty-nine weeks ended September 27, 2020 and September 29, 2019, respectively.


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Chuy's Holdings, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
(Tabular dollar amounts in thousands, except share and per share data)

Restricted stock units granted under the 2012 Plan vest over four to five years from the date of grant. As of March 29, 2020, a total of 69,850 shares of common stock are reserved and remain available for issuance under the 2012 Plan.
Stock-based compensation expense recognized in the accompanying condensed consolidated income statements was approximately $856,000 and $750,000 for the thirteen weeks ended March 29, 2020 and March 31, 2019, respectively.
A summary of stock-based compensation activity related to restricted stock units for the thirteenthirty-nine weeks ended March 29,September 27, 2020 are as follows:
Shares 
Weighted
Average
Fair Value
 Weighted
Average
Remaining
Contractual
Term
(Year)
SharesWeighted
Average
Fair Value
Weighted
Average
Remaining
Contractual
Term
(Year)
Outstanding at December 29, 2019406,205
 $25.02
  Outstanding at December 29, 2019406,205 $25.02 
Granted278,718
 14.70
 Granted284,099 14.77 
Vested(134,530) 26.27
 Vested(144,601)26.16 
Forfeited(6,346) 21.22
 Forfeited(26,601)18.34 
Outstanding at March 29, 2020544,047
 $19.47
 2.98
Outstanding at September 27, 2020Outstanding at September 27, 2020519,102 $19.43 2.59
The fair value of the restricted stock units is the quoted market value of our common stock on the date of grant. As of March 29,September 27, 2020, total unrecognized stock-based compensation expense related to non-vested restricted stock units was approximately $10.3$8.0 million. This amount is expected to be recognized evenly over the remaining vesting period of the grants.
5.5. Long-Term Debt
Revolving Credit Facility
On November 30, 2012, the Company entered into a $25.0 million Revolving Credit Facility with Wells Fargo Bank, National Association. On October 30, 2015,May 21, 2020, the Company entered into anthe second amendment (the “Amendment”) to its Revolving Credit Facility (as amended, the "Revolving Credit Facility") to among other things, (1) extend the maturity date ofto April 30, 2022, (2) relax compliance with the Revolving Credit Facility to October 30, 2020 from November 30, 2017financial covenants during the COVID-19 pandemic through the new maturity date and (2)(3) revise the applicable margins and leverage ratios that determine the commitment fees and interest rates payable by the Company under the Revolving Credit Facility.Company.
Under the Company's Revolving Credit Facility, the Company may request to increase the size of the Revolving Credit Facility by up to an additional $25.0 million, in minimum principal amounts of $5.0 million or the remaining amount of the $25.0 million if less than $5.0 million (the "Incremental Revolving Loan"), which Incremental Revolving Loan will be effective after 10 days written notice to the agent.. In the event that any of the lenders fund the Incremental Revolving Loan, the terms and provisions of the Incremental Revolving Loan will be the same as under the Company's Revolving Credit Facility.
Borrowings under the Revolving Credit Facility generally bear interest at a variable rate based upon the Company's election, of (i) the base rate (which is the highest of the prime rate, federal funds rate plus 0.5% orand one month LIBOR plus 1.0%), or (ii) LIBOR, plus, in either case, an applicable margin based on the Company's consolidated total lease adjusted leverage ratio (as defined in the Revolving Credit Facility agreement)Amendment) with a LIBOR floor of 1.0%. The Revolving Credit Facility also requires payment for commitment fees that accrue on the daily unused commitment of the lender at the applicable margin, which varies based on the Company's consolidated total lease adjusted leverage ratio.
The Revolving Credit Facility also requires compliance with a fixed charge coverage ratio, a lease adjustedconsolidated total leverage ratio, growth capital expenditure limitation during fiscal years 2020 and certain non-financial covenants.2021 and a minimum monthly liquidity requirement of $5.0 million. The Revolving Credit Facility also placeshas certain restrictions on the payment of dividends and distributions. Under the Revolving Credit Facility, the Company may declare and make dividend payments so long as (i) no default or event of default has occurred and is continuing or would result therefrom and (ii) immediately after giving effect to any such dividend payment, on a pro forma basis, the lease adjusted leverage ratio does not exceed 3.50 to 1.00.
The obligations under the Company’s Revolving Credit Facility are secured by a first priority lien on substantially all of the Company’s assets. As of March 29,September 27, 2020, the Company had $25.0 million outstandingno borrowings under our Revolving Credit Facility.
Subsequent to the end of the first quarter of 2020, the Company entered into an amendment to its Revolving Credit Facility, as describedand we were in the Note 13, Subsequent Events.

compliance with all covenants.


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Chuy's Holdings, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
(Tabular dollar amounts in thousands, except share and per share data)

6.6. Accrued Liabilities
The major classes of accrued liabilities at March 29,September 27, 2020 and December 29, 2019 are summarized as follows:
 September 27, 2020December 29, 2019
Accrued compensation and related benefits$10,858 $9,342 
Other accruals4,091 4,302 
Property tax3,780 2,220 
Sales and use tax2,341 2,954 
Deferred gift card revenue1,858 2,289 
Total accrued liabilities$22,928 $21,107 
 March 29, 2020 December 29, 2019
Accrued compensation and related benefits$5,676
 $9,342
Other accruals3,850
 4,302
Sales and use tax2,260
 2,954
Property tax1,553
 2,220
Deferred gift card revenue1,793
 2,289
Total accrued liabilities$15,132
 $21,107
7. Stockholders' Equity
ATM Offering
During the second quarter of 2020, the Company issued 3,041,256 shares of its common stock and received net proceeds of $48.2 million after deducting sales agent commissions and offering expenses. A portion of the net proceeds was used to repay the $25.0 million outstanding under the Company Revolving Credit Facility as of the end of the first quarter of 2020. The Company intends to use the remaining net proceeds from the ATM offering for general corporate purposes, including, but not limited to, increasing its liquidity as a result of the COVID-19 pandemic.
Share Repurchase Program
On October 31, 2019, the Company’s board of directors authorized a new share repurchase program under which the Company may, at its discretion, repurchase up to $30.0 million of its common stock through December 31, 2022. Repurchases of the Company's outstanding common stock will be made in accordance with applicable laws and may be made at management's discretion from time to time in the open market, through privately negotiated transactions or otherwise, including pursuant to Rule 10b5-1 trading plans. There is no guarantee as to the exact number of shares to be repurchased by the Company. The timing and extent of repurchases will depend upon several factors, including market and business conditions, regulatory requirements and other corporate considerations, and repurchases may be discontinued at any time.
We repurchased approximately 90,000 shares of common stock for $1.4 million during the thirteen weeks ended March 29,first quarter of 2020. As a result of COVID-19, the Company temporarily suspended any further activity under the program and did not repurchase any shares during the third quarter of 2020. As of March 29,September 27, 2020, we havethe Company had $28.6 million remaining to be repurchased under this plan. As a result of COVID-19, the Company has temporarily suspended any further activity under the program.
8. Commitments and Contingencies
As of March 29,September 27, 2020, we are involved in various legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on our condensed consolidated financial position, results of operations, or cash flows.
See Note 10, Income Taxes for additional information.
9. Leases
The Company determines if a contract contains a lease at inception. The Company's material long-term operating lease agreements are for the land and buildings for our restaurants as well as our corporate offices. The lease term begins on the date that the Company takes possession under the lease, including the pre-opening period during construction, when in many cases the Company is not making rent payments. The initial lease terms range from 10 years to 15 years, most of which include renewal options oftotaling 10 to 15 years. The lease term is generally the minimum of the noncancelable period or the lease term including renewal options which are reasonably certain of being exercised up to a term of approximately 20 years.
Operating lease assets and liabilities are recognized at the lease commencement date for material leases with a term of greater than 12 months. Operating lease liabilities represent the present value of future minimum lease payments. Since our leases do not provide an implicit rate, our operating lease liabilities are calculated using the Company's secured incremental borrowing rate at lease commencement. We estimate this rate based on prevailing financial market conditions, comparable companies, credit analysis and management judgment. Minimum lease payments include only fixed lease components of the agreement, as well as variable rate payments that depend on an index, initially measured using the index at the lease commencement date.

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Chuy's Holdings, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
(Tabular dollar amounts in thousands, except share and per share data)
Operating lease assets represent our right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepaid or accrued lease payments, initial direct costs and lease incentives. Lease incentives are recognized when earnedconstruction milestones are met and reduce our operating lease asset. They are amortized through the operating lease assets as reductions of rent expense over the lease term.


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Chuy's Holdings, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
(Tabular dollar amounts in thousands, except share and per share data)

Operating lease expense is recognized on a straight-line basis over the lease term. Variable lease payments that do not depend on a rate or index, escalation in the index subsequent to the initial measurement, payments associated with non-lease components such as common area maintenance, real estate taxes and insurance, and short-term lease payments (leases with a term with 12 months or less) are expensed as incurred. Certain of the Company’s operating leases contain clauses that provide for contingent rent based on a percentage of sales greater than certain specified target amounts. These variable payments are expensed when the achievement of the specified target that triggers the contingent rent is considered probable. As of March 29,September 27, 2020, all of the Company's leases were operating.
During the second quarter of 2020, the Company suspended lease payments for the months of April through June 2020 as a result of the COVID-19 pandemic. The Company was able to negotiate rent concessions, abatements and deferrals with landlords on a large portion of our operating leases. Financial Accounting Standards Board ("FASB") issued a clarification to accounting for lease concessions in response to the COVID-19 pandemic to reduce the operational challenges and complexity of lease accounting. The Company used the relief provisions provided by FASB and made an election to account for the lease concessions as if they were part of the original lease agreement. The recognition of rent concessions did not have a material impact on our consolidated financial statements.
Components of operating lease costs are included in the occupancy, closed restaurant costs, restaurant pre-opening, general and administrative expense and property and equipment, net:
 Thirteen Weeks EndedThirteen Weeks EndedThirty-Nine Weeks Ended
Lease cost March 29, 2020 March 31, 2019Lease costSeptember 27, 2020September 29, 2019September 27, 2020September 29, 2019
Operating lease cost (a)
 $6,088
 $6,012
Operating lease cost (a)
$6,500 $6,496 $19,523 $19,082 
Variable lease cost 123
 252
Variable lease cost143 315 360 865 
 $6,211
 $6,264
$6,643 $6,811 $19,883 $19,947 
(a) Includes short-term operating lease costs which are immaterial.
Supplemental cash flow disclosures for the thirteenthirty-nine weeks ended March 29,September 27, 2020 and March 31,September 29, 2019, respectively:
Thirty-Nine Weeks Ended
September 27, 2020September 29, 2019
Cash paid for operating lease liabilities15,472 19,177 
Operating lease assets obtained in exchange for operating lease liabilities (a)(1,351)176,511 
 Thirteen Weeks Ended
 March 29, 2020 March 31, 2019
Cash paid for operating lease liabilities6,616
 6,286
Operating lease assets obtained in exchange for operating lease liabilities (a)(923) 168,984
(a) The thirteenthirty-nine weeks ended March 29,September 27, 2020 includes a $6.6$7.0 million reduction to the operating lease assets and liabilities mainly as a result of shortening the remaining life of certain leases.leases during the first quarter of 2020. The thirteenthirty-nine weeks ended March 31,September 29, 2019 includes the transition adjustment for the adoption of Leases (Topic 842) of $170.3 million as well as a $1.3 million reduction to the operating lease assets and liabilities as a result of shortening the remaining life of certain leases.
The Company recorded $0.2 million and $0.6$0.7 million in deferred lease incentives during the thirteenthirty-nine weeks ended March 29,September 27, 2020 and March 31,September 29, 2019, respectively.
Supplemental balance sheet and other lease disclosures:

Operating leasesClassification March 29, 2020 December 29, 2019
Right-of-use assetsOperating lease assets $162,859
 $169,299
      
Current lease liabilitiesOperating lease liability $10,939
 $10,307
Non-current lease liabilitiesOperating lease liability, less current portion 210,120
 214,541
Total lease liabilities  $221,059
 $224,848
      
Weighted average remaining lease term (in years) 14.4
 15.0
Weighted average discount rate 7.9% 7.8%
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Chuy's Holdings, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
(Tabular dollar amounts in thousands, except share and per share data)

Supplemental balance sheet and other lease disclosures:
Operating leasesClassificationSeptember 27, 2020December 29, 2019
Right-of-use assetsOperating lease assets$158,659 $169,299 
Deferred rent payments (a)
Operating lease liability3,269 
Current lease liabilitiesOperating lease liability11,697 10,307 
14,966 10,307 
Non-current lease liabilitiesOperating lease liability, less current portion206,232 214,541 
221,198 224,848 
(a) A majority of the deferred rent payments is payable within the next 12 months
Weighted average remaining lease term (in years)14.015.0
Weighted average discount rate7.9 %7.8 %
Future minimum rent payments for our operating leases, excluding the deferred rent payments of $3.3 million, for each of the next five years as of March 29,September 27, 2020 are as follows:
Fiscal year ending:  Fiscal year ending:
Remainder of 2020 $20,766
Remainder of 2020$6,944 
2021 27,980
202128,521 
2022 27,164
202227,753 
2023 27,578
202327,625 
2024 26,411
202426,459 
Thereafter 240,383
Thereafter243,249 
Total minimum lease payments 370,282
Total minimum lease payments360,551 
Less: imputed interest 149,223
Less: imputed interest142,622 
Present value of lease liabilities $221,059
Present value of lease liabilities$217,929 
As of March 29,September 27, 2020, operating lease payments exclude approximately $7.1 million of legally binding minimum lease payments for leases signed but which we have not yet taken possession.
10. Income taxesTaxes
On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed into law. The CARES Act includes provisions that allow net operating losses in 2018, 2019 and 2020 to be carried back for up to five years and eliminates the 80% taxable income limitation on such net operating loss deductions if utilized before 2021. Additionally, the CARES Act includes an administrative correction of the depreciation recovery period for qualified improvement property ("QIP"), including certain restaurant leasehold improvement costs that will result in the acceleration of depreciation on these assets retroactive to 2018. As a result, we estimate we will receive federal tax refunds for a total of approximately $3.0 million for tax years 2020$1.6 million.

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Chuy's Holdings, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
(Tabular dollar amounts in thousands, except share and prior.per share data)
The following is a reconciliation of the expected federal income taxes at the statutory rates of 21% for the thirteen and thirty-nine weeks ended March 29,September 27, 2020 and March 31,September 29, 2019:
Thirteen Weeks EndedThirteen Weeks EndedThirty-Nine Weeks Ended
March 29, 2020
 March 31, 2019
September 27, 2020September 29, 2019September 27, 2020September 29, 2019
Expected income tax (benefit) expense(3,763) 700
Expected income tax (benefit) expense693 (678)(2,250)1,349 
State tax expense, net of federal benefit(305) 167
State tax expense, net of federal benefit216 (25)108 470 
FICA tip credit(1,253) (882)FICA tip credit(1,187)(729)(2,979)(3,205)
Deferred tax balance adjustment (a)(533) 
Deferred tax balance adjustment (a)620 (1,016)
Other342
 130
Other134 19 500 166 
Income tax (benefit) expense(5,512) 115
Income tax (benefit) expense476 (1,413)(5,637)(1,220)
(a) Reflects the tax benefit recorded in the quarter associated with a carryback of federal net operating losses due to the CARES Act administrative correction of the deprecation recovery period for QIP.
Deferred tax assets were $7.2$9.1 million and $2.6 million as of March 29,September 27, 2020 and March 31,September 29, 2019, respectively. This increase is primarily related to an increase in the general business tax credits.
Deferred tax assets are reduced by a valuation allowance if, based on the weight of the available evidence, it is more likely than not that some or all of the deferred taxes will not be realized. Both positive and negative evidence is considered in forming management’s judgment as to whether a valuation allowance is appropriate, and more weight is given to evidence that can be objectively verified. The tax benefits relating to any reversal of the valuation allowance on the deferred tax assets would be recognized as a reduction of future income tax expense. As of March 29,September 27, 2020 the Company believes that it will realize all of the deferred tax assets. Therefore, no valuation allowance has been recorded.
The Internal Revenue Service ("IRS") audited our tax return for the fiscal year 2016. In August 2020, the IRS issued a Notice of Proposed Adjustment to the Company asserting that the tenant allowances paid under our operating leases should be recorded as taxable income for years 2016 and prior. The Company disagrees with this position based on the underlying facts and circumstances as well as standard industry practice. The Company estimates if the IRS's position was upheld, the Company's tax liability could range between $0.5 million and $2.5 million. In accordance with the provisions of FASB Accounting Standards Codification Subtopic 740-10, Accounting for Uncertainty in Income Taxes, the Company believes that it is more likely than not that the Company's position will ultimately be sustained upon further examination, including the resolution of the IRS's appeal or litigation processes, if any. As a result, no additional accrual has been made as of September 27, 2020.
The tax years 2019, 2018 and 2017 remain open for IRS audit. The Company has received no notice of audit or any notifications from the IRS for any of the open tax years.
11. Impairment, and Closed Restaurant and Other Costs
The Company reviews long-lived assets, such as property and equipment and intangibles, subject to amortization, for impairment when events or circumstances indicate the carrying value of the assets may not be recoverable. In determining the recoverability of the asset value, an analysis is performed at the individual restaurant level and primarily includes an assessment of historical


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Chuy's Holdings, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
(Tabular dollar amounts in thousands, except share and per share data)

undiscounted cash flows and other relevant factors and circumstances. The Company evaluates future cash flow projections in conjunction with qualitative factors and future operating plans and regularly reviews any restaurants with a deficient level of cash flows for the previous 24 months to determine if impairment testing is necessary. Recoverability of assets to be held and used is measured by a comparison of the carrying value of the restaurant to its estimated future undiscounted cash flows. If the estimated undiscounted future cash flows are less than the carrying value, we determine if there is an impairment loss by comparing the carrying value of the restaurant to its estimated fair value. Based on this analysis, if the carrying value of the restaurant exceeds its estimated fair value, an impairment charge is recognized by the amount by which the carrying value exceeds the fair value.

We make assumptions to estimate future cash flows and asset fair values. The estimated fair value is generally determined using the depreciated replacement cost method, the income approach, or discounted cash flow projections. Estimated future cash flows are highly subjective assumptions based on the Company’s projections and understanding of our business, historical operating results, and trends in sales and restaurant level operating costs.
The Company’s impairment assessment process requires the use of estimates and assumptions regarding future cash flows and operating outcomes, which are based upon a significant degree of management judgment. The estimates used in the impairment analysis represent a Level 3 fair value measurement. The Company continues to assess the performance of restaurants and

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Chuy's Holdings, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
(Tabular dollar amounts in thousands, except share and per share data)
monitors the need for future impairment. Changes in the economic environment, real estate markets, capital spending, overall operating performance and underlying assumptions could impact these estimates and result in future impairment charges.
The Company recorded impairment, closed restaurant and other costs as follows:
 Thirteen Weeks EndedThirty-Nine Weeks Ended
 September 27, 2020September 29, 2019September 27, 2020September 29, 2019
Operating lease assets impairment$$$3,133 
Property and equipment impairment1,008 7,114 16,152 $7,114 
Total impairment charge1,008 7,114 19,285 7,114 
Closed restaurant costs1,591 186 3,869 774 
COVID-19 related charges845 845 
Impairment, closed restaurant and other costs$3,444 $7,300 $23,999 $7,888 
During the thirteen weeks ended September 27, 2020, the Company recorded a $1.0 million impairment charge as a result of the discontinuation of the Company's complimentary “Nacho Car” and a COVID-19 related charge of $0.8 million due to idle development costs as a result of delaying restaurant openings to 2021.
During the thirteen weeks ended September 27, 2020, the Company also incurred $1.6 million in closed restaurant costs, as follows:
 Thirteen Weeks Ended
 March 29, 2020 March 31, 2019
Right of use asset impairment$3,133
 
Property, plant, and equipment impairment15,144
 $
Non-cash impairment charge18,277
 $
    
Closed restaurant costs496
 372
Impairment and closed restaurant costs$18,773
 $372
Closed restaurant costs representswhich represent on-going expenses to maintain the restaurants closed during fiscal 2019restaurants such as rent expense, utility and insurance costs.
COVID-19 had a negative impact on our assumptions for future restaurant level cash flows as well as changes in the expected life of certain operating lease assets. These changes in assumptions resulted in elevated impairment charges for the three months ended March 29, 2020.
12. Goodwill and Indefinite Life Intangibles
Despite the significant excess fair value identified in our annual goodwill and indefinite life intangibles impairment assessments performed at the end of fiscal year 2019, we determined that the reduced cash flow projections and the significant decline in our market capitalization as a result of the COVID-19 pandemic indicates a potential impairment may exist. As a result, we performed an interim impairment assessment to determine if it was more likely than not that the goodwill and indefinite life intangible assets were impaired as of March 29, 2020.
Goodwill
The first step of the goodwill impairment test compares the implied estimated fair value of the reporting unit to the carrying amount, including goodwill. The Company considers all of its stores in total as one reporting unit. If the estimated fair value of the reporting unit is less than the carrying amount, then it is more likely than not that a goodwill impairment exits and a second step must be completed in order to determine the amount of the goodwill impairment. In the second step, the implied fair value of the goodwill is determined by allocating fair value to all of its assets and liabilities, other than goodwill, in a manner similar to a purchase price allocation. If the resulting implied fair value of the goodwill that results from the application of this second step is less than the carrying amount of the goodwill, an impairment charge is recorded for the difference. We determined that goodwill is not impaired as of March 29, 2020.



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Chuy's Holdings, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
(Tabular dollar amounts in thousands, except share and per share data)

Indefinite Life Intangibles
An intangible asset is determined to have an indefinite useful life when there are no legal, regulatory, contractual, competitive, economic or other factors that may limit the period over which the asset is expected to contribute directly or indirectly to the future cash flows of the Company. Intangible assets acquired in a business combination are determined to have an indefinite useful life and are not amortized.
As part of our impairment assessment we calculate the estimated fair value of the indefinite-lived intangible asset and compare it to the carrying value. Fair value is estimated primarily using future discounted cash flow projections in conjunction with qualitative factors and future operating plans. When the carrying value exceeds fair value, an impairment charge is recorded for the amount of the difference. The Company also evaluated intangible assets that are not being amortized to determine whether events and circumstances continue to support an indefinite useful life. If an intangible asset that is not being amortized is determined to have a finite useful life, the asset will be amortized prospectively over the estimated remaining useful life and accounted for in the same manner as intangible assets subject to amortization. We determined that indefinite life intangibles are not impaired as of March 29, 2020.
The Company's impairment assessment process requires the use of estimates and assumptions including estimates and assumptions regarding the short and long-term impacts of COVID-19. Changes in the economic environment and the future effect that COVID-19 may have on our business could negatively impact our estimates and assumptions and result in future impairment charges.
13. Subsequent events
Subsequent to the first quarter of fiscal 2020, we amended the revolving credit facility to provide additional financial flexibility during the COVID-19 pandemic. The amendment extends the maturity date to April 30, 2022 and relaxes compliance with financial covenants through the new maturity date. This amendment requires the Company to be in compliance with a fixed charge coverage ratio, a leverage ratio and growth capital expenditure limits during both fiscal 2020 and 2021. Additionally, a $5.0 million monthly liquidity covenant was added as well as certain additional reporting requirements. The interest rate increased to LIBOR plus 2.75% with a LIBOR floor of 1.00%. This rate is effective through the end of the second quarter of fiscal 2020. After the second quarter of fiscal year 2020, the interest rate will be based on LIBOR plus percentages ranging from 2.25% and 2.75% depending on the Company's leverage ratio thereafter.


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Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations
Unless otherwise specified, or the context otherwise requires, the references in this report to "Chuy's," “our Company,” “the Company,” “us,” “we” and “our” refer to Chuy’s Holdings, Inc. together with its subsidiaries.
The following discussion summarizes the significant factors affecting the consolidated operating results, financial condition, liquidity and cash flows of our Company as of and for the periods presented below. The following discussion and analysis should be read in conjunction with our Annual Report on Form 10-K for the year ended December 29, 2019 (our "Annual Report") and the unaudited condensed consolidated financial statements and the accompanying notes thereto included herein.
COVID-19 Pandemic
During March 2020, the World Health Organization declared the COVID-19 outbreak to be a global pandemic and the United States declared a National Public Health Emergency. The COVID-19 pandemic has significantly impacted health and economic conditions throughout the United States. Federal, state and local governments took a variety of actions to contain the spread of COVID-19. Many jurisdictions where our restaurants are located required mandatory closures or imposed capacity limitations and other restrictions affecting our operations. During the third quarter of 2020, the Company saw sequential improvement in monthly comparable restaurant sales as state and local restrictions, while still in effect, were eased in many states, including Texas. As of September 27, 2020, the Company had reopened dining rooms at varying degrees of operating capacity in 92 of its 101 restaurants. Nine restaurants remain temporarily closed.
Selected monthly comparable restaurant sales and average weekly sales per restaurant for the third quarter and fourth quarter to-date are as follows:
Month Ending
7/26/208/23/209/27/2010/25/20
Comparable Restaurant Sales(26.3)%(20.0)%(13.8)%(14.2)%
Average Weekly Sales per Restaurant$66,065$71,031$68,579$68,464
Number of Open Restaurants92929292
July comparable restaurant sales were negatively impacted by approximately 170 basis points as a result of these developments,July 4th falling on the weekend as compared to a weekday last year.Off-premise sales remained strong at a rate more than double pre-COVID-19 levels comprising approximately 30% to 35% of all revenue during the third and fourth quarter-date. As of September 27, 2020, the Company is experiencinghad a significant negative impact on its revenues, results of operationsstrong financial position with $77.8 million in cash and cash flowsequivalents, no debt and $25.0 million of availability under its revolving credit facility. The Company believes it maintains ample financial flexibility with which could negatively impactto navigate the current environment.
During the thirty-nine weeks ended September 27, 2020, the Company had taken various steps to reduce non-essential spend, postpone restaurant development and rightsize operations in light of reduced sales volume to improve our store level profitability and increase our cash flows. The Company also enhanced its abilityliquidity position by repaying the $25.0 million outstanding under its revolving credit facility with a portion of the net proceeds from the sale of its common stock in its "At-The-Market" ("ATM") offering. As of September 27, 2020, the Company had $77.8 million in cash and cash equivalents, no debt and $25.0 million of availability under its revolving credit facility. Management believes the Company's strong financial position, combined with the measures taken during the pandemic, will allow the Company to meet its financial obligations over the next twelve months.
In response to the business disruption caused by the COVID-19 pandemic, the Company has taken the following actions, which management expects will enable it to meet its obligations over the next twelve months:
Transitioned its restaurants to an off-premise operating model starting the last week of March 2020 and temporarily closed nine locations. The Company started to reopen some of its dining rooms during the week ending May 10, 2020 and as of May 21, 2020, the Company had reopened the dining rooms at approximately 70 restaurants at varying levels of limited capacity as allowed by federal, state and local governments. Selected weekly comparable restaurant sales and average sales per restaurant sales data for the first and second quarter to-date are as follows:
 -------1Q 2020 ------------------------------------- 2Q 2020 -------------------------------
 Week EndingWeek Ending
 3/153/223/294/54/124/194/265/35/105/17
Comparable Restaurant Sales(16.8)%(67.0)%(63.5)%(60.8)%(57.4)%(50.2)%(52.7)%(61.0)%(39.4)%(45.4)%
Average Sales per Restaurant$73,200$27,900$32,656$33,873$36,440$42,660$42,300$40,200$57,500$48,500
Number of Restaurants1011019292929292929292
Canceled or delayed all non-essential planned capital expenditures for the remainder of 2020, which is expected to lower annual capital expenditures by approximately $15.0 million to $22.0 million.
Furloughed approximately 80% of hourly employees and approximately 40% of store management personnel, while enacting temporary salary reductions for remaining managers. In addition, the Company also furloughed certain corporate and administrative staff, temporarily reduced the pay of all remaining corporate and administrative staff by 25% to 50%, temporarily reduced senior management salaries by 50% to 75%, and temporarily suspended all board fees.
Suspended the lease payments for months of April through June 2020. Currently in negotiations of rent concessions, abatements and deferrals with its landlords to reduce these lease payments. While some landlords have agreed to certain concessions, there can be no assurance that the Company will be successful in obtaining all of the relief it is seeking.
Temporarily suspended any further activity under its share repurchase program.
Further enhanced its liquidity position through several actions such as drawing down $25.0 million under its Revolving Credit Facility among other measures. See "Liquidity" for more information.
As of May 17, 2020, the Company had approximately $27.0 million in cash and, assuming current sales levels and spending, a current cash burn rate of approximately $200,000 per week.
We cannot predict how soon we will be able to reopen all of our restaurants at full capacity, and our ability to reopen and stay open will depend in part on the actions of a number of governmental bodies over which we have no control. Moreover, once restrictions are lifted, it is unclear how quickly customers will return to our restaurants, which may be a function of continued concerns over safety and/or depressed consumer sentiment due to adverse economic conditions, including job losses.


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Overview
We are a growing full-service restaurant concept offering a distinct menu of authentic, freshly-prepared Mexican and Tex-Mex inspired food. We were founded in Austin, Texas in 1982 and, as of March 29,September 27, 2020, we operated 92 restaurants across 19 states and had nine temporarily closed restaurants due to COVID-19.
We are committed to providing value to our customers through offering generous portions of made-from-scratch, flavorful Mexican and Tex-Mex inspired dishes. We also offer a full-service bar in all of our restaurants providing our customers a wide variety of beverage offerings. We believe the Chuy’s culture is one of our most valuable assets, and we are committed to preserving and continually investing in our culture and our customers’ restaurant experience.
Our restaurants have a common décor, but we believe each location is unique in format, offering an “unchained” look and feel, as expressed by our motto “If you’ve seen one Chuy’s, you’ve seen one Chuy’s!” We believe our restaurants have an upbeat, funky, eclectic, somewhat irreverent atmosphere while still maintaining a family-friendly environment.
During the 13-week period ended March 29, 2020, we opened one new restaurant. We have an established presence in Texas, the Southeast and the Midwest, with restaurants in multiple large markets in these regions. In response to COVID-19, all future restaurant development for fiscal year 2020 has been delayed and openings have been put on hold. There were three restaurants at various stages of competitioncompletion at the end of the firstthird quarter of 2020, thatand we intend to complete and open these restaurants in fiscal year 2021.
Performance Indicators
We use the following performance indicators in evaluating our performance:
Number of Restaurant Openings. Number of restaurant openings reflects the number of restaurants opened during a particular fiscal period. For restaurant openings we incur pre-opening costs, which are defined below, before the restaurant opens. Typically new restaurants open with an initial start-up period of higher than normalized sales volumes, which decrease to a steady level approximately six to twelve months after opening. However, operating costs during this initial six to twelve month period are also higher than normal, resulting in restaurant operating margins that are generally lower during the start-up period of operation and increase to a steady level approximately nine to twelve months after opening.
Comparable Restaurant Sales. We consider a restaurant to be comparable in the first full quarter following the 18th month of operations. Changes in comparable restaurant sales reflect changes in sales for the comparable group of restaurants over a specified period of time. Changes in comparable sales reflect changes in customer count trends as well as changes in average check. Our comparable restaurant base consisted of 8385 restaurants at March 29,September 27, 2020.
Average Check. Average check is calculated by dividing revenue by total entrées sold for a given time period. Average check reflects menu price increases as well as changes in menu mix. Our management team uses this indicator to analyze trends in customers’ preferences, effectiveness of menu changes and price increases and per customer expenditures.
Average Weekly Customers. Average weekly customers is measured by the number of entrées sold per week. Our management team uses this metric to measure changes in customer traffic.
Average Unit Volume. Average unit volume consists of the average sales of our comparable restaurants over a certain period of time. This measure is calculated by dividing total comparable restaurant sales within a period of time by the total number of comparable restaurants within the relevant period. This indicator assists management in measuring changes in customer traffic, pricing and development of our brand.
Average Weekly Sales per Restaurant. Average Weekly Sales per Restaurant is calculated by dividing total weekly sales by number of operating restaurants in a given week.
Operating Margin. Operating margin represents income from operations as a percentage of our revenue. By monitoring and controlling our operating margins, we can gauge the overall profitability of our Company.


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The following table presents operating data for the periods indicated:
 Thirteen Weeks EndedThirty-Nine Weeks Ended
 September 27, 2020September 29, 2019September 27, 2020September 29, 2019
Total open restaurants (at end of period)92 103 92 103 
Total comparable restaurants (at end of period)85 90 85 90 
Average unit volumes (in thousands)$901 $1,070 $2,614 $3,292 
Change in comparable restaurant sales(1)
(19.8)%2.6 %(23.3)%2.5 %
Average check$17.53 $15.78 $16.90 $15.75 
 Thirteen Weeks Ended
 March 29, 2020 March 31, 2019
Total restaurants (at end of period)92
 99
Total comparable restaurants (at end of period)83
 83
Average unit volumes (in thousands)$993
 $1,067
Change in comparable restaurant sales(1)
(9.7)% 3.2%
Average check$16.28
 $15.53
(1) We consider a restaurant to be comparable in the first full quarter following the 18th month of operations. Change in comparable restaurant sales reflects changes in sales for the comparable group of restaurants over a specified period of time.
Our Fiscal Year
We operate on a 52- or 53-week fiscal year that ends on the last Sunday of the calendar year. Each quarterly period has 13 weeks, except for a 53-week year when the fourth quarter has 14 weeks. Our 2020 and 2019 fiscal years each consists of 52 weeks.
Key Financial Definitions
Revenue. Revenue primarily consists of food and beverage sales and also includes sales of our t-shirts, sweatshirts and hats. Revenue is presented net of discounts associated with each sale. Revenue in a given period is directly influenced by the number of operating weeks in such period, the number of restaurants we operate and comparable restaurant sales growth.
Cost of Sales. Cost of sales consists of food, beverage and merchandise related costs. The components of cost of sales are variable in nature, change with sales volume and are subject to increases or decreases based on fluctuations in commodity costs.
Labor Costs. Labor costs include restaurant management salaries, front- and back-of-house hourly wages and restaurant-level manager bonus expense and payroll taxes.
Operating Costs. Operating costs consist primarily of restaurant-related operating expenses, such as supplies, utilities, repairs and maintenance, travel cost, insurance, employee benefits, credit card fees, recruiting, delivery service and security. These costs generally increase with sales volume but may increase or decrease as a percentage of revenue.
Occupancy Costs. Occupancy costs include rent charges, both fixed and variable, as well as common area maintenance costs, property taxes, the amortization of tenant allowances and the adjustment to straight-line rent. These costs are generally fixed but a portion may vary with an increase in sales when the lease contains percentage rent.
General and Administrative Expenses. General and administrative expenses include costs associated with corporate and administrative functions that support our operations, including senior and supervisory management and staff compensation (including stock-based compensation) and benefits, travel, legal and professional fees, information systems, corporate office rent and other related corporate costs.
Marketing. Marketing costs include costs associated with our local restaurant marketing programs, community service and sponsorship activities, our menus and other promotional activities.
Restaurant Pre-opening Costs. Restaurant pre-opening costs consist of costs incurred before opening a restaurant, including manager salaries, relocation costs, supplies, recruiting expenses, initial new market public relations costs, pre-opening activities, employee payroll and related training costs for new employees. Restaurant pre-opening costs also include rent recorded during the period between date of possession and the restaurant opening date.
Impairment, and closed restaurant and other costs. Impairment costs include impairment of long-lived assets associated with restaurants where the carrying amount of the asset is not recoverable and exceeds the fair value of the asset. Closed restaurant costs consist of any costs associated with the closure of a restaurant such as lease termination costs, severance benefits, other miscellaneous closing costs as well as costs to maintain these closed restaurants through the lease termination date such as occupancy costs, including rent payments less sublease income, if any, and insurance and utility costs. Other costs consist of COVID-19 related charges due to idle development costs as a result of delaying restaurant openings to 2021.
Depreciation and Amortization. Depreciation and amortization principally include depreciation on fixed assets, including equipment and leasehold improvements, and amortization of certain intangible assets for our restaurants.
Interest Expense. Interest expense consists primarily of interest on our outstanding indebtedness and the amortization of our debt issuance costs reduced by capitalized interest.


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Results of Operations
Potential Fluctuations in Quarterly Results and Seasonality
OurIn addition to the impacts of COVID-19 discussed above, our quarterly operating results may fluctuate significantly as a result of a variety of factors, including the timing of new restaurant openings and related expenses, profitability of new restaurants, weather, increases or decreases in comparable restaurant sales, general economic conditions, consumer confidence in the economy, changes in consumer preferences, competitive factors, changes in food costs, changes in labor costs and changes in gas prices. In the past, we have experienced significant variability in restaurant pre-opening costs from quarter to quarter primarily due to the timing of restaurant openings. We typically incur restaurant pre-opening costs in the five months preceding a new restaurant opening. In addition, our experience to date has been that labor and direct operating costs associated with a newly opened restaurant during the first several months of operation are often materially greater than what will be expected after that time, both in aggregate dollars and as a percentage of restaurant sales. Accordingly, the number and timing of new restaurant openings in any quarter has had, and is expected to continue to have, a significant impact on quarterly restaurant pre-opening costs, labor and direct operating costs.
Our business is also subject to fluctuations due to seasonality and adverse weather. The spring and summer months have traditionally had higher sales volume than other periods of the year. Timing of holidays, severe winter weather, hurricanes, thunderstorms and similar conditions may impact restaurant unit volumes in some of the markets where we operate and may
have a greater impact should they occur during our higher volume months. As a result of these and other factors, our financial results for any given quarter may not be indicative of the results that may be achieved for a full fiscal year.
Thirteen Weeks EndedMarch 29, September 27, 2020 Compared to Thirteen Weeks Ended March 31,September 29, 2019
The following table presents, for the periods indicated, the condensed consolidated statement of operations (in thousands):
 Thirteen Weeks Ended
 September 27, 2020% of
Revenue
September 29, 2019% of
Revenue
$ Change%
Change
Revenue$82,032 100.0 %$109,082 100.0 %$(27,050)(24.8)%
Costs and expenses:
Cost of sales19,819 24.2 28,673 26.3 (8,854)(30.9)
Labor23,891 29.1 38,770 35.5 (14,879)(38.4)
Operating12,659 15.4 16,127 14.8 (3,468)(21.5)
Occupancy7,480 9.1 8,206 7.5 (726)(8.8)
General and administrative5,701 6.9 5,975 5.5 (274)(4.6)
Marketing514 0.6 1,492 1.4 (978)(65.5)
Restaurant pre-opening345 0.4 457 0.4 (112)(24.5)
Impairment, closed restaurant and other costs3,444 4.2 7,300 6.7 (3,856)(52.8)
Depreciation and amortization4,844 6.0 5,284 4.8 (440)(8.3)
Total costs and expenses78,697 95.9 112,284 102.9 (33,587)(29.9)
Income (loss) from operations3,335 4.1 (3,202)(2.9)6,537 *
Interest expense, net33 0.1 28 0.1 17.9 
Income (loss) before income taxes3,302 4.0 (3,230)(3.0)6,532 *
Income tax expense (benefit)476 0.6 (1,413)(1.3)1,889 *
Net income (loss)$2,826 3.4 %$(1,817)(1.7)%$4,643 *
* Not meaningful
 Thirteen Weeks Ended
 March 29, 2020 
% of
Revenue
 March 31, 2019 
% of
Revenue
 $ Change 
%
Change
Revenue$94,500
 100.0 % $102,111
 100.0% $(7,611) (7.5)%
Costs and expenses:           
Cost of sales24,562
 26.0
 25,715
 25.2
 (1,153) (4.5)
Labor33,580
 35.5
 36,699
 35.9
 (3,119) (8.5)
Operating14,585
 15.4
 14,559
 14.3
 26
 0.2
Occupancy7,986
 8.5
 7,982
 7.8
 4
 0.1
General and administrative5,720
 6.1
 6,167
 6.0
 (447) (7.2)
Marketing1,009
 1.1
 1,451
 1.4
 (442) (30.5)
Restaurant pre-opening860
 0.9
 718
 0.7
 142
 19.8
Impairment and closed restaurant costs18,773
 19.9
 372
 0.4
 18,401
 *
Depreciation and amortization5,289
 5.5
 5,077
 5.0
 212
 4.2
Total costs and expenses112,364
 118.9
 98,740
 96.7
 13,624
 13.8
(Loss) income from operations(17,864) (18.9) 3,371
 3.3
 (21,235) *
Interest expense, net52
 0.1
 39
 
 13
 33.3
(Loss) income before income taxes(17,916) (19.0) 3,332
 3.3
 (21,248) *
Income tax (benefit) expense(5,512) (5.9) 115
 0.1
 (5,627) *
Net (loss) income$(12,404) (13.1)% $3,217
 3.2% $(15,621) *
            
* Not meaningful           
Revenue. Revenue decreased $7.6$27.1 million, or 7.5%24.8%, to $94.5$82.0 million for the thirteen weeks ended March 29,September 27, 2020 from $102.1$109.1 million for the comparable period in 2019. The decrease was primarily drivenSales in the third quarter of 2020 were negatively impacted by $12.9 milliona decline in revenuescustomer traffic as a result of COVID-19, including athe loss of nine117 operating weeks due to the temporary closureclosures of nine restaurants, and aas well as the loss of 6352 operating weeks due to stores closed during fiscal year 2019. These decreasesFor the third quarter of 2020, off-premise sales were partially offset by $5.5 millionapproximately 33% of incrementaltotal revenue from an additional 84 operating weeks provided by new restaurants as well as a 3.3% increasecompared to approximately 12% in comparable restaurant revenue prior to COVID-19.the same period last year.
Comparable restaurant sales decreased 9.7%19.8% for the thirteen weeks ended March 29,September 27, 2020 compared to the thirteen weeks ended March 31,September 29, 2019. These results includeThe decrease in comparable restaurant sales growth of 3.3% for the first ten weeks of the 13-week quarter, prior to the impact of COVID-19 on the Company’s business aswas primarily driven by a result of a 4.0% increase in average check, partially offset by a


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0.7%27.5% decrease in average weekly customers.customers, partially offset by a 7.7% increase in average check. The weekly comparable restaurant sales cadence forby month during the last three weeks of thethird quarter consisted of the following decreases: 16.8%decreased: 26.3%, 67.0%20.0% and 63.5%13.8%.
Cost of Sales. Cost of sales as a percentage of revenue increaseddecreased to 26.0%24.2% during the thirteen weeks ended March 29,September 27, 2020 from 25.2%26.3% during the same period in 2019, primarily as a result of increases inswitching to a limited menu and eliminating the costs of produce of approximately 80 basis pointscomplimentary buffet style chips and dairy of approximately 50 basis points,salsa, or “Nacho Car”, which was partially offset by decreasesan increase of approximately 70 basis points in the costscost of chicken of approximately 30 basis points,beef and bar items of approximately 10 basis points.points in the cost of dairy and cheese.
Labor Costs. Labor costs as a percentage of revenue decreased to 35.5%29.1% during the thirteen weeks ended March 29,September 27, 2020 from 35.9%35.5% during the comparable period in 2019 primarily due to leverage on higher average check, increased labor efficiency due to continued management efforts on implementing best practicesas a result of a reduction in connection with new stores openings, lowerhourly employees and store management bonuses and training expense forpersonnel as the Company transitioned to a new managers in response to COVID-19, partially offset byoperating model during the previous quarter as well as an hourly labor rate inflation indeflation at its comparable storesrestaurants of approximately 4.0%1.8%. During the third quarter of 2020, the Company was fully staffed at its current operating capacity.
Operating Costs.Costs. Operating costs as a percentage of revenue increased to 15.4% during the thirteen weeks ended March 29,September 27, 2020 from 14.3%14.8% during the comparable period in 2019, primarily due to an increasedriven by increases in delivery service charges and to-go suppliesof approximately 100 basis points as a result of anthe growth in the Company's off-premise business, partially offset by lower credit card fees of approximately 32.0% increase in our off-premise sales, higher repair20 basis points and lower insurance costs as well as overall sales deleverage of fixed restaurant operating expenses.approximately 10 basis points.
Occupancy Costs. Occupancy costs as a percentage of revenue increased to 8.5%9.1% during the thirteen weeks ended March 29,September 27, 2020 from 7.8%7.5% during the comparable period in 2019, primarily as a result of sales deleverage ofon fixed occupancy expenses due to COVID-19 and higher property taxes.
General and Administrative Expenses.Expenses. General and administrative expenses decreased to $5.7 million for the thirteen weeks ended March 29,September 27, 2020 as compared to $6.2$6.0 million for the same period in 2019. The decline was primarily driven by reduced travel, recruiting, and various other expenses as a result of cost saving measures in response to COVID-19.
RestaurantPre-opening Costs. Restaurant pre-opening costs decreased to $0.3 million for the thirteen weeks ended September 27, 2020 as compared to $0.5 million for the same period in 2019 due to a postponement of all new store openings for the remainder of fiscal 2020.
Marketing. Marketing expense as a percentage of revenue decreased to 0.6% during the thirteen weeks ended September 27, 2020 from 1.4% during the comparable period in 2019, primarily due to the suspension of the Company’s national-level marketing initiatives in response to COVID-19 while relying on more cost effective organic local store digital marketing efforts. The Company expects to increase its advertising campaign during the fourth quarter of 2020.
Impairment, closed restaurant and other costs. Impairment, closed restaurant and other costs decreased to $3.4 million during the thirteen weeks ended September 27, 2020 from $7.3 million during the comparable period in 2019 primarily due to a $7.1 million loss related to the impairment of five restaurants during the comparable period in 2019, partially offset by a $1.0 million impairment charge recorded during the third quarter of 2020 as a result of the discontinuation of the Company's complimentary “Nacho Car,” a COVID-19 related charge of $0.8 million due to idle development costs as a result of delaying restaurant openings to 2021 and $1.4 million increase in closed restaurant costs.
Depreciation and Amortization. Depreciation and amortization costs decreased $0.4 million to $4.8 million during the thirteen weeks ended September 27, 2020 from $5.3 million recorded during the comparable period in 2019 primarily due to a decrease in depreciation related to closed stores.
Income tax expense (benefit). We recorded an income tax expense of $0.5 million in the third quarter of 2020 compared to a benefit of $1.4 million during the comparable period in 2019. The increase in tax expense in the quarter was in part related to a reduction in the tax benefit from the revaluation of deferred tax assets, associated with the CARES Act, during the third quarter of 2020.
In August 2020, the IRS issued a Notice of Proposed Adjustment to the Company asserting that the tenant allowances paid under our operating leases should be recorded as taxable income for years 2016 and prior. The Company disagrees with the IRS's position and believes that it is more likely than not that the Company's position will ultimately be sustained upon further examination, including the resolution of the IRS's appeal or litigation processes, if any. As a result, no further tax accrual was made. The Company estimates if the IRS's position was upheld, the Company's tax liability could range between $0.5 million and $2.5 million.
Net Income. As a result of the foregoing, net income was $2.8 million during the thirteen weeks ended September 27, 2020 as compared to a loss of $1.8 million during the comparable period in 2019.
Thirty-Nine Weeks Ended September 27, 2020 Compared to Thirty-Nine Weeks Ended September 29, 2019
The following table presents, for the periods indicated, the condensed consolidated statement of operations (in thousands):
 Thirty-Nine Weeks Ended
 September 27, 2020% of
Revenue
September 29, 2019% of
Revenue
Change%
Change
Revenue$242,244 100.0 %$324,325 100.0 %$(82,081)(25.3)%
Costs and expenses:
Cost of sales59,791 24.7 83,562 25.8 (23,771)(28.4)
Labor74,808 30.9 114,323 35.2 (39,515)(34.6)
Operating37,964 15.7 46,583 14.4 (8,619)(18.5)
Occupancy22,563 9.3 24,340 7.5 (1,777)(7.3)
General and administrative16,195 6.7 18,010 5.6 (1,815)(10.1)
Marketing1,888 0.8 4,487 1.4 (2,599)(57.9)
Restaurant pre-opening1,483 0.6 2,357 0.7 (874)(37.1)
Legal settlement— — 775 0.2 (775)*
Impairment, closed restaurant and other costs23,999 9.9 7,888 2.4 16,111 *
Gain on insurance settlements(1,000)(0.4)— — (1,000)*
Depreciation and amortization15,028 6.1 15,485 4.8 (457)(3.0)
Total costs and expenses252,719 104.3 317,810 98.0 (65,091)(20.5)
(Loss) income from operations(10,475)(4.3)6,515 2.0 (16,990)*
Interest expense, net238 0.1 90 — 148 *
(Loss) income before income taxes(10,713)(4.4)6,425 2.0 (17,138)*
Income tax benefit(5,637)(2.3)(1,220)(0.4)(4,417)*
Net (loss) income$(5,076)(2.1)%$7,645 2.4 %$(12,721)*
* Not meaningful
Revenue. Revenue decreased $82.1 million, or 25.3%, to $242.2 million for the thirty-nine weeks ended September 27, 2020 from $324.3 million for the comparable period in 2019. The decrease in revenue was primarily attributed to a decline in customer traffic as a result of COVID-19, including the loss of 243 operating weeks due to temporary closures of nine restaurants, as well as the loss of 167 operating weeks due to stores closed during fiscal year 2019. The Company operated on an off-premise only operating model beginning in late March 2020 through May 2020. Since then, the Company reopened and operated dining rooms at varying degrees of operating capacity in 92 of its 101 restaurants. The decrease in revenue was partially offset by $10.2 million of incremental revenue from an additional 169 operating weeks provided by new restaurants.
Comparable restaurant sales decreased 23.3% for the thirty-nine weeks ended September 27, 2020 compared to the thirty-nine weeks ended September 29, 2019. The decrease in comparable restaurant sales was primarily driven by a 28.3% decrease in average weekly customers, partially offset by a 5.0% increase in average check. During the third quarter of 2020, the Company saw sequential improvement in monthly comparable restaurant sales as state and local restrictions, while still in effect, were eased in many states, including Texas.
Cost of Sales. Cost of sales as a percentage of revenue decreased to 24.7% during the thirty-nine weeks ended September 27, 2020 from 25.8% during the same period in 2019, primarily as a result of switching to a limited menu and eliminating the complimentary buffet style chips and salsa, or “Nacho Car,” which was partially offset by an increase of approximately 60 basis points in the cost of beef and approximately 20 basis points in the cost of dairy and cheese.
Labor Costs. Labor costs as a percentage of revenue decreased to 30.9% during the thirty-nine weeks ended September 27, 2020 from 35.2% during the comparable period in 2019. This decrease is primarily due to furloughing a substantial number of hourly employees as well as store management personnel to right-size our operations as the Company transitioned to an off-premise only operating model at the end of the first quarter of 2020. During the third quarter of 2020, the Company was fully staffed at its current operating capacity. Hourly labor rate inflation in comparable stores was approximately 1.7%.
Operating Costs. Operating costs as a percentage of revenue increased to 15.7% during the thirty-nine weeks ended September 27, 2020 from 14.4% during the comparable period in 2019, primarily driven by increases in delivery service charges of approximately 90 basis points and to-go supplies of approximately 60 basis points as a result of the growth in the Company's off-premise business.
Occupancy Costs. Occupancy costs as a percentage of revenue increased to 9.3% during the thirty-nine weeks ended September 27, 2020 from 7.5% during the comparable period in 2019, primarily as a result of sales deleverage on fixed occupancy expenses and higher property taxes.
General and Administrative Expenses. General and administrative expenses decreased to $16.2 million for the thirty-nine weeks ended September 27, 2020 as compared to $18.0 million for the same period in 2019, primarily driven by a $0.3$1.7 million decrease in performance-based bonuses, staff reductions and a $0.3 million credit card settlement received intemporary pay reductions during the quarter, partially offset by a $0.2 million increase in management salaries and non-cash stock compensation.thirty-nine weeks ended September 27, 2020 as part of our response to COVID-19.
Restaurant Pre-opening Costs. Restaurant pre-opening costs increaseddecreased to $0.9$1.5 million for the thirteenthirty-nine weeks ended March 29,September 27, 2020 as compared to $0.7$2.4 million for the same period in 2019. This increase was2019 primarily driven bydue to a postponement of all new store openings for the timingremainder of new restaurant openings in the first quarter of 2020 as compared to the same period in 2019. Due to COVID-19, the Company delayed all remaining 2020 restaurant openings.fiscal 2020.
Marketing. Marketing expense as a percentage of revenue decreased to 1.1%0.8% during the thirteenthirty-nine weeks ended March 29,September 27, 2020 from 1.4% during the comparable period in 2019, primarily due to the suspension of the Company’s national-level marketing initiatives in response to COVID-19 while relying on more cost effective local store digital marketing efforts. The Company expects to increase its advertising campaign during the fourth quarter of 2020.
Impairment, and closed restaurant and other costs. Impairment, and closed restaurant and other costs increased to $18.8$24.0 million during the thirteenthirty-nine weeks ended March 29,September 27, 2020 from $0.4$7.9 million during the comparable period in 2019. As a result of the negative impact ofthat COVID-19 had on its business, including the temporary closure of nine restaurants, during the first quarter of 2020, the Company performed an impairment analysis of its restaurants and identified certain restaurants as impaired based on revised assumptions of future restaurant level cash flows as well as changes in the expected life of certain operating lease assets. These changes in assumptions resulted in aand recorded an $18.3 million impairment charge. Additionally, during the third quarter of 2020, the Company recorded an additional $1.0 million impairment charge forrelated to the three months ended March 29, 2020.discontinuation of its complimentary "Nacho Car" and a COVID-19 related charge of $0.8 million due to idle development costs as a result of delaying restaurant openings to 2021. The Company also recorded $0.5$3.9 million and $0.4$0.8 million of closed restaurant costs, which includesinclude rent expense, utility and insurance costs during the firstthirty-nine weeks ended September 27, 2020 and September 29, 2019, respectively.
Gain on insurance settlements. During the second quarter of 2020, and 2019, respectively.the Company received a one-time insurance settlement in the amount of $1.0 million under its trade name restoration insurance policy.
Depreciation and Amortization. Depreciation and amortization costs increased $0.2 million to $5.3 million during the thirteen weeks ended March 29, 2020 from $5.1 million during the comparable period in 2019, primarily due to an increase in equipment and leasehold improvement costs associated with new restaurants.
Income Tax Benefittax benefit. We recorded an income tax benefit of $5.5$5.6 million during the thirteenthirty-nine weeks ended March 29,September 27, 2020 compared to an expense of $0.1$1.2 million during the comparable period in 2019. The tax benefit was primarily due to a projected annual taxablenet loss as compared to taxablenet income in the same period last year as well as the tax benefit relating to the revaluation of deferred tax assets due to the administrative correction of the depreciation recovery period for qualified improvement property and the reinstatement of net operating loss carrybackcarrybacks as a result of the CARES Act. The Company believes that it will realize all of theits deferred tax assets and, therefore, no valuation allowance is required at this time.
In August 2020, the IRS issued a Notice of Proposed Adjustment to the Company asserting that the tenant allowances paid under our operating leases should be recorded as taxable income for years 2016 and prior. The Company disagrees with the IRS's position and believes that it is more likely than not that the Company's position will ultimately be sustained upon further examination, including the resolution of the IRS's appeal or litigation processes, if any. As a result, no further tax accrual was made. The Company estimates if the IRS's position was upheld, the Company's tax liability could range between $0.5 million and $2.5 million.
Net Loss.(loss) income. As a result of the foregoing, net loss was $12.4$5.1 million during the thirteenthirty-nine weeks ended March 29,September 27, 2020 as compared to net income of $3.2$7.6 million during the comparable period in 2019.
Liquidity
Our principal sources of cash are net cash provided by operating activities, which includes tenant improvement allowances from our landlords, and borrowings, if any, under our $25.0 million Revolving Credit Facility. Our need for capital resources is driven by our restaurant expansion plans, ongoing maintenance of our existing restaurants, investment in our corporate and information technology infrastructure, obligations under our operating leases and interest payments on our debt, if any.


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Consistent with many other restaurant and retail store operations, we typically use operating lease arrangements for our restaurants. From time to time, we may also purchase the underlying land lot for development. We believe that our operating lease arrangements provide appropriate leverage of our capital structure in a financially efficient manner. As of March 29, 2020, we had a cash and cash equivalents balance of $28.0 million.
Our main requirements for liquidity are to support our working capital, restaurant expansion plans, ongoing maintenance of our existing restaurants, investment in infrastructure, obligations under our operating leases, interest payments on our debt, if any, and to repurchase shares of our common stock subject to market conditions. Repurchases of the Company's outstanding common stock will be made in accordance with applicable laws and may be made at management's discretion from time to time in the open market, through privately negotiated transactions or otherwise, including pursuant to Rule 10b5-1 trading plans. There is no guarantee as to the exact number of shares to be repurchased by the Company. The timing and extent of repurchases will depend upon several factors, including market and business conditions, regulatory requirements and other corporate considerations, and repurchases may be discontinued at any time. During the first quarter of 2020, and prior to the impact of that
COVID-19 had on the Company's business operations, the Company repurchased approximately 90,000 shares of its common stock for a total of $1.4 million. As of the end of the firstthird quarter of 2020, the Company had $28.6 million remaining under its $30.0 million repurchase program that expires on December 31, 2022. As a result of COVID-19, the Company has temporarily suspended further share repurchase activity for the remainder of the year.
During the second quarter of 2020, the Company issued 3,041,256 shares of its common stock and received net proceeds of $48.2 million after deducting sales agent commissions and offering expenses payable by the Company. A portion of the net proceeds was used to repay the $25.0 million outstanding under the Company's revolving credit facility as of the end of the first quarter of 2020. The Company intends to use the remaining net proceeds from the ATM offering for general corporate purposes, including, but not limited to, increasing its liquidity as a result of the COVID-19 pandemic.
Our liquidity may be adversely affected by a number of factors, including a decrease in customer traffic or average check per customer due to changes in economic conditions.
COVID-19 Pandemic
In response to the uncertain market conditions resulting from the COVID-19 pandemic, we have enhanced our liquidity position through the following measures:
Fully drew down our $25.0 million revolving credit facility to preserve financial flexibility and liquidity. Subsequent to the first quarter of 2020, we amended our revolving credit facility to extend its maturity to April 30, 2022 and relax the financial covenants through the new maturity date.
As of May 17,September 27, 2020, wethe Company had approximately $27.0a strong financial position with $77.8 million in cash and estimates a current cash burn rateequivalents, no debt and $25.0 million of approximately $200,000 per week. The estimated cash burn assumes current sales levels and spending. For additional information onavailability under its revolving credit facility. During the actions we have taken to reduce expenditures and reduce our cash burn, see "— COVID-19 Pandemic" above.
Engaged in and are continuing to engage in, discussions with various parties to explore financing opportunitiesthirty-nine weeks ended September 27, 2020, the Company took the following measures to enhance liquidity. On May 5, 2020, we filed a $100.0 million shelf registration statement withits liquidity position in response to the Securities and Exchange Commission. Once this registration statement becomes effective, we may offer and sell our common stock, preferred stock, debt securities and warrants in one or more offerings at prices and terms determined atuncertainty caused by the time of each offering.COVID-19 pandemic:
Temporarily suspended any further activity under ourits share repurchase program.program;
Utilized provisions of the CARES Actact provisions to obtain tax savings as well as the deferral of ourdeferred its portion of social security taxes to future years.years;
We believe our existing cashNegotiated rent abatements and cash equivalents balance,concessions with its landlords in response to the COVID-19 pandemic.
Management believes that the Company's strong financial position and continued improvement in comparable restaurant sales, combined with the measures taken due toduring the COVID-19 pandemic described above, will be sufficientallow the Company to finance our operating activitiesmeet its financial obligations for at least the next twelve months.
Cash Flows for ThirteenThirty-Nine Weeks Ended March 29,September 27, 2020 and March 31,September 29, 2019
The following table summarizes the statement of cash flows for the thirteenthirty-nine weeks ended March 29,September 27, 2020 and March 31,September 29, 2019 (in thousands):
 Thirty-Nine Weeks Ended
 September 27, 2020September 29, 2019
Net cash provided by operating activities$32,849 $32,629 
Net cash used in investing activities(11,294)(21,916)
Net cash provided by (used in) financing activities46,146 (8,436)
Net increase in cash and cash equivalents67,701 2,277 
Cash and cash equivalents at beginning of year10,074 8,199 
Cash and cash equivalents at end of period$77,775 $10,476 
 Thirteen Weeks Ended
 March 29, 2020 March 31, 2019
Net cash provided by operating activities$595
 $7,659
Net cash used in investing activities(5,598) (5,919)
Net cash provided by (used in) financing activities22,952
 (2,594)
Net increase (decrease) in cash and cash equivalents17,949
 (854)
Cash and cash equivalents at beginning of year10,074
 8,199
Cash and cash equivalents at end of period$28,023
 $7,345
Operating Activities. Net cash provided by operating activities decreased $7.1increased $0.2 million to $0.6$32.8 million for the thirteenthirty-nine weeks ended March 29,September 27, 2020 from $7.7$32.6 million during the comparable period in 2019. Our business is almost exclusively a cash business. Almost all of our receipts come in the form of cash and cash equivalents and a large majority of our expenditures are paid within


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a 30 day period. The decrease in net cash provided by operating activities was primarily due to a $7.7 million decrease in accrued expenses mainly driven by lower bonus and payroll accruals due to furloughing a substantial amount of our workforce in March 2020 and a $2.1 million increase in income tax receivable due in part to a CARES Act administrative correction. This total decrease of $9.8 million was partially offset by a $3.8 million increase in accounts payable due to the extension of payment terms with our vendors as a result of the COVID-19 pandemic.
Investing Activities. Net cash used in investing activities decreased $0.3$10.6 million to $5.6$11.3 million for the thirteenthirty-nine weeks ended March 29,September 27, 2020 from $5.9$21.9 million during the comparable period in 2019. The decrease was primarily due to the timinga cancellation of our construction payments associated with new restaurant development during the thirteen weeks ended March 29, 2020 as compared to the same period last year. All futureall non-essential capital expenditures including costs associated withand postponement of all new openings have been canceled or delayed.store development for the remainder of fiscal 2020.
Financing Activities. Net cash provided by financing activities increased by $25.5$54.6 million to $23.0$46.1 million for the thirteenthirty-nine weeks ended March 29,September 27, 2020 from net cash used in financialfinancing activities of $2.6$8.4 million during the comparable period in 2019. The increase was primarily due to $48.2 million in net proceeds received in the Company's ATM offering completed during the second quarter of 2020 and a $25.0$6.4 million draw on our revolving credit facility to provide additional liquidity duedecrease in stock repurchases as compared to the COVID-19 pandemic.same period last year.
As of March 29,September 27, 2020, we had no other financing transactions, arrangements or other relationships with any unconsolidated affiliates or related parties. Additionally, we had no financing arrangements involving synthetic leases or trading activities involving commodity contracts.
Capital Resources
Long-Term and Short-Term Capital Requirements
There have been no material changes to our long-term or short-term capital requirements from what was previously disclosed in our Annual Report filed with the SEC, except as disclosed in Note 1, Basis of PresentationCOVID-19 Pandemic Note 6, Long-Term Debt and Note 13, Subsequent Events 5, Long-Term Debtin the notes to our unaudited condensed consolidated financial statements included elsewhere in this quarterly report on Form 10-Q for more information.
Contractual Obligations
There have been no material changes to our contractual obligations from what was previously disclosed in our Annual Report filed with the SEC, except as disclosed in Note 1, Basis of PresentationCOVID-19 Pandemic, Note 6, 5, Long-Term Debt and Note 13, Subsequent Events.9, Leases.
Off-Balance Sheet Arrangements
As of March 29,September 27, 2020, we are not involved in any variable interest entities transactions and do not otherwise have any off-balance sheet arrangements.
Significant Accounting Policies
There have been no material changes to the significant accounting policies from what was previously disclosed in our Annual Report filed with the SEC.
Recent Accounting Pronouncements
For information regarding new accounting pronouncements, see Note 3, 2, Recent Accounting Pronouncements in the notes to our unaudited condensed consolidated financial statements.
Cautionary Statement Concerning Forward-Looking Statements
Certain statements in this quarterly report that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We use words such as “anticipate,” “expect,” “believe,” “intend,” “estimate,” “plans” and similar expressions, and variations or negatives of these words to identify forward-looking statements. Forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. We believe that these factors include, but are not limited to, the following:
the ultimate geographic spread, duration and severity of the COVID-19 pandemic, and the effectiveness of actions taken, or actions that may be taken, by governmental authorities to contain the outbreak or treat its impact;
the success of our existing and new restaurants;
our ability to identify appropriate sites and develop and expand our operations;
our ability to manage our growth effectively;


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we operate most of our restaurants under long-term leases which we would be obligated to perform even if we closed our restaurants;
we may not be able to renew leases;
changes in economic conditions;
damage to our reputation or lack of acceptance of our brand in existing or new markets;
our expansion into markets that we are unfamiliar with;
economic and other trends and developments, including adverse weather conditions, in the local or regional areas in which our restaurants are located and specifically in Texas where a large percentage of our restaurants are located;
acts of violence at or threatened against our restaurants or centers in which they are located;
the impact of negative economic factors, including the availability of credit, on our landlords and surrounding tenants;
changes in food availability and costs;
labor shortages and increases in our labor costs, including as a result of changes in government regulation, such as the adoption of federal health care legislation;
food safety and food borne illness concerns;
increased competition in the restaurant industry and the segments in which we compete;
the impact of legislation and regulations regarding nutritional information, and new information or attitudes regarding diet and health or adverse opinions about the health of consuming our menu offerings;
the impact of federal, state and local beer, liquor and food service regulations;
the impact of litigation;
the success of our marketing programs;
the impact of new restaurant openings, including the effect on our existing restaurants when opening new restaurants in the same markets and restaurant closures;
the loss of key members of our management team;
strain on our infrastructure and resources caused by our growth;
the inadequacy of our insurance coverage and fluctuating insurance requirements and costs;
the impact of our indebtedness on our ability to invest in the ongoing needs of our business;
our ability to obtain debt or other financing on favorable terms or at all;
the impact of impairment charges and closed restaurant costs in the future;
the impact of security breaches of confidential customer information in connection with our electronic processing of credit and debit card transactions;
inadequate protection of our intellectual property;
the failure of our information technology system or the breach of our network security;
a major natural or man-made disaster;
our increased costs and obligations as a result of being a public company;
the failure of our internal control over financial reporting;
the impact of federal, state and local tax laws;
volatility in the price of our common stock;
the timing and amount of repurchases of our common stock, if any, will depend upon several factors, including market and business conditions, regulatory requirements and other corporate considerations, changes to the Company’s expected liquidity position and the possibility that the repurchase program may be suspended or discontinued;
the impact of future sales of our common stock and any additional capital raised by us through the sale of our common stock or grants of additional equity-based compensation;


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the impact of a downgrade of our shares by securities analysts or industry analysts, the publication of negative research or reports, or lack of publication of reports about our business;
the effect of anti-takeover provisions in our charter documents and under Delaware law;
the effect of our decision to not pay dividends for the foreseeable future;
the effect of changes in accounting principles applicable to us;
our ability to raise capital in the future;
the risks described under the heading "Risk Factors" in this Quarterly Report on Form 10-Q for the quarter ended March 29,September 27, 2020; and
other risks and uncertainties described from time to time in the Company's Annual Report and other filings with the Securities and Exchange Commission.
Although we believe that the expectations reflected in the forward-looking statements are reasonable based on our current knowledge of our business and operations, we cannot guarantee future results, levels of activity, performance or achievements. The foregoing factors should not be construed as exhaustive and should be read together with other cautionary statements included in this report and in our Annual Report. If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. Any forward-looking statements you read in this report reflect our views as of the date of this report with respect to future events and are
subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. You should not place undue reliance on these forward-looking statements and you should carefully consider all of the factors identified in this report that could cause actual results to differ. We assume no obligation to update these forward-looking statements, except as required by law.
Item 3.    Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes to our quantitative and qualitative disclosures about market risk from what was previously disclosed in our Annual Report filed with the SEC.
Item 4.    Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We carried out an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) were effective as of the end of the period covered by this report.
The design of any system of control is based upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated objectives under all future events, no matter how remote, or that the degree of compliance with the policies or procedures may not deteriorate. Because of its inherent limitations, disclosure controls and procedures may not prevent or detect all misstatements. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) that occurred during our quarter ended March 29,September 27, 2020, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Part II—Other Information
Item 1.    Legal Proceedings
None.
Item 1A. Risk Factors
The COVID-19 pandemic has heightened, and in some cases manifested, certain of the risks we normally face in operating our business, including those disclosed in our Annual Report, and the risk factor disclosure in our Annual Report is qualified by the information relating to COVID-19 that is described in this Quarterly Report on Form 10-Q including the new risk factor set forth below. There have been no other material changes from the risk factors previously disclosed in our Annual Report.


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COVID-19 has harmed our business and may continue to do so.
During March 2020, the World Health Organization declared the COVID-19 outbreak to be a global pandemic and the United States declared a National Public Health Emergency. The COVID-19 pandemic has significantly impacted health and economic conditions throughout the United States. Federal, state and local governments took a variety of actions to contain the spread of COVID-19. Many jurisdictions where our restaurants are located required mandatory closures or imposed capacity limitations and other restrictions affecting our operations. MostDuring the third quarter of 2020, the Company has seen sequential improvement in comparable restaurant sales as state and local restrictions, while still in effect, were eased in many states, including Texas. As of September 27, 2020, the Company had reopened dining rooms at varying degrees of operating capacity in 92 of its 101 restaurants. Nine restaurants remain temporarily closed.
During the thirty-nine weeks ended September 27, 2020, the Company took various steps to reduce non-essential spend, postpone restaurant development and rightsize operations in light of reduced sales volume to improve our restaurants have transitioned to an off-premise operating model. These developments have materially harmedstore level profitability and increase our business, financial conditioncash flows. The Company also enhanced its liquidity position by:
Completing its ATM offering by selling 3,041,256 shares of the common stock for net proceeds of $48.2 million after deducting sales agent commissions and results of operations and may continue to do so.offering expenses payable the Company;
In response, we reduced expenses broadly, including furloughing approximately 80% of hourly employees and approximately 40% of store management personnel, while enacting temporary salary reductions for remaining managers. In addition, we also furloughed certain corporate and administrative staff, temporarily reducedRepaying the pay of$25.0 million outstanding under its revolving credit facility;
Suspending all remaining corporate and administrative staff by 25% to 50%, temporarily reduced senior management salaries by 50% to 75%, and temporarily suspended all board fees. We also suspended ourfurther activity under its share repurchase programprogram;

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Utilized CARES act provisions to obtain tax savings as well as deferred its portion of social security taxes to future years; and fully drew down under our $25.0 million revolving credit facility. Additionally, the Company delayed all remaining 2020 restaurant openings.
Successfully negotiated rent abatements, concessions and deferrals with its landlords.
We cannot predict how soon we will be able to reopen all of our existing restaurants orat full capacity, open new restaurants in the future andor whether we will have to revert back to an off-premise only operating model at some or all of our restaurants. Our ability to reopen ourcontinue to operate existing restaurant and open new restaurants in the future will depend in part on the actions of a number of governmental bodies over which we have no control. Moreover, once all restrictions are lifted, it is unclear how quickly customers will return to our restaurants, which may be a function of continued concerns over safety and/or depressed consumer sentiment due to adverse economic conditions, including job losses. Considering the significant uncertainty as to when we can reopen some or all of our restaurants and the uncertain customer demand environment, in addition to the actions described above, we:
are negotiating rent concessions, abatements and deferrals with our landlords to reduce our lease payments;
extended the maturity date of our revolving credit facility and obtained easement of the covenants; and
due to the impact of coronavirus on the economy and our business, have engaged in and are continuing to engage in, discussions with various parties to explore financing opportunities to enhance liquidity.
While some landlords have agreed to certain concessions, there can be no assurance that we will be successful in obtaining all of the relief we are seeking.
The outbreak of COVID-19 pandemic has caused significant disruptions to our ability to generate revenue and cash flows, and uncertainty regarding the length of the disruption may adversely harm our ability to raise additional capital. The COVID-19 outbreakpandemic is adversely affecting the availability of liquidity generally in the credit markets, and there can be no guarantee that additional liquidity will be readily available or available on favorable terms, especially the longer the COVID-19 outbreakpandemic lasts. The equity markets in the United States have been extremely volatile due to the COVID-19 outbreakpandemic and our stock price has fluctuated significantly. Continued volatility in the equity markets and outour stock price could negatively impact our ability to raise additional capital. The ultimate impact of the COVID-19 pandemic on our business, financial condition and results of operations will depend on our ability to have sufficient liquidity until such time as our restaurants can again generate revenue and profits capable of supporting our ongoing operations, all of which remain highly uncertain at this time.
Our suppliers could also be adversely impacted by the COVID-19 outbreak.pandemic. If our suppliers' employees are unable to work, whether because of illness, quarantine, limitations of travel or other government restrictions in connection with COVID-19, we could face shortages of food items or other supplies at our restaurants and our operations and sales could be adversely harmed by such supply interruptions.
We could experience other potential impacts as a result of the COVID-19 pandemic that are not completely known at this time, including, but not limited to, charges from potential adjustments to the carrying amount of goodwill, indefinite-lived intangibles and long-lived asset impairment charges. Our actual results may differ materially from our current estimates as the scope of the COVID-19 pandemic evolves, depending largely though not exclusively on the duration of the disruption to our business.


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Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds
The table below provides information with respect to our purchase of shares of our common stock during the thirteen weeks ended March 29, 2020:None.
Period Total Number of Shares Purchased Average Price Paid Per Share Total number of shares purchased as part of publicly announced plans or programs
Approximate dollar value of shares that may yet be purchased under the plans or programs (in millions) (1)
December 30, 2019 through January 26, 2020 
 $
 
$30.0
January 27, 2020 through February 23, 2020 
 
 
30.0
February 24, 2020 through March 29, 2019 90,144
 15.78
 90,144
28.6
Total 90,144
 $15.78
 90,144
 
(1)On November 7, 2019, we announced that our board of directors authorized us to repurchase an indeterminate number of our common stock through December 31, 2022 at an aggregate market value of up to $30.0 million. The Company's previous repurchase program expired on December 31, 2019. As a result of COVID-19, the Company has suspended any further activity under the program.
Item 3.    Defaults Upon Senior Securities
None.
Item 4.    Mine Safety Disclosures
None.
Item 5.    Other Information
None.

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Item 6.    Exhibits
Exhibit No.Description of Exhibit
Chuy's Holdings, Inc. 2020 Omnibus Incentive Plan (incorporated by reference to Exhibit No.Description of Exhibit10.1 to the Company's Current Report on Form 8-K, filed on July 31, 2020)
Form of Restricted Stock Unit Agreement (2020 Omnibus Incentive Plan)
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002
101.INSInline XBRL Instance Document (The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document)
101.SCHInline XBRL Taxonomy Extension Schema
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document
101.LABInline XBRL Taxonomy Extension Label Linkbase Document
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document
104Cover page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)



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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: May 22,November 6, 2020
CHUY’S HOLDINGS, INC.
By:/s/ Steven J. Hislop
Name:Steven J. Hislop
Title:President and Chief Executive Officer
(Principal Executive Officer)
CHUY’S HOLDINGS, INC.
By:
By:/s/ Steven J. Hislop
Name:Steven J. Hislop
Title:President and Chief Executive Officer
(Principal Executive Officer)
By:/s/ Jon W. Howie
Name:Jon W. Howie
Title:Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)







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