| (1) | Organization and Business |
Village Inn Holdings, LLC (“VI”) and Bakers Square Holdings, LLC (“BSQ”), collectively, “we,” “our,” or the “Company,” are Delaware limited liability companies, formed on August 17, 2020 as wholly owned subsidiaries of RG Group Holdco, LLC, ultimately owned by Cannae Holdings, Inc. Prior to the August 17, 2020 formation, the Company was a subsidiary of American Blue Ribbon Holdings, LLC, which was also a subsidiary of Cannae Holdings, Inc.
The Company operates family dining restaurants under the tradenames Village Inn and Bakers Square, and franchises restaurants under the Village Inn tradename. Our Company operated and franchised restaurants are located across 20 states and are concentrated in the Southeast, Midwest, and the Rocky Mountain regions.
On June 25, 2021, the Company entered into a Membership Interest Purchase Agreement (“MIPA”) with BBQ Holdings, Inc. (“BBQ”) to acquire 21 Company operated Village Inn restaurants, 13 Company operated Bakers Square restaurants, and become the franchisor of 117 Village Inn franchise locations. The transaction was consummated on July 30, 2021.
| (2) | Summary of Significant Accounting Policies |
| (a) | Principles of Consolidation and Basis of Presentation |
The financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company as well as wholly owned subsidiaries. All intercompany profits, transactions, and balances have been eliminated. The revenues and direct expenses presented in the Special Purpose Consolidated Statements of Revenues and Direct Expenses are representative of the operational activity of the Company operated locations in addition to the revenues and cost of revenues associated with the franchise locations identified in the MIPA. Indirect expenses, inclusive of corporate allocation of shared service charges, interest on term loan and related revolver facility, and income taxes, have been excluded from the financial statements. The Company has not previously accounted for VI or BSQ as stand-alone businesses, however, we believe the abbreviated financial statements provide the most relevant information to BBQ. The financial statements are not meant to be indicative of the Company’s financial condition.
The Company utilizes a 52/53 week fiscal year where the last day of the fiscal year is the last Sunday in December. The fiscal years ended December 27, 2020 and December 29, 2019 were each composed of 52 weeks.
| (c) | Property and Equipment, Net |
The Company records property and equipment, including internally developed software, at cost less accumulated depreciation. Depreciation expense is calculated using the straight-line method. The useful lives of assets are 3 to 15 years for furniture, fixtures, and equipment. Leasehold improvements are depreciated over the lesser of the useful life or the remaining lease term, inclusive of renewal periods, not to exceed 20 years. Gains or losses are recognized upon the disposal of property and equipment, and the asset and related accumulated depreciation is removed from the accounts. For 2020 and 2019, depreciation expense was $1.8 million and $1.4 million, respectively.
