Cover
Cover - shares | 3 Months Ended | |
Mar. 26, 2023 | Apr. 28, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 26, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-35603 | |
Entity Registrant Name | CHUY’S HOLDINGS, INC. | |
Amendment Flag | false | |
Entity Central Index Key | 0001524931 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 20-5717694 | |
Entity Address, Address Line One | 1623 Toomey Rd. | |
Entity Address, City or Town | Austin | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 78704 | |
City Area Code | (512) | |
Local Phone Number | 473-2783 | |
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Trading Symbol | CHUY | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 18,121,408 | |
Entity Filer Category | Accelerated Filer |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 26, 2023 | Dec. 25, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 82,598 | $ 78,028 |
Accounts receivable | 1,818 | 2,004 |
Lease incentives receivable | 900 | 900 |
Inventories | 1,614 | 2,069 |
Prepaid expenses and other current assets | 4,285 | 4,817 |
Total current assets | 91,215 | 87,818 |
Property and equipment, net | 189,384 | 185,956 |
Operating lease assets | 144,435 | 146,920 |
Deferred tax asset, net | 4,750 | 4,958 |
Other assets and intangible assets, net | 3,680 | 3,160 |
Tradename | 21,900 | 21,900 |
Goodwill | 24,069 | 24,069 |
Total assets | 479,433 | 474,781 |
Current liabilities: | ||
Accounts payable | 7,043 | 8,059 |
Accrued liabilities | 22,833 | 23,321 |
Operating lease liabilities | 12,489 | 12,499 |
Income tax payable | 1,122 | 479 |
Total current liabilities | 43,487 | 44,358 |
Operating lease liabilities, less current portion | 180,643 | 183,670 |
Other liabilities | 2,725 | 2,192 |
Total liabilities | 226,855 | 230,220 |
Contingencies | ||
Stockholders’ equity: | ||
Common stock, $0.01 par value; 60,000,000 shares authorized; 18,121,408 shares issued and outstanding at March 26, 2023 and 17,998,170 shares issued and outstanding at December 25, 2022 | 181 | 180 |
Preferred stock, $0.01 par value; 15,000,000 shares authorized and no shares issued or outstanding at March 26, 2023 and December 25, 2022 | 0 | 0 |
Paid-in capital | 96,380 | 96,586 |
Retained earnings | 156,017 | 147,795 |
Total stockholders’ equity | 252,578 | 244,561 |
Total liabilities and stockholders’ equity | $ 479,433 | $ 474,781 |
Unaudited Condensed Consolida_2
Unaudited Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 26, 2023 | Dec. 25, 2022 |
Statement of Financial Position [Abstract] | ||
Common stock - par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock - shares authorized | 60,000,000 | 60,000,000 |
Common stock - shares issued | 18,121,408 | 17,998,170 |
Common stock - shares outstanding | 18,121,408 | 17,998,170 |
Preferred stock - par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock - authorized | 15,000,000 | 15,000,000 |
Preferred stock - issued | 0 | 0 |
Preferred stock - outstanding | 0 | 0 |
Unaudited Condensed Consolida_3
Unaudited Condensed Consolidated Income Statements - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 26, 2023 | Mar. 27, 2022 | |
Income Statement [Abstract] | ||
Revenue | $ 112,498 | $ 100,486 |
Costs and expenses: | ||
Cost of sales | 28,718 | 26,243 |
Labor | 34,102 | 29,825 |
Operating | 18,078 | 16,230 |
Occupancy | 7,882 | 7,652 |
General and administrative | 7,806 | 6,654 |
Marketing | 1,550 | 1,413 |
Restaurant pre-opening | 481 | 125 |
Impairment, closed restaurant and other costs | 371 | 1,279 |
Depreciation | 5,140 | 4,982 |
Total costs and expenses | 104,128 | 94,403 |
Income from operations | 8,370 | 6,083 |
Interest (income) expense, net | (777) | 28 |
Income before income taxes | 9,147 | 6,055 |
Income tax expense | 925 | 537 |
Net income | $ 8,222 | $ 5,518 |
Net income per common share: | ||
Basic (in dollars per share) | $ 0.46 | $ 0.29 |
Diluted (in dollars per share) | $ 0.45 | $ 0.29 |
Weighted-average shares outstanding: | ||
Basic (in shares) | 18,020,434 | 19,099,754 |
Diluted (in shares) | 18,176,121 | 19,288,718 |
Statement of Stockholders' Equi
Statement of Stockholders' Equity Statement - USD ($) $ in Thousands | Total | Common Stock | Paid-in Capital | Retained Earnings |
Beginning balance (in shares) at Dec. 26, 2021 | 19,538,058 | |||
Beginning balance at Dec. 26, 2021 | $ 262,794 | $ 195 | $ 135,659 | $ 126,940 |
Increase (Decrease) in Stockholders' Equity | ||||
Stock-based compensation | 1,068 | $ 0 | 1,068 | 0 |
Settlement of restricted stock units (in shares) | 171,490 | |||
Settlement of restricted stock units | $ 0 | $ 2 | (2) | 0 |
Repurchase of shares of common stock (in shares) | (718,112) | (718,112) | ||
Repurchase of shares of common stock | $ (19,720) | $ (7) | (19,713) | 0 |
Indirect repurchase of shares for minimum tax withholdings (in shares) | (53,668) | |||
Indirect repurchase of shares for minimum tax withholdings | (1,426) | $ (1) | (1,425) | 0 |
Net income | 5,518 | $ 0 | 0 | 5,518 |
End balance (in shares) at Mar. 27, 2022 | 18,937,768 | |||
End balance at Mar. 27, 2022 | 248,234 | $ 189 | 115,587 | 132,458 |
Beginning balance (in shares) at Dec. 25, 2022 | 17,998,170 | |||
Beginning balance at Dec. 25, 2022 | 244,561 | $ 180 | 96,586 | 147,795 |
Increase (Decrease) in Stockholders' Equity | ||||
Stock-based compensation | 1,036 | $ 0 | 1,036 | 0 |
Proceeds from exercise of stock options | 9,557 | |||
Proceeds from exercise of stock options | 273 | $ 0 | 273 | 0 |
Settlement of restricted stock units (in shares) | 156,898 | |||
Settlement of restricted stock units | 0 | $ 2 | (2) | 0 |
Indirect repurchase of shares for minimum tax withholdings (in shares) | (43,217) | |||
Indirect repurchase of shares for minimum tax withholdings | (1,514) | $ (1) | (1,513) | 0 |
Net income | 8,222 | $ 0 | 0 | 8,222 |
End balance (in shares) at Mar. 26, 2023 | 18,121,408 | |||
End balance at Mar. 26, 2023 | $ 252,578 | $ 181 | $ 96,380 | $ 156,017 |
Unaudited Condensed Consolida_4
Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 26, 2023 | Mar. 27, 2022 | |
Cash flows from operating activities: | ||
Net income | $ 8,222 | $ 5,518 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 5,140 | 4,982 |
Amortization of operating lease assets | 2,485 | 2,360 |
Amortization of loan origination costs | 22 | 22 |
Impairment, closed restaurant and other costs | 19 | 72 |
Stock-based compensation | 975 | 1,016 |
Loss on disposal of property and equipment | 54 | 13 |
Deferred income taxes | 208 | 362 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 186 | (19) |
Lease incentive receivable | 0 | (1,000) |
Income tax receivable and payable | 643 | 108 |
Inventories | 455 | 62 |
Prepaid expenses and other assets | (10) | (4) |
Accounts payable | (3,278) | 414 |
Accrued and other liabilities | 45 | (4,028) |
Operating lease liabilities | (3,037) | (3,027) |
Net cash provided by operating activities | 12,129 | 6,851 |
Cash flows from investing activities: | ||
Purchase of property and equipment, net | (6,318) | (2,613) |
Net cash used in investing activities | (6,318) | (2,613) |
Cash flows from financing activities: | ||
Repurchase of shares of common stock | 0 | (19,720) |
Proceeds from the exercise of stock options | 273 | 0 |
Indirect repurchase of shares for minimum tax withholdings | (1,514) | (1,426) |
Net cash used in financing activities | (1,241) | (21,146) |
Net increase (decrease) in cash and cash equivalents | 4,570 | (16,908) |
Cash and cash equivalents, beginning of period | 78,028 | 106,621 |
Cash and cash equivalents, end of period | 82,598 | 89,713 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Property and equipment and other assets acquired by accounts payable | 2,262 | 786 |
Supplemental cash flow disclosures: | ||
Cash paid for interest | 11 | 19 |
Cash paid for income taxes | $ 73 | $ 67 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 26, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | 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 26, 2023, the Company operated 99 restaurants across 17 states. 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 25, 2022. The accompanying condensed consolidated balance sheet as of December 25, 2022, 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. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 3 Months Ended |
Mar. 26, 2023 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
Recent Accounting Pronouncements | 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. |
Net Income Per Share
Net Income Per Share | 3 Months Ended |
Mar. 26, 2023 | |
Earnings Per Share [Abstract] | |
Net Income Per Share | Net Income Per Share The number of shares and net income per share data for all periods presented are based on the historical weighted-average shares of common stock outstanding. Basic net income per share of the Company's common stock is computed by dividing net income by the weighted-average number of shares of common stock outstanding for the period. Diluted net income per share of 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 restricted stock units (the options and restricted stock units were granted under the Chuy's Holdings, Inc. 2012 Omnibus Equity Incentive Plan (the "2012 Plan") and the Chuy's Holdings, Inc. 2020 Omnibus Incentive Plan (the "2020 Plan")). For the thirteen weeks ended March 26, 2023 and March 27, 2022, there were approximately 3,292 and 29,337 shares, respectively, of common stock equivalents that were excluded from the calculation of diluted net income per share because their inclusion would have been anti-dilutive. The computation of basic and diluted net income per share is as follows: Thirteen Weeks Ended March 26, 2023 March 27, 2022 BASIC Net income $ 8,222 $ 5,518 Weighted-average common shares outstanding 18,020,434 19,099,754 Basic net income per common share $ 0.46 $ 0.29 DILUTED Net income $ 8,222 $ 5,518 Weighted-average common shares outstanding 18,020,434 19,099,754 Dilutive effect of stock options and restricted stock units 155,687 188,964 Weighted-average of diluted shares 18,176,121 19,288,718 Diluted net income per common share $ 0.45 $ 0.29 |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 26, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation The Company has outstanding awards under the 2012 Plan and the 2020 Plan. On July 30, 2020, the Company’s stockholders approved the 2020 Plan, which replaced the 2012 Plan and no further awards may be granted under the 2012 plan. The termination of the 2012 Plan did not affect outstanding awards granted under the 2012 Plan. Options granted under these plans vest over five years from the date of grant and have a maximum term of ten years. As of March 26, 2023, the Company had 1,892 of stock options outstanding and exercisable with a remaining weighted average contractual term of approximately 1.0 year. Restricted stock units granted under the 2012 Plan and 2020 Plan vest over four years to five years from the date of grant. As of March 26, 2023, a total of 747,158 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 $975,000 and $1,016,000 for the thirteen weeks ended March 26, 2023 and March 27, 2022, respectively. A summary of stock-based compensation activity related to restricted stock units for the thirteen weeks ended March 26, 2023 is as follows: Shares Weighted Weighted Outstanding at December 25, 2022 383,098 $ 27.06 Granted 131,609 36.70 Vested (156,898) 24.40 Forfeited (3,551) 27.30 Outstanding at March 26, 2023 354,258 $ 31.82 3.04 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 26, 2023, total unrecognized stock-based compensation expense related to non-vested restricted stock units was approximately $11.1 million. This amount is expected to be recognized evenly over the remaining vesting period of the grants. |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Mar. 26, 2023 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt Revolving Credit Facility On July 30, 2021, the Company entered into a secured $35.0 million revolving credit facility with JPMorgan Chase Bank, N.A. (the “Credit Facility”). The Credit Facility may be increased up to an additional $25.0 million subject to certain conditions and at the Company’s option if the lenders agree to increase their commitments. The Credit Facility will mature on July 30, 2024, unless the Company exercises its option to voluntarily and permanently reduce all of the commitments before the maturity date. The Credit Facility contains representations and warranties, affirmative and negative covenants and events of default that the Company considers customary for an agreement of this type. The agreement requires the Company to be in compliance with a minimum fixed charge coverage ratio of no less than 1.25 to 1.00, and a maximum consolidated total lease adjusted leverage ratio of no more than 4.00 to 1.00. The Credit Facility also has certain restrictions on the payment of dividends and distributions. Under the 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 consolidated total lease adjusted leverage ratio does not exceed 3.50 to 1.00. Borrowings under the Credit Facility accrue interest at a per annum rate equal to, at the Company’s election, either LIBOR plus a margin of 1.5% to 2.0%, depending on the Company’s consolidated total lease adjusted leverage ratio, or a base rate determined according to the highest of (a) the prime rate, (b) the federal funds rate plus 0.5% or (c) LIBOR plus 1.0%, plus a margin of 0.5% to 1.0%, depending on the Company’s consolidated total lease adjusted leverage ratio. An unused commitment fee at a rate of 0.125% applies to unutilized borrowing capacity under the Credit Facility. The obligations under the Company’s Credit Facility are guaranteed by certain subsidiaries of the Company and, subject to certain exceptions, secured by a continuing security interest in substantially all of the Company’s assets. As of March 26, 2023, the Company had no borrowings under the Credit Facility, and was in compliance with all covenants under the Credit Facility. |
Accrued Liabilities
Accrued Liabilities | 3 Months Ended |
Mar. 26, 2023 | |
Payables and Accruals [Abstract] | |
Accrued Liabilities | Accrued Liabilities The major classes of accrued liabilities at March 26, 2023 and December 25, 2022 are summarized as follows: March 26, 2023 December 25, 2022 Accrued compensation and related benefits $ 9,516 $ 9,117 Other accruals 5,246 5,202 Sales and use tax 3,382 3,007 Deferred gift card revenue 2,670 3,175 Property tax 2,019 2,820 Total accrued liabilities $ 22,833 $ 23,321 |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 26, 2023 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Stockholders' Equity Share Repurchase Program On October 28, 2021, the Company’s Board of Directors replaced the Company's previous $30.0 million share repurchase program and approved a new share repurchase program under which the Company may repurchase up to $50.0 million of its common shares outstanding. This repurchase program became effective on October 28, 2021 and expires on December 31, 2023. The Company repurchased 718,112 shares for approximately $19.7 million during the first quarter of 2022. As of December 25, 2022 , the Company completed its previous $50.0 million repurchase program. On October 27, 2022, the Company’s Board of Directors approved a new share repurchase program under which the Company may repurchase up to $50.0 million of its common shares outstanding through December 31, 2024. As of March 26, 2023 , the Company had $50.0 million remaining under its $50.0 million repurchase program. 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. |
Contingencies
Contingencies | 3 Months Ended |
Mar. 26, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | ContingenciesThe Company is 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. |
Leases
Leases | 3 Months Ended |
Mar. 26, 2023 | |
Leases [Abstract] | |
Leases | 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 totaling 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. 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 construction 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. 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 26, 2023, all of the Company's leases were operating. Components of operating lease costs are included in occupancy, closed restaurant costs, restaurant pre-opening, general and administrative expense and property and equipment, net: Thirteen Weeks Ended Lease cost March 26, 2023 March 27, 2022 Operating lease cost $ 6,041 $ 6,209 Variable lease cost 450 379 $ 6,491 $ 6,588 Supplemental cash flow disclosures and other lease information: Thirteen Weeks Ended March 26, 2023 March 27, 2022 Cash paid for operating lease liabilities $ 6,821 $ 8,634 Operating lease assets obtained in exchange for operating lease liabilities (a) — 3,955 (a) The thirteen weeks ended March 27, 2022 includes a $2.4 million increase to operating lease assets and liabilities related to new lease commencements and a $1.5 million increase primarily due to extending remaining lives of certain leases. The Company recorded no deferred lease incentives during the thirteen weeks ended March 26, 2023 and $1.0 million deferred lease incentives during the thirteen weeks ended March 27, 2022. Supplemental balance sheet disclosures: Operating leases Classification March 26, 2023 December 25, 2022 Right-of-use assets Operating lease assets $ 144,435 $ 146,920 Deferred rent payments Operating lease liability 6 84 Current lease liabilities Operating lease liability 12,483 12,415 12,489 12,499 Deferred rent payments Operating lease liability, less current portion 66 68 Non-current lease liabilities Operating lease liability, less current portion 180,577 183,602 180,643 183,670 Total lease liabilities $ 193,132 $ 196,169 Weighted average remaining lease term (in years) 12.5 12.7 Weighted average discount rate 7.6 % 7.6% Future minimum rent payments for our operating leases for the next five years as of March 26, 2023 are as follows: Fiscal year ending: Remainder of 2023 $ 20,027 2024 26,163 2025 26,279 2026 25,298 2027 22,894 Thereafter 178,172 Total minimum lease payments 298,833 Less: imputed interest 105,701 Present value of lease liabilities $ 193,132 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 26, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The following is a reconciliation of the expected federal income taxes at the statutory rates of 21%: Thirteen Weeks Ended March 26, 2023 March 27, 2022 Expected income tax expense $ 1,921 $ 1,272 State tax expense, net of federal benefit 301 227 FICA tip credit (997) (898) Officers' compensation 76 59 Stock compensation (381) (127) Other 5 4 Income tax expense $ 925 $ 537 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 26, 2023, the Company believes that it will realize all of its 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 to us 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 associated with this position 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 of March 26, 2023 and March 27, 2022, the Company recognized no liability for uncertain tax positions. It is the Company’s policy to include any penalties and interest related to income taxes in its income tax provision. However, the Company currently has no penalties or interest related to income taxes. The tax years 2021, 2020 and 2019 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. |
Impairment, Closed Restaurant a
Impairment, Closed Restaurant and Other Costs | 3 Months Ended |
Mar. 26, 2023 | |
Impairment, Closed Restaurant and Other Costs [Abstract] | |
Impairment, Closed Restaurant and Other Costs | Impairment, Closed Restaurant and Other Costs The Company reviews long-lived assets, such as property and equipment, operating lease assets 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 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 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 Ended March 26, 2023 March 27, 2022 Closed restaurant costs 371 1,279 Impairment, closed restaurant and other costs $ 371 $ 1,279 Closed restaurant costs represent on-going expenses to maintain the closed restaurants, such as rent expense, utility and insurance among other costs required to maintain the remaining closed locations. |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 3 Months Ended |
Mar. 26, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of basic and diluted net income per share | The computation of basic and diluted net income per share is as follows: Thirteen Weeks Ended March 26, 2023 March 27, 2022 BASIC Net income $ 8,222 $ 5,518 Weighted-average common shares outstanding 18,020,434 19,099,754 Basic net income per common share $ 0.46 $ 0.29 DILUTED Net income $ 8,222 $ 5,518 Weighted-average common shares outstanding 18,020,434 19,099,754 Dilutive effect of stock options and restricted stock units 155,687 188,964 Weighted-average of diluted shares 18,176,121 19,288,718 Diluted net income per common share $ 0.45 $ 0.29 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 26, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Summary of Stock-Based Compensation Activity Related to Restricted Stock Units | A summary of stock-based compensation activity related to restricted stock units for the thirteen weeks ended March 26, 2023 is as follows: Shares Weighted Weighted Outstanding at December 25, 2022 383,098 $ 27.06 Granted 131,609 36.70 Vested (156,898) 24.40 Forfeited (3,551) 27.30 Outstanding at March 26, 2023 354,258 $ 31.82 3.04 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 3 Months Ended |
Mar. 26, 2023 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Liabilities | The major classes of accrued liabilities at March 26, 2023 and December 25, 2022 are summarized as follows: March 26, 2023 December 25, 2022 Accrued compensation and related benefits $ 9,516 $ 9,117 Other accruals 5,246 5,202 Sales and use tax 3,382 3,007 Deferred gift card revenue 2,670 3,175 Property tax 2,019 2,820 Total accrued liabilities $ 22,833 $ 23,321 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 26, 2023 | |
Leases [Abstract] | |
Components of operating lease costs | Components of operating lease costs are included in occupancy, closed restaurant costs, restaurant pre-opening, general and administrative expense and property and equipment, net: Thirteen Weeks Ended Lease cost March 26, 2023 March 27, 2022 Operating lease cost $ 6,041 $ 6,209 Variable lease cost 450 379 $ 6,491 $ 6,588 |
Supplemental Cash Flow Information | Supplemental cash flow disclosures and other lease information: Thirteen Weeks Ended March 26, 2023 March 27, 2022 Cash paid for operating lease liabilities $ 6,821 $ 8,634 Operating lease assets obtained in exchange for operating lease liabilities (a) — 3,955 |
Supplemental balance sheet information | Supplemental balance sheet disclosures: Operating leases Classification March 26, 2023 December 25, 2022 Right-of-use assets Operating lease assets $ 144,435 $ 146,920 Deferred rent payments Operating lease liability 6 84 Current lease liabilities Operating lease liability 12,483 12,415 12,489 12,499 Deferred rent payments Operating lease liability, less current portion 66 68 Non-current lease liabilities Operating lease liability, less current portion 180,577 183,602 180,643 183,670 Total lease liabilities $ 193,132 $ 196,169 Weighted average remaining lease term (in years) 12.5 12.7 Weighted average discount rate 7.6 % 7.6% |
Operating Lease Liability Maturity Schedule | Future minimum rent payments for our operating leases for the next five years as of March 26, 2023 are as follows: Fiscal year ending: Remainder of 2023 $ 20,027 2024 26,163 2025 26,279 2026 25,298 2027 22,894 Thereafter 178,172 Total minimum lease payments 298,833 Less: imputed interest 105,701 Present value of lease liabilities $ 193,132 |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Mar. 26, 2023 | |
Income Tax Disclosure [Abstract] | |
Reconciliation of the expected income taxes | The following is a reconciliation of the expected federal income taxes at the statutory rates of 21%: Thirteen Weeks Ended March 26, 2023 March 27, 2022 Expected income tax expense $ 1,921 $ 1,272 State tax expense, net of federal benefit 301 227 FICA tip credit (997) (898) Officers' compensation 76 59 Stock compensation (381) (127) Other 5 4 Income tax expense $ 925 $ 537 |
Impairment, Closed Restaurant_2
Impairment, Closed Restaurant and Other Costs (Tables) | 3 Months Ended |
Mar. 26, 2023 | |
Impairment, Closed Restaurant and Other Costs [Abstract] | |
Impairment and closed restaurant costs | The Company recorded impairment, closed restaurant and other costs as follows: Thirteen Weeks Ended March 26, 2023 March 27, 2022 Closed restaurant costs 371 1,279 Impairment, closed restaurant and other costs $ 371 $ 1,279 |
Basis of Presentation Company I
Basis of Presentation Company Information (Details) | Mar. 26, 2023 numberOfOpenRestaurants State |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of Open Restaurants | numberOfOpenRestaurants | 99 |
Number of States in which Entity Operates | State | 17 |
Net Income Per Share - Computat
Net Income Per Share - Computation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 26, 2023 | Mar. 27, 2022 | |
BASIC | ||
Net income | $ 8,222 | $ 5,518 |
Weighted-average common shares outstanding | 18,020,434 | 19,099,754 |
Basic net income per common share (in dollars per share) | $ 0.46 | $ 0.29 |
DILUTED | ||
Net income | $ 8,222 | $ 5,518 |
Weighted-average common shares outstanding | 18,020,434 | 19,099,754 |
Dilutive effect of stock options and restricted stock units | 155,687 | 188,964 |
Weighted-average of diluted shares | 18,176,121 | 19,288,718 |
Diluted net income per common share (in dollars per share) | $ 0.45 | $ 0.29 |
Net Income Per Share - Narrativ
Net Income Per Share - Narrative (Details) - shares | 3 Months Ended | |
Mar. 26, 2023 | Mar. 27, 2022 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 3,292 | 29,337 |
Stock-Based Compensation - Narr
Stock-Based Compensation - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 26, 2023 | Mar. 27, 2022 | |
Stock-based compensation | $ 975 | $ 1,016 |
Share-based Payment Arrangement, Option [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 5 years | |
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period | 10 years | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 1,892 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term | 1 year | |
Restricted Stock Units (RSUs) [Member] | ||
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount | $ 11,100 | |
2020 Omnibus Equity Incentive Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 747,158 | |
Minimum [Member] | Restricted Stock Units (RSUs) [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 4 years | |
Maximum [Member] | Restricted Stock Units (RSUs) [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 5 years |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock Units (Details) | 3 Months Ended |
Mar. 26, 2023 $ / shares shares | |
Shares | |
Outstanding, beginning balance (in shares) | shares | 383,098 |
Granted (in shares) | shares | 131,609 |
Vested (in shares) | shares | (156,898) |
Forfeited (in shares) | shares | (3,551) |
Outstanding, ending balance (in shares) | shares | 354,258 |
Weighted Average Fair Value | |
Weighted Average Fair Value, beginning balance (in dollars per share) | $ / shares | $ 27.06 |
Weighted Average Fair Value, granted (in dollars per share) | $ / shares | 36.70 |
Weighted Average Fair Value, vested (in dollars per share) | $ / shares | 24.40 |
Weighted Average Fair Value, forfeited (in dollars per share) | $ / shares | 27.30 |
Weighted Average Fair Value, ending balance (in dollars per share) | $ / shares | $ 31.82 |
Weighted Average Remaining Contractual Term [Abstract] | |
Weighted Average Remaining Contractual Term (Year) | 3 years 14 days |
Long-Term Debt (Details)
Long-Term Debt (Details) - Revolving Credit Facility [Member] | Jul. 30, 2021 USD ($) | Mar. 26, 2023 USD ($) |
Debt Instrument [Line Items] | ||
Line of Credit Facility, Maximum Borrowing Capacity | $ 35,000,000 | |
Line of Credit Facility Additional Borrowing Capacity | $ 25,000,000 | |
Line of credit facility, lease adjusted leverage ratio | 3.50 | |
Long-term Debt | $ 0 | |
Line of credit facility, minimum fixed charge coverage ratio | 1.25 | |
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage | 0.125% | |
Line of credit facility, consolidated total lease adjusted leverage ratio ceiling | 4 | |
Federal Funds Rate [Member] | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Basis Spread on Variable Rate | 0.50% | |
LIBOR | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Basis Spread on Variable Rate | 1% | |
Maximum [Member] | LIBOR | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Basis Spread on Variable Rate | 2% | |
Maximum [Member] | Base Rate [Member] | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Basis Spread on Variable Rate | 1% | |
Minimum [Member] | LIBOR | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Basis Spread on Variable Rate | 1.50% | |
Minimum [Member] | Base Rate [Member] | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Basis Spread on Variable Rate | 0.50% |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) $ in Thousands | Mar. 26, 2023 | Dec. 25, 2022 |
Payables and Accruals [Abstract] | ||
Accrued compensation and related benefits | $ 9,516 | $ 9,117 |
Other accruals | 5,246 | 5,202 |
Sales and use tax | 3,382 | 3,007 |
Deferred gift card revenue | 2,670 | 3,175 |
Property tax | 2,019 | 2,820 |
Total accrued liabilities | $ 22,833 | $ 23,321 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 27, 2022 | Mar. 26, 2023 | Oct. 27, 2022 | Oct. 31, 2019 | |
Stockholders' Equity Note [Abstract] | ||||
Stock Repurchase Program, Number of Shares Authorized to be Repurchased | $ 50,000 | $ 30,000 | ||
Repurchase of shares of common stock (in shares) | 718,112 | |||
Repurchase of shares of common stock | $ 19,720 | |||
Stock Repurchase Program, Remaining Authorized Repurchase Amount | $ 50,000 |
Leases - Narrative (Details)
Leases - Narrative (Details) $ in Thousands | 3 Months Ended |
Mar. 26, 2023 USD ($) | |
Lessee, Lease, Description [Line Items] | |
Initial lease term | 20 years |
Deferred lease incentives | $ 1,000 |
Operating Lease Payments, Minimum Lease Payments Excluded, Not Yet Taken Possession of Leases | $ 5,300 |
Minimum [Member] | |
Lessee, Lease, Description [Line Items] | |
Initial lease term | 10 years |
Lease terms renewal | 10 years |
Maximum [Member] | |
Lessee, Lease, Description [Line Items] | |
Initial lease term | 15 years |
Lease terms renewal | 15 years |
Leases - Components of operatin
Leases - Components of operating lease costs (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 26, 2023 | Mar. 27, 2022 | |
Leases [Abstract] | ||
Operating lease cost | $ 6,041 | $ 6,209 |
Variable lease cost | 450 | 379 |
Lease cost | $ 6,491 | $ 6,588 |
Leases - Supplemental cash flow
Leases - Supplemental cash flow disclosures (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 26, 2023 | Mar. 27, 2022 | |
Leases [Abstract] | ||
Cash paid for operating lease liabilities | $ 6,821 | $ 8,634 |
Operating lease assets obtained in exchange for operating lease liabilities(a) | $ 0 | 3,955 |
Change In Operating Lease Assets and Liabilities Due to Lease Remeasurement | 1,500 | |
Change in Operating Lease Assets and Liabilities Due to Lease Commencements | $ 2,400 |
Leases - Supplemental balance s
Leases - Supplemental balance sheet disclosures (Details) - USD ($) $ in Thousands | Mar. 26, 2023 | Dec. 25, 2022 |
Leases [Abstract] | ||
Operating lease assets | $ 144,435 | $ 146,920 |
Deferred rent payments | 6 | 84 |
Current lease liabilities | 12,483 | 12,415 |
Operating lease liability | 12,489 | 12,499 |
Deferred Rent Credit, Noncurrent | 66 | 68 |
Operating Lease Liability, Noncurrent Excluding Deferred Rent | 180,577 | 183,602 |
Operating lease liability, less current portion | 180,643 | 183,670 |
Operating Lease, Liability - Including Deferred Rent | $ 193,132 | $ 196,169 |
Weighted average remaining lease term (in years) | 12 years 6 months | 12 years 8 months 12 days |
Weighted average discount rate | 7.60% | 7.60% |
Leases - Future minimum rent pa
Leases - Future minimum rent payments (Details) $ in Thousands | Mar. 26, 2023 USD ($) |
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | |
Remainder of 2023 | $ 20,027 |
2024 | 26,163 |
2025 | 26,279 |
2026 | 25,298 |
2027 | 22,894 |
Thereafter | 178,172 |
Total minimum lease payments | 298,833 |
Less: imputed interest | 105,701 |
Operating Lease, Liability | $ 193,132 |
Income Taxes - Reconciliation (
Income Taxes - Reconciliation (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 26, 2023 | Mar. 27, 2022 | |
Income Tax Disclosure [Abstract] | ||
Expected income tax expense | $ 1,921 | $ 1,272 |
State tax expense, net of federal benefit | 301 | 227 |
FICA tip credit | (997) | (898) |
Officers' compensation | 76 | 59 |
Stock compensation | (381) | (127) |
Other | 5 | 4 |
Income tax expense | $ 925 | $ 537 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) $ in Millions | 3 Months Ended |
Mar. 26, 2023 USD ($) | |
Income Tax Disclosure [Abstract] | |
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21% |
Minimum [Member] | |
Income Tax Contingency [Line Items] | |
Loss Contingency, Estimate of Possible Loss | $ 0.5 |
Maximum [Member] | |
Income Tax Contingency [Line Items] | |
Loss Contingency, Estimate of Possible Loss | $ 2.5 |
Impairment, Closed Restaurant_3
Impairment, Closed Restaurant and Other Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 26, 2023 | Mar. 27, 2022 | |
Impairment, Closed Restaurant and Other Costs [Abstract] | ||
Closed restaurant costs | $ 371 | $ 1,279 |
Impairment, closed restaurant and other costs | $ 371 | $ 1,279 |