Revenue Recognition | Revenue Recognition The Company records food and beverage revenues, net of discounts and taxes, upon delivery to the customer. Franchise-related revenues are included in Franchise and other revenues in the Company’s Consolidated Statements of Operations and Comprehensive (Loss) Income . Royalties, which are a percentage of net sales of the franchisee, are recognized as revenue in the period which the sales are reported to have occurred. The following table includes the categories of revenue included in the Company’s Consolidated Statements of Operations and Comprehensive (Loss) Income for the periods indicated: THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED JULY 1, 2018 JUNE 25, 2017 JULY 1, 2018 JUNE 25, 2017 (dollars in thousands) (Restated) (1) (Restated) (1) Revenues Restaurant sales $ 1,015,484 $ 1,021,184 $ 2,114,487 $ 2,165,015 Franchise and other revenues: Franchise revenue $ 13,134 $ 11,565 $ 27,349 $ 20,662 Other revenue 3,196 3,709 6,443 5,492 Total Franchise and other revenues $ 16,330 $ 15,274 $ 33,792 $ 26,154 Total revenues $ 1,031,814 $ 1,036,458 $ 2,148,279 $ 2,191,169 ____________________ (1) See Note 1 - Description of the Business and Basis of Presentation for details of the impact of implementing ASU No. 2014-09. The following table includes the disaggregation of Restaurant sales and Franchise revenue, by restaurant concept and major international market, for the periods indicated: THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED JULY 1, 2018 JULY 1, 2018 (dollars in thousands) RESTAURANT SALES FRANCHISE REVENUE RESTAURANT SALES FRANCHISE REVENUE U.S. Outback Steakhouse (1) $ 521,719 $ 10,157 $ 1,093,198 $ 21,231 Carrabba’s Italian Grill (1) 163,454 157 337,381 304 Bonefish Grill 149,054 233 305,903 473 Fleming’s Prime Steakhouse & Wine Bar 73,312 — 154,302 — Other 1,398 — 2,497 — U.S. Total $ 908,937 $ 10,547 $ 1,893,281 $ 22,008 International Outback Steakhouse-Brazil $ 87,809 $ — $ 182,932 $ — Other 18,738 2,587 38,274 5,341 International Total $ 106,547 $ 2,587 $ 221,206 $ 5,341 Total $ 1,015,484 $ 13,134 $ 2,114,487 $ 27,349 THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED JUNE 25, 2017 JUNE 25, 2017 (dollars in thousands) RESTAURANT SALES FRANCHISE REVENUE RESTAURANT SALES FRANCHISE REVENUE U.S. (Restated) (2) (Restated) (2) (Restated) (2) (Restated) (2) Outback Steakhouse (1) $ 519,060 $ 8,731 $ 1,130,535 $ 14,965 Carrabba’s Italian Grill (1) 168,372 156 351,022 245 Bonefish Grill 150,743 258 314,387 517 Fleming’s Prime Steakhouse & Wine Bar 70,089 — 147,875 — U.S. Total $ 908,264 $ 9,145 $ 1,943,819 $ 15,727 International Outback Steakhouse-Brazil $ 95,801 $ — $ 186,691 $ — Other 17,119 2,420 34,505 4,935 International Total $ 112,920 $ 2,420 $ 221,196 $ 4,935 Total $ 1,021,184 $ 11,565 $ 2,165,015 $ 20,662 ____________________ (1) In 2017, the Company sold 53 Outback Steakhouse restaurants and one Carrabba’s Italian Grill restaurant, which are now operated as franchises. (2) See Note 1 - Description of the Business and Basis of Presentation for details of the impact of implementing ASU No. 2014-09. Gift Card Revenue - Proceeds from the sale of gift cards, which do not have expiration dates, are recorded as deferred revenue and recognized as revenue upon redemption by the customer. Gift cards sold at a discount are recorded as revenue upon redemption of the associated gift cards at an amount net of the related discount. Gift card breakage, the amount of gift cards which will not be redeemed, is recognized using estimates based on historical redemption patterns. If actual redemptions vary from the estimated breakage, gift card breakage income may differ from the amount recorded. The Company periodically updates its estimates used for breakage. Gift card sales that are accompanied by a bonus card to be used by the customer at a future visit result in a separate deferral of a portion of the original gift card sale. Revenue is recorded when the bonus card is redeemed at the estimated fair market value of the bonus card. Approximately 87% of the current deferred gift card revenue is expected to be recognized over the next 12 months. Gift card sales commissions paid to third-party providers are initially capitalized and subsequently amortized to Other restaurant operating expenses based on historical gift card redemption patterns. Advertising Fees - Advertising fees charged to franchisees are recognized as Franchise revenue in the Company’s Consolidated Statements of Operations and Comprehensive (Loss) Income . Franchise Fees - Initial franchise and renewal fees are recognized over the term of the franchise agreement and renewal period, respectively. The weighted average remaining term of franchise agreements and renewal periods was approximately 15 years as of July 1, 2018 . Loyalty Program - The Company maintains a customer loyalty program, Dine Rewards, in the U.S., where customers have the ability to earn a reward after a number of qualified visits. The Company has developed an estimated value of the partial reward earned from each qualified visit, which is recorded as deferred revenue. Each reward has a maximum value and must be redeemed within three months of earning such reward. The revenue associated with the fair value of the qualified visit is recognized upon the earlier of redemption or expiration of the reward. The Company applies the practical expedient to exclude disclosures regarding loyalty program remaining performance obligations which have original expected durations of one year or less. The following table includes a detail of assets and liabilities from contracts with customers included on the Company’s Consolidated Balance Sheets as of the periods indicated: (dollars in thousands) JULY 1, 2018 DECEMBER 31, 2017 Other current assets, net Deferred gift card sales commissions $ 9,175 $ 16,231 Unearned revenue Deferred gift card revenue (1) $ 213,286 $ 323,628 Deferred loyalty revenue 8,145 6,667 Deferred franchise fees - current (1) 495 461 Total Unearned revenue $ 221,926 $ 330,756 Other long-term liabilities, net Deferred franchise fees - non-current (1) $ 4,661 $ 4,698 ____________________ (1) See Note 1 - Description of the Business and Basis of Presentation for details of the impact of implementing ASU No. 2014-09 on the Company’s Consolidated Balance Sheet as of December 31, 2017 . The following table is a rollforward of deferred gift card sales commissions for the periods indicated: THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED (dollars in thousands) JULY 1, 2018 JUNE 25, 2017 JULY 1, 2018 JUNE 25, 2017 Balance, beginning of period $ 10,039 $ 10,226 $ 16,231 $ 15,584 Deferred gift card sales commissions amortization (5,804 ) (5,854 ) (15,219 ) (13,756 ) Deferred gift card sales commissions capitalization 5,400 5,060 9,258 8,790 Other (460 ) (14 ) (1,095 ) (1,200 ) Balance, end of period $ 9,175 $ 9,418 $ 9,175 $ 9,418 The Company applies the portfolio approach practical expedient to account for gift card contracts and performance obligations. The following table is a rollforward of unearned gift card revenue for the periods indicated: THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED (dollars in thousands) JULY 1, 2018 JUNE 25, 2017 JULY 1, 2018 JUNE 25, 2017 Balance, beginning of period $ 227,783 $ 217,872 $ 323,628 $ 331,803 Gift card sales 78,837 80,376 135,122 139,246 Gift card redemptions (88,496 ) (91,482 ) (233,052 ) (255,635 ) Gift card breakage (1) (4,838 ) (4,961 ) (12,412 ) (13,609 ) Balance, end of period $ 213,286 $ 201,805 $ 213,286 $ 201,805 ____________________ (1) See Note 1 - Description of the Business and Basis of Presentation for details of the impact of implementing ASU No. 2014-09 for the thirteen and twenty-six weeks ended June 25, 2017 . |