Cover Page
Cover Page - shares | 8 Months Ended | |
Sep. 08, 2020 | Oct. 12, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 8, 2020 | |
Document Transition Report | false | |
Entity Registrant Name | DEL TACO RESTAURANTS, INC. | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 37,324,593 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0001585583 | |
Current Fiscal Year End Date | --12-29 | |
Entity File Number | 001-36197 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 46-3340980 | |
Entity Address, Address Line One | 25521 Commercentre Drive | |
Entity Address, City or Town | Lake Forest, | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 92630 | |
City Area Code | (949) | |
Local Phone Number | 462-9300 | |
Title of 12(b) Security | Common Stock, $0.0001 Par Value | |
Trading Symbol | TACO | |
Security Exchange Name | NASDAQ | |
Entity Interactive Data Current | Yes |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 08, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 5,359 | $ 1,421 |
Accounts and other receivables, net | 3,731 | 3,580 |
Inventories | 2,640 | 3,123 |
Prepaid expenses and other current assets | 2,541 | 2,289 |
Assets held for sale | 1,495 | 8,411 |
Total current assets | 15,766 | 18,824 |
Property and equipment, net | 147,569 | 156,921 |
Operating lease right-of-use assets | 250,154 | 258,278 |
Goodwill | 108,979 | 192,739 |
Trademarks | 208,400 | 220,300 |
Intangible assets, net | 10,202 | 10,827 |
Other assets, net | 4,610 | 4,568 |
Total assets | 745,680 | 862,457 |
Current liabilities: | ||
Accounts payable | 17,616 | 19,652 |
Other accrued liabilities | 45,690 | 34,577 |
Current portion of finance lease obligations and other debt | 199 | 220 |
Current portion of operating lease liabilities | 20,116 | 17,848 |
Total current liabilities | 83,621 | 72,297 |
Long-term debt, finance lease obligations and other debt, excluding current portion, net | 123,380 | 144,581 |
Operating lease liabilities, excluding current portion | 253,121 | 257,361 |
Deferred income taxes | 61,466 | 69,510 |
Other non-current liabilities | 16,274 | 16,601 |
Total liabilities | 537,862 | 560,350 |
Commitments and contingencies (Note 15) | ||
Shareholders’ equity: | ||
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; no shares issued and outstanding | 0 | 0 |
Common stock, $0.0001 par value; 400,000,000 shares authorized; 37,324,593 shares issued and outstanding at September 8, 2020; 37,059,202 shares issued and outstanding at December 31, 2019 | 4 | 4 |
Additional paid-in capital | 336,285 | 333,379 |
Accumulated other comprehensive loss | 0 | (52) |
Accumulated deficit | (128,471) | (31,224) |
Total shareholders’ equity | 207,818 | 302,107 |
Total liabilities and shareholders’ equity | $ 745,680 | $ 862,457 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 08, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 400,000,000 | 400,000,000 |
Common stock, shares issued (in shares) | 37,324,593 | 37,059,202 |
Common stock, shares outstanding (in shares) | 37,324,593 | 37,059,202 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive (Loss) Income - USD ($) | 3 Months Ended | 8 Months Ended | ||
Sep. 08, 2020 | Sep. 10, 2019 | Sep. 08, 2020 | Sep. 10, 2019 | |
Revenue: | ||||
Total revenue | $ 120,782,000 | $ 120,198,000 | $ 335,162,000 | $ 355,855,000 |
Restaurant operating expenses: | ||||
Labor and related expenses | 35,450,000 | 36,304,000 | 101,995,000 | 108,542,000 |
Occupancy and other operating expenses | 25,302,000 | 25,386,000 | 72,099,000 | 73,522,000 |
General and administrative | 10,841,000 | 10,421,000 | 30,139,000 | 31,735,000 |
Franchise advertising expenses | 4,001,000 | 3,458,000 | 9,995,000 | 10,048,000 |
Depreciation and amortization | 6,055,000 | 5,941,000 | 18,477,000 | 17,661,000 |
Occupancy and other - franchise subleases and other | 1,766,000 | 1,011,000 | 5,088,000 | 2,858,000 |
Pre-opening costs | 63,000 | 465,000 | 359,000 | 720,000 |
Impairment of goodwill | 0 | 0 | 87,277,000 | 0 |
Impairment of trademarks | 0 | 0 | 11,900,000 | 0 |
Impairment of long-lived assets | 0 | 1,407,000 | 8,287,000 | 5,101,000 |
Restaurant closure charges, net | 413,000 | 588,000 | 1,406,000 | 1,718,000 |
Loss on disposal of assets and adjustments to assets held for sale, net | 140,000 | 7,906,000 | 697,000 | 8,790,000 |
Total operating expenses | 113,082,000 | 123,648,000 | 430,707,000 | 351,129,000 |
Income (loss) from operations | 7,700,000 | (3,450,000) | (95,545,000) | 4,726,000 |
Other expense (income), net | ||||
Interest expense | 941,000 | 1,663,000 | 3,730,000 | 5,169,000 |
Other income | 0 | 0 | 0 | (201,000) |
Total other expense, net | 941,000 | 1,663,000 | 3,730,000 | 4,968,000 |
Income (loss) from operations before provision (benefit) for income taxes | 6,759,000 | (5,113,000) | (99,275,000) | (242,000) |
Provision (benefit) for income taxes | 962,000 | 2,556,000 | (2,028,000) | 3,910,000 |
Net income (loss) | 5,797,000 | (7,669,000) | (97,247,000) | (4,152,000) |
Other comprehensive income (loss): | ||||
Change in fair value of interest rate cap, net of tax | 0 | (75,000) | 0 | (345,000) |
Reclassification of interest rate cap amortization included in net income, net of tax | 0 | 32,000 | 52,000 | 79,000 |
Total other comprehensive (loss) income, net | 0 | (43,000) | 52,000 | (266,000) |
Comprehensive income (loss) | $ 5,797,000 | $ (7,712,000) | $ (97,195,000) | $ (4,418,000) |
Earnings (loss) per share: | ||||
Basic (in dollars per share) | $ 0.16 | $ (0.21) | $ (2.62) | $ (0.11) |
Diluted (in dollars per share) | $ 0.15 | $ (0.21) | $ (2.62) | $ (0.11) |
Weighted-average shares outstanding | ||||
Basic (in shares) | 37,293,390 | 37,023,287 | 37,152,419 | 37,000,331 |
Diluted (in shares) | 37,420,043 | 37,023,287 | 37,152,419 | 37,000,331 |
Company restaurant sales | ||||
Revenue: | ||||
Revenue | $ 109,522,000 | $ 111,059,000 | $ 305,116,000 | $ 329,142,000 |
Franchise revenue | ||||
Revenue: | ||||
Revenue | 5,169,000 | 4,490,000 | 14,080,000 | 13,193,000 |
Franchise advertising contributions | ||||
Revenue: | ||||
Revenue | 4,001,000 | 3,458,000 | 9,995,000 | 10,048,000 |
Franchise sublease and other income | ||||
Revenue: | ||||
Revenue | 2,090,000 | 1,191,000 | 5,971,000 | 3,472,000 |
Food and paper costs | ||||
Restaurant operating expenses: | ||||
Cost, Direct Material | $ 29,051,000 | $ 30,761,000 | $ 82,988,000 | $ 90,434,000 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands | Total | Cumulative Effect, Period of Adoption, Adjustment | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings (Accumulated Deficit) | Retained Earnings (Accumulated Deficit)Cumulative Effect, Period of Adoption, Adjustment |
Beginning Balance, Shares at Jan. 01, 2019 | 37,305,342 | ||||||
Beginning Balance at Jan. 01, 2019 | $ 422,274 | $ 1,912 | $ 4 | $ 336,941 | $ 180 | $ 85,149 | $ 1,912 |
Net income (loss) | 1,425 | 1,425 | |||||
Other comprehensive income (loss), net of tax | (118) | (118) | |||||
Comprehensive income (loss) | 1,307 | ||||||
Stock-based compensation | 1,577 | 1,577 | |||||
Issuance of vested restricted stock, net of shares withheld for tax withholding, shares | 13,172 | ||||||
Issuance of vested restricted stock, net of shares withheld for tax withholding | (84) | (84) | |||||
Exercise of stock options, shares | 1,500 | ||||||
Exercise of stock options | 16 | 16 | |||||
Repurchase of common stocks and warrants, shares | (270,874) | ||||||
Repurchase of common stocks and warrants | (4,306) | (4,306) | |||||
Ending Balance, Shares at Mar. 26, 2019 | 37,049,140 | ||||||
Ending Balance at Mar. 26, 2019 | 422,696 | $ 4 | 334,144 | 62 | 88,486 | ||
Beginning Balance, Shares at Jan. 01, 2019 | 37,305,342 | ||||||
Beginning Balance at Jan. 01, 2019 | 422,274 | $ 1,912 | $ 4 | 336,941 | 180 | 85,149 | $ 1,912 |
Net income (loss) | (4,152) | ||||||
Other comprehensive income (loss), net of tax | (266) | ||||||
Comprehensive income (loss) | (4,418) | ||||||
Ending Balance, Shares at Sep. 10, 2019 | 37,059,202 | ||||||
Ending Balance at Sep. 10, 2019 | 414,514 | $ 4 | 331,687 | (86) | 82,909 | ||
Beginning Balance, Shares at Mar. 26, 2019 | 37,049,140 | ||||||
Beginning Balance at Mar. 26, 2019 | 422,696 | $ 4 | 334,144 | 62 | 88,486 | ||
Net income (loss) | 2,092 | 2,092 | |||||
Other comprehensive income (loss), net of tax | (105) | (105) | |||||
Comprehensive income (loss) | 1,987 | ||||||
Stock-based compensation | 1,677 | 1,677 | |||||
Issuance of vested restricted stock, net of shares withheld for tax withholding, shares | 48,499 | ||||||
Exercise of stock options, shares | 1,500 | ||||||
Exercise of stock options | 15 | 15 | |||||
Repurchase of common stocks and warrants, shares | (303,607) | ||||||
Repurchase of common stocks and warrants | (3,067) | (3,067) | |||||
Ending Balance, Shares at Jun. 18, 2019 | 36,795,532 | ||||||
Ending Balance at Jun. 18, 2019 | 423,308 | $ 4 | 332,769 | (43) | 90,578 | ||
Net income (loss) | (7,669) | (7,669) | |||||
Other comprehensive income (loss), net of tax | (43) | (43) | |||||
Comprehensive income (loss) | (7,712) | ||||||
Stock-based compensation | 1,347 | 1,347 | |||||
Issuance of vested restricted stock, net of shares withheld for tax withholding, shares | 254,670 | ||||||
Issuance of vested restricted stock, net of shares withheld for tax withholding | (2,518) | (2,518) | |||||
Exercise of stock options, shares | 9,000 | ||||||
Exercise of stock options | 89 | 89 | |||||
Ending Balance, Shares at Sep. 10, 2019 | 37,059,202 | ||||||
Ending Balance at Sep. 10, 2019 | 414,514 | $ 4 | 331,687 | (86) | 82,909 | ||
Beginning Balance, Shares at Dec. 31, 2019 | 37,059,202 | ||||||
Beginning Balance at Dec. 31, 2019 | 302,107 | $ 4 | 333,379 | (52) | (31,224) | ||
Net income (loss) | (102,468) | (102,468) | |||||
Other comprehensive income (loss), net of tax | 45 | 45 | |||||
Comprehensive income (loss) | (102,423) | ||||||
Stock-based compensation | 1,225 | 1,225 | |||||
Issuance of vested restricted stock, net of shares withheld for tax withholding, shares | 21,758 | ||||||
Issuance of vested restricted stock, net of shares withheld for tax withholding | (105) | (105) | |||||
Ending Balance, Shares at Mar. 24, 2020 | 37,080,960 | ||||||
Ending Balance at Mar. 24, 2020 | 200,804 | $ 4 | 334,499 | (7) | (133,692) | ||
Beginning Balance, Shares at Dec. 31, 2019 | 37,059,202 | ||||||
Beginning Balance at Dec. 31, 2019 | 302,107 | $ 4 | 333,379 | (52) | (31,224) | ||
Net income (loss) | (97,247) | ||||||
Other comprehensive income (loss), net of tax | 52 | ||||||
Comprehensive income (loss) | (97,195) | ||||||
Ending Balance, Shares at Sep. 08, 2020 | 37,324,593 | ||||||
Ending Balance at Sep. 08, 2020 | 207,818 | $ 4 | 336,285 | (128,471) | |||
Beginning Balance, Shares at Mar. 24, 2020 | 37,080,960 | ||||||
Beginning Balance at Mar. 24, 2020 | 200,804 | $ 4 | 334,499 | (7) | (133,692) | ||
Net income (loss) | (576) | (576) | |||||
Other comprehensive income (loss), net of tax | 7 | 7 | |||||
Comprehensive income (loss) | (569) | ||||||
Stock-based compensation | 1,413 | 1,413 | |||||
Issuance of vested restricted stock, net of shares withheld for tax withholding, shares | 42,016 | ||||||
Ending Balance, Shares at Jun. 16, 2020 | 37,122,976 | ||||||
Ending Balance at Jun. 16, 2020 | 201,648 | $ 4 | 335,912 | $ 0 | (134,268) | ||
Net income (loss) | 5,797 | 5,797 | |||||
Other comprehensive income (loss), net of tax | 0 | ||||||
Comprehensive income (loss) | 5,797 | ||||||
Stock-based compensation | 1,267 | 1,267 | |||||
Issuance of vested restricted stock, net of shares withheld for tax withholding, shares | 201,617 | ||||||
Issuance of vested restricted stock, net of shares withheld for tax withholding | (894) | (894) | |||||
Ending Balance, Shares at Sep. 08, 2020 | 37,324,593 | ||||||
Ending Balance at Sep. 08, 2020 | $ 207,818 | $ 4 | $ 336,285 | $ (128,471) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 8 Months Ended | |
Sep. 08, 2020 | Sep. 10, 2019 | |
Operating activities | ||
Net loss | $ (97,247,000) | $ (4,152,000) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Allowance for doubtful accounts | 15,000 | 0 |
Depreciation and amortization | 18,477,000 | 17,661,000 |
Amortization of deferred financing costs, debt discount and interest rate cap | 251,000 | 376,000 |
Amortization of operating lease assets | 15,200,000 | 14,886,000 |
Stock-based compensation | 3,905,000 | 4,601,000 |
Impairment of goodwill | 87,277,000 | 0 |
Impairment of trademarks | 11,900,000 | 0 |
Impairment of long-lived assets | 8,287,000 | 5,101,000 |
Deferred income taxes | (8,059,000) | 1,210,000 |
Loss on disposal of assets and adjustments to assets held for sale, net | 697,000 | 8,790,000 |
Restaurant closure charges | 92,000 | 118,000 |
Changes in operating assets and liabilities: | ||
Accounts and other receivables, net | (166,000) | 394,000 |
Inventories | 483,000 | 55,000 |
Prepaid expenses and other current assets | 1,071,000 | (330,000) |
Other assets | (252,000) | (124,000) |
Accounts payable | (365,000) | 1,293,000 |
Operating lease liabilities | (14,513,000) | (13,584,000) |
Other accrued liabilities | 13,148,000 | 2,307,000 |
Other non-current liabilities | (678,000) | 161,000 |
Net cash provided by operating activities | 39,523,000 | 38,763,000 |
Investing activities | ||
Purchases of property and equipment | (16,335,000) | (28,440,000) |
Proceeds from disposal of property and equipment, net | 1,440,000 | 14,130,000 |
Purchases of other assets | (1,094,000) | (1,051,000) |
Acquisition of franchisees | 0 | (4,833,000) |
Proceeds from sale of company-operated restaurants | 2,558,000 | 2,090,000 |
Net cash used in investing activities | (13,431,000) | (18,104,000) |
Financing activities | ||
Repurchase of common stock and warrants | 0 | (7,373,000) |
Payment of tax withholding related to restricted stock vesting | (999,000) | (2,602,000) |
Payments on finance leases and other debt | (155,000) | (389,000) |
Proceeds from revolving credit facility | 65,000,000 | 27,000,000 |
Payments on revolving credit facility | (86,000,000) | (36,000,000) |
Proceeds from exercise of stock options | 0 | 120,000 |
Net cash used in financing activities | (22,154,000) | (19,244,000) |
Increase in cash and cash equivalents | 3,938,000 | 1,415,000 |
Cash and cash equivalents at beginning of period | 1,421,000 | 7,153,000 |
Cash and cash equivalents at end of period | 5,359,000 | 8,568,000 |
Supplemental cash flow information: | ||
Cash paid during the period for interest | 3,255,000 | 4,720,000 |
Cash paid during the period for income taxes | 1,060,000 | 1,764,000 |
Supplemental schedule of non-cash activities: | ||
Accrued property and equipment purchases | 1,783,000 | 5,768,000 |
Write-offs of accounts receivables | 0 | 21,000 |
Amortization of interest rate cap into net income, net of tax | 52,000 | 79,000 |
Change in other asset for fair value of interest rate cap recorded to other comprehensive (loss) income, net of tax | 0 | (345,000) |
Operating lease right-of-use assets obtained in exchange for lease obligations | 13,139,000 | 262,369,000 |
Finance lease right-of-use assets obtained in exchange for lease obligations | 0 | 1,185,000 |
Impairment on operating lease right-of-use assets related to the adoption of new accounting pronouncements | $ 0 | $ 3,116,000 |
Description of Business
Description of Business | 8 Months Ended |
Sep. 08, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | Description of BusinessDel Taco Restaurants, Inc. is a Delaware corporation headquartered in Lake Forest, California. The consolidated financial statements include the accounts of Del Taco Restaurants, Inc. and its wholly owned subsidiaries (collectively, the “Company” or “Del Taco”). The Company develops, franchises, owns, and operates Del Taco quick-service Mexican-American restaurants. At September 8, 2020, there were 295 company-operated and 301 franchise-operated Del Taco restaurants located in 15 states, including one franchise-operated unit in Guam. At September 10, 2019, there were 312 company-operated and 274 franchise-operated Del Taco restaurants located in 14 states, including one franchise-operated unit in Guam. |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 8 Months Ended |
Sep. 08, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited consolidated financial statements included herein have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). For additional information, these unaudited consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019 ("2019 Form 10-K"). The Company’s fiscal year ends on the Tuesday closest to December 31. Fiscal year 2020 is a fifty-two week period ending December 29, 2020. Fiscal year 2019 is the fifty-two week period ended December 31, 2019. In a fifty-two week fiscal year, the first, second and third quarters each include twelve weeks of operations and the fourth quarter includes sixteen weeks of operations. For fiscal year 2020, the Company’s accompanying financial statements reflect the twelve weeks ended September 8, 2020. For fiscal year 2019, the Company’s accompanying financial statements reflect the twelve weeks ended September 10, 2019. In the opinion of management, the accompanying consolidated financial statements reflect all adjustments which are necessary for a fair presentation of the consolidated financial position, results of operations and cash flows for the periods presented. The results of operations for such interim periods are not necessarily indicative of results of operations to be expected for the full fiscal year. Principles of Consolidation The accompanying unaudited consolidated financial statements include the accounts of the Company and its wholly and majority owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Management believes that such estimates have been based on reasonable and supportable assumptions and the resulting estimates are reasonable for use in the preparation of the consolidated financial statements. Actual results could differ from these estimates. The Company’s significant estimates include estimates for impairment of goodwill, intangible assets and property and equipment, valuations provided in business combinations, insurance reserves, restaurant closure reserves, stock-based compensation, contingent liabilities, certain leasing activities and income tax valuation allowances. Recently Issued Accounting Standards In December 2019, the Financial Accounting Standard Board ("FASB") issued Accounting Standards Update ("ASU") 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by removing the following exceptions: (1) exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or gain from other items; (2) exception to the requirement to recognize a deferred tax liability for equity method investments when a subsidiary becomes an equity method investment; and (3) exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. Furthermore, ASU 2019-12 simplifies the accounting for income taxes by doing the following: (1) requiring that an entity recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax; (2) requiring that an entity evaluate when a step up in the tax basis of goodwill should be considered part if the business combination in which the book goodwill was originally recognized and when it should be considered a separate transaction; (3) specifying that an entity is not required to allocate the consolidated amount of current and deferred tax expense to a legal entity that is not subject to tax in its separate financial statements; and (4) requiring that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020. Early adoption is permitted. The Company is currently evaluating the impact of the standard on its consolidated financial statements. Recently Adopted Accounting Standards In June 2016, the FASB issued ASU 2016-13, Financial Statements - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires companies to measure credit losses utilizing a methodology that reflects expected credit losses and requires a consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The standard is effective for fiscal years beginning after December 15, 2019. There was no material impact on the Company's consolidated financial statements and related disclosures as a result of adopting this standard. In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, which clarifies the accounting implementation costs in cloud computing arrangements. The standard is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted. There was no material impact on the Company's consolidated financial statements and related disclosures as a result of adopting this standard. Summary of Significant Accounting Policies There have been no changes to our significant accounting policies described in the 2019 Form 10-K filed with the SEC on March 13, 2020 that have had a material impact on our consolidated financial statements and related notes. |
Impairment of Long-Lived Assets
Impairment of Long-Lived Assets and Restaurant Closure Charges | 8 Months Ended |
Sep. 08, 2020 | |
Restructuring and Related Activities [Abstract] | |
Impairment of Long-Lived Assets and Restaurant Closure Charges | Impairment of Long-Lived Assets and Restaurant Closure Charges Impairment of Long-Lived Assets The Company evaluates long-lived assets for indicators of impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The Company considers a triggering event to have occurred related to a specific restaurant if the restaurant’s cash flows are less than a minimum threshold or if consistent levels of undiscounted cash flows for the remaining lease period are less than the carrying value of the restaurant’s assets. Long-lived assets are grouped and evaluated for impairment at the lowest level for which there are identifiable cash flows that are independent of the cash flows of other groups of assets. The Company evaluates such cash flows for individual restaurants and franchise agreements on an undiscounted basis. If it is determined that the carrying amounts of such long-lived assets are not recoverable, the assets are written down to their estimated fair values. We generally estimate fair value using the discounted value of the estimated cash flows associated with the respective restaurant or agreement, using Level 3 inputs. The impairment charges represent the excess of each operating lease right-of-use asset, furniture, fixtures and equipment and leasehold improvement's carrying amount over its estimated fair value. During the twelve and thirty-six weeks ended September 8, 2020, the Company evaluated certain restaurants having indicators of impairment based on operating performance, taking into consideration the negative impact of the COVID-19 pandemic on forecasted restaurant performance, which resulted in elevated impairment charges for the thirty-six weeks ended September 8, 2020. No impairment charges were recorded during the twelve weeks ended September 8, 2020. During the thirty-six weeks ended September 8, 2020, the Company recorded a non-cash impairment charge totaling $8.3 million related to eight restaurants based on the estimate of future recoverable cash flows. During the twelve weeks ended September 10, 2019, the Company evaluated certain restaurants having indicators of impairment based on operating performance and recorded an impairment charge totaling $1.4 million related to one restaurant based on the estimate of future recoverable cash flows. During the thirty-six weeks ended September 10, 2019, the Company evaluated certain restaurants having indicators of impairment based on operating performance and recorded an impairment charge totaling $5.1 million related to three restaurants based on the estimate of future recoverable cash flows. Restaurant Closure Charges The restaurant closure liability was $0.5 million and $0.4 million at September 8, 2020 and December 31, 2019, respectively, and relates to the non-lease executory costs associated with company-operated restaurants that were closed during the fourth quarter of 2015. A summary of the restaurant closure liability activity for these closed restaurants consisted of the following (in thousands): 36 Weeks Ended September 8, 2020 September 10, 2019 Beginning Balance $ 437 $ 2,092 Reclassified to operating lease right-of-use assets — (1,900) Cash payments (2) (192) Adjustments to estimates based on current activity — 118 Accretion 16 — Ending Balance $ 451 $ 118 During the thirty-six weeks weeks ended September 10, 2019, in connection with the adoption of ASU 2016-02, Leases , the Company reclassified $1.9 million of the lease-related restaurant closure liability to offset the respective operating lease right-of-use assets. The current portion of the restaurant closure liability was $0.2 million and $0.1 million as of September 8, 2020 and December 31, 2019, respectively, and is included in other accrued liabilities in the consolidated balance sheets. The non-current portion of the restaurant closure liability was $0.3 million as of both September 8, 2020 and December 31, 2019, respectively, and is included in other non-current liabilities in the consolidated balance sheets. The restaurant closure liability is expected to be settled by 2022. |
Summary of Refranchising and Fr
Summary of Refranchising and Franchise Acquisitions | 8 Months Ended |
Sep. 08, 2020 | |
Franchise Acquisitions [Abstract] | |
Summary of Refranchising and Franchise Acquisitions | Summary of Refranchising and Franchise Acquisitions Refranchising In connection with the sale of company-operated restaurants to franchisees, the Company typically enters into several agreements, in addition to an asset purchase agreement, with franchisees including franchise and lease agreements. The Company typically sells restaurants’ inventory and equipment and retains ownership of the leasehold interest to the real estate to sublease to the franchisee. The Company has determined that its restaurant dispositions usually represent multiple-element arrangements, and as a result, the cash consideration received is allocated to the separate elements based on their relative selling price. Cash consideration generally includes up-front consideration for the sale of the restaurants and franchise fees and future cash consideration for royalties and lease payments. The Company considers the future lease payments in allocating the initial cash consideration received. The Company compares the stated rent under the lease and/or sublease agreements with comparable market rents, and the Company records sublease assets/liabilities with a corresponding offset to the gain or loss on the sale of the company-operated restaurants. Sublease assets represent subleases with stated rent above comparable market rents. Sublease assets are amortized to sublease income over the term of the related sublease. Sublease liabilities represent subleases with stated rent below comparable market rents and are amortized to sublease income over the term of the related sublease. Both sublease assets and sublease liabilities arise from the sale of company-operated restaurants to franchisees. The cash consideration per restaurant for franchise fees is consistent with the amounts stated in the related franchise agreements, which are charged for separate standalone arrangements. The Company initially defers and subsequently recognizes the franchise fees over the term of the franchise agreement. Future royalty income is also recognized in franchise revenue as earned. The Company sold six company-operated restaurants to franchisees during the thirty-six weeks ended September 8, 2020 and 13 company-operated restaurants to franchisees during the thirty-six weeks ended September 10, 2019. The following table summarizes the net loss recognized related to these transactions (dollars in thousands): 36 Weeks Ended September 8, 2020 36 Weeks Ended September 10, 2019 Company-operated restaurants sold to franchisees 6 13 Proceeds from the sale of company-operated restaurants, net of selling costs $ 2,558 $ 2,090 Net assets sold (primarily furniture, fixtures and equipment) (a) (2,086) (2,051) Goodwill related to the company-operated restaurants sold to franchisees (1,196) (83) Allocation to deferred franchise fees (193) (281) Sublease assets, net 220 260 Gain on lease termination 40 — Loss on sale of company-operated restaurants, net (b) $ (657) $ (65) (a) Of the net assets sold during the thirty-six weeks ended September 8, 2020, $0.7 million was included in assets held for sale as of December 31, 2019. The net assets sold during the thirty-six weeks ended September 10, 2019 were all included in assets held for sale as of January 1, 2019. (b) Of the loss related to the company-operated restaurants sold during the thirty-six weeks ended September 8, 2020, $0.6 million was previously recognized during the fifty-two weeks ended December 31, 2019 as a fair value adjustment to the assets held for sale balance. The loss on sale of company-operated restaurants is included in loss on disposal of assets and adjustments to assets held for sale, net on the consolidated statements of comprehensive income (loss). Assets Held for Sale Assets held for sale includes the net book value of property and equipment for company-operated restaurants that the Company plans to sell within the next year to new or existing franchisees. Long-lived assets that meet the held for sale criteria are held for sale and reported at the lower of their carrying value or fair value, less estimated costs to sell. As of December 31, 2019, the Company classified 19 company-operated restaurants as held for sale. During the twelve weeks ended March 24, 2020, the Company sold five of these restaurants as discussed in the Refranchising section above and determined that the remaining 14 company-operated restaurants would not be sold within the next year and therefore reclassified the related long-lived assets back to held for use. The Company reclassified the assets back to held for use at their carrying amount before they were classified as held for sale, adjusted for depreciation expense that would have been recognized had the assets been continuously classified as held for use. As such, the Company recognized a loss of $0.5 million related to the reclassification which is included in loss on disposal of assets and adjustments to assets held for sale, net in the consolidated statement of comprehensive income (loss). As of September 8, 2020, the Company classified the land and building related to a previously closed company-operated restaurant as held for sale and recorded a $0.2 million adjustment to assets held for sale in order to recognize the assets at their estimated net realizable value less estimated costs to sell. The estimated fair value of assets held for sale is based upon Level 2 inputs, which include previous negotiations with a third party. Assets held for sale at September 8, 2020 and December 31, 2019 consisted of the following (in thousands): September 8, 2020 December 31, 2019 Land $ 561 $ — Building 934 — Other property and equipment — 4,025 Goodwill — 4,386 $ 1,495 $ 8,411 Franchise Acquisitions There were no franchise acquisitions during the thirty-six weeks ended September 8, 2020. The Company acquired four franchise-operated restaurants during the thirty-six weeks ended September 10, 2019. The Company accounts for the acquisition of franchise-operated restaurants using the acquisition method of accounting for business combinations. The purchase price allocations were based on fair value estimates determined using significant unobservable inputs (Level 3). The goodwill recorded primarily relates to the market position and future growth potential of the markets acquired and is expected to be deductible for income tax purposes. The following table provides detail of the combined acquisitions for the thirty-six weeks ended September 10, 2019 (dollars in thousands): 36 Weeks Ended Franchise-operated restaurants acquired from franchisees 4 Goodwill $ 4,302 Restaurant and other equipment and leasehold improvements 660 Operating lease right-of-use assets 2,006 Operating lease liabilities (2,006) Unfavorable lease liabilities (130) Total consideration $ 4,832 The unfavorable lease liability of $0.1 million was recorded as an adjustment to the respective operating lease right-of-use asset. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 8 Months Ended |
Sep. 08, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Changes in the carrying amount of goodwill for the thirty-six weeks ended September 8, 2020 are as follows (in thousands): Goodwill Balance as of December 31, 2019 $ 192,739 Goodwill reclassified from held for sale 3,517 Impairment of goodwill (87,277) Balance as of September 8, 2020 $ 108,979 The decrease in goodwill was primarily due to an impairment of $87.3 million during the thirty-six weeks ended September 8, 2020. In March 2020, the outbreak of the COVID-19 pandemic prompted authorities in most jurisdictions where the Company operates to issue stay-at-home orders, leading to an unexpected significant disruption to the Company's business requiring the Company to close restaurant dining rooms and operate with only drive-thru, take-out and delivery orders. As such, the consequences of the outbreak of the COVID-19 pandemic coupled with a sustained decline in the Company's stock price were determined to be indicators of impairment. As such, using Level 3 inputs, the Company performed a quantitative goodwill impairment assessment during the first quarter of 2020 using both the discounted cash flow method and guideline public company method to determine the fair value of its reporting unit. Significant assumptions and estimates used in determining fair value include future revenues, operating costs, working capital changes, capital expenditures, a discount rate that approximates the Company's weighted average cost of capital and a selection of comparable companies. Based on the quantitative assessment, the Company determined that the fair value of its reporting unit was less than its carrying value and recognized a non-cash goodwill impairment charge of $87.3 million, equal to the excess of the reporting unit's carrying value above its fair value. The impairment charge was recorded in impairment of goodwill on the consolidated statements of comprehensive income (loss). Since June 30, 2015, the date of the business combination between Del Taco and Levy Acquisition Corporation, accumulated goodwill impairment losses were $205.6 million and $118.3 million as of September 8, 2020 and December 31, 2019, respectively. In conjunction with the quantitative goodwill impairment assessment during the first quarter of 2020, the Company also performed a quantitative impairment assessment of its indefinite-lived trademarks. Using Level 3 inputs, the Company used the relief from royalty method to determine the fair value of its trademarks. Significant assumptions and estimates used in determining fair value include future revenues, the royalty rate, franchise attrition, brand maintenance expenses and a discount rate that approximates the Company's weighted average cost of capital. Based on the quantitative assessment, the Company determined the fair value of its trademarks was less than its carrying value and recognized a non-cash impairment charge of $11.9 million during the thirty-six weeks ended September 8, 2020, equal to the excess of the trademarks' carrying value above their fair value. The impairment charge was recorded in impairment of trademarks on the consolidated statements of comprehensive income (loss). The Company’s other intangible assets at September 8, 2020 and December 31, 2019 consisted of the following (in thousands): September 8, 2020 December 31, 2019 Gross Accumulated Net Gross Accumulated Net Sublease assets $ 1,820 $ (157) $ 1,663 $ 1,340 $ (82) $ 1,258 Franchise rights 13,995 (6,118) 7,877 14,298 (5,465) 8,833 Reacquired franchise rights 943 (281) 662 943 (207) 736 Total amortized other intangible assets $ 16,758 $ (6,556) $ 10,202 $ 16,581 $ (5,754) $ 10,827 The Company recorded sublease assets of $0.5 million and $1.0 million during the thirty-six weeks ended September 8, 2020 and September 10, 2019, respectively, in connection with the sale of company-operated restaurants (see Note 4 for more information). |
Debt, Obligations Under Capital
Debt, Obligations Under Capital Leases and Deemed Landlord Financing Liabilities | 8 Months Ended |
Sep. 08, 2020 | |
Debt Disclosure [Abstract] | |
Debt, Obligations Under Capital Leases and Deemed Landlord Financing Liabilities | Debt and Obligations Under Finance Leases The Company’s long-term debt, finance lease obligations and other debt at September 8, 2020 and December 31, 2019 consisted of the following (in thousands): September 8, 2020 December 31, 2019 Senior Credit Facility, as amended, net of unamortized debt discount of $197 and $ 122,915 $ 143,731 Total outstanding indebtedness 122,915 143,731 Obligations under finance leases and other debt 664 1,070 Total debt 123,579 144,801 Less: amounts due within one year 199 220 Total amounts due after one year, net $ 123,380 $ 144,581 At September 8, 2020 and December 31, 2019, the Company assessed the amounts recorded under the Senior Credit Facility and determined that such amounts approximated fair value. During the thirty-six weeks ended September 8, 2020, the Company wrote off a finance lease obligation of $0.3 million related to the modification of a lease from a finance lease to an operating lease. Senior Credit Facility On August 4, 2015, the Company refinanced its then existing senior credit facility and entered into a new credit agreement (the “Senior Credit Facility”). The Senior Credit Facility, which was to mature on August 4, 2020, provided for a $250 million revolving credit facility. In September 2019, the Company refinanced the Senior Credit Facility, pursuant to Amendment No. 4 to the Credit Agreement among Del Taco, as borrower, the Company and its subsidiaries, as guarantors, Bank of America, N.A. as administrative agent and letter of credit issuer, the lenders party thereto, and other parties thereto, which provides for a $250 million five-year senior secured revolving facility. The Senior Credit Facility, as amended, includes a sub limit of $35 million for letters of credit. The Senior Credit Facility, as amended, will mature on September 19, 2024. The Senior Credit Facility, as amended, contains certain financial covenants, including the maintenance of a consolidated total lease adjusted leverage ratio and a consolidated fixed charge coverage ratio. The Company was in compliance with the financial covenants as of September 8, 2020. Substantially all of the assets of the Company are pledged as collateral under the Senior Credit Facility. At September 8, 2020, the weighted-average interest rate on the outstanding balance of the Senior Credit Facility, as amended, was 2.16%. At September 8, 2020, the Company had a total of $108.7 million of availability for additional borrowings under the Senior Credit Facility, as amended, as the Company had $124.0 million of outstanding borrowings and $17.3 million of letters of credit outstanding, which reduce availability under the Senior Credit Facility, as amended. |
Leases
Leases | 8 Months Ended |
Sep. 08, 2020 | |
Leases [Abstract] | |
Leases | LeasesThe Company's material leases consist of restaurant locations and its executive offices with expiration dates through 2044. In general, the leases have remaining terms of 1-20 years, most of which include options to extend the leases for additional five year periods. The lease term is generally the minimum noncancelable period of the lease. The Company does not include option periods unless the Company determines that it is reasonably certain of exercising the option at inception or when a triggering event occurs. The Company has subleased certain properties to other third parties where the Company remains primarily liable to the landlord for the performance of all obligations in the event that the sublessee does not perform its obligations under the lease. As a result of the sublease arrangements, future rental commitments under operating leases will be offset by sublease amounts to be paid by the sublessee. In general, the terms of the sublease are similar to the terms of the master lease. The components of lease cost for the twelve and thirty-six weeks ended September 8, 2020 were as follows (in thousands): Classification Twelve Weeks Thirty-Six Weeks Operating lease cost Occupancy and other operating expenses, $ 9,251 $ 28,060 Finance lease cost: Amortization of right of use assets Depreciation and amortization 33 123 Interest on lease liabilities Interest expense 5 23 Short-term lease cost Occupancy and other operating expenses 71 238 Variable lease cost Occupancy and other operating expenses, 440 1,097 Sublease income Franchise sublease and other income (1,716) (4,988) Total lease cost $ 8,084 $ 24,553 The components of lease cost for the twelve and thirty-six weeks ended September 10, 2019 were as follows (in thousands): Classification Twelve Weeks Thirty-Six Weeks Operating lease cost Occupancy and other operating expenses, $ 8,792 $ 26,196 Finance lease cost: Amortization of right of use assets Depreciation and amortization 86 329 Interest on lease liabilities Interest expense 21 72 Short-term lease cost Occupancy and other operating expenses 53 231 Variable lease cost Occupancy and other operating expenses, 444 1,282 Sublease income Franchise sublease and other income (1,125) (3,261) Total lease cost $ 8,271 $ 24,849 Supplemental balance sheet information related to the Company's operating and finance leases (noting the financial statement caption each is included with) as of September 8, 2020 and December 31, 2019 was as follows (in thousands): September 8, 2020 December 31, 2019 Operating lease assets: Operating lease right-of-use assets $ 250,154 $ 258,278 Operating lease liabilities: Current portion of operating lease liabilities $ 20,116 $ 17,848 Operating lease liabilities, excluding current portion 253,121 257,361 Total operating lease liabilities $ 273,237 $ 275,209 Finance lease assets: Buildings under finance leases $ 441 $ 871 Accumulated depreciation (240) (334) Finance lease assets, net $ 201 $ 537 Finance lease obligations: Current portion of finance lease obligations and other debt $ 138 $ 162 Long-term debt, finance lease obligations and other debt, excluding current portion, net 70 412 Total finance lease obligations $ 208 $ 574 Weighted Average Remaining Lease Term (in years) September 8, 2020 Operating leases 12.5 Finance leases 2.1 Weighted Average Discount Rate September 8, 2020 Operating leases 6.58 % Finance leases 10.44 % Supplemental cash flow information related to leases was as follows (in thousands): Thirty-Six Weeks Ended September 8, 2020 Thirty-Six Weeks Ended September 10, 2019 Cash paid for amounts in the measurement of lease liabilities: Operating cash flows used for operating leases $ 25,529 $ 22,617 Operating cash flows used for finance leases $ 23 $ 72 Financing cash flows used for finance leases $ 119 $ 353 The estimated future lease payments as of September 8, 2020, are as follows (in thousands): Finance Lease Liabilities Operating Lease Liabilities Operating Subleases Net Lease Commitments 2020 $ 38 $ 9,957 $ (1,562) $ 8,433 2021 138 39,240 (6,140) 33,238 2022 19 41,029 (6,678) 34,370 2023 17 35,892 (6,005) 29,904 2024 16 30,076 (5,358) 24,734 Thereafter 4 253,707 (59,927) 193,784 Total lease payments $ 232 $ 409,901 $ (85,670) $ 324,463 Amounts representing interest (24) (136,664) (136,688) Present value of lease obligations $ 208 $ 273,237 $ 187,775 During the thirty-six weeks ended September 8, 2020, the Company entered into one sale-leaseback arrangement with a third party private investor during the first quarter of 2020. The sale-leaseback transaction does not provide for any continuing involvement by the Company other than a normal lease where the Company intends to use the property during the lease term. The lease has been accounted for as an operating lease. The net proceeds from the transaction totaled approximately $1.4 million. Under the arrangement, the Company sold the land and building of an existing restaurant and leased it back for a term of 20 years. The sale of this property resulted in a gain of approximately $0.6 million which is included in loss on disposal of assets and adjustments to assets held for sale, net in the consolidated statements of comprehensive income (loss). During the thirty-six weeks ended September 10, 2019, the Company entered into three sale-leaseback arrangements with third party private investors, with two arrangements occurring during the first quarter of 2019 and one during the second quarter of 2019. These sale-leaseback transactions do not provide for any continuing involvement by the Company other than normal leases where the Company intends to use the property during the lease term. The leases have been accounted for as operating leases. The net proceeds from the transactions totaled approximately $12.7 million. Under two of the arrangements, the Company sold the land and buildings related to restaurants constructed during 2018 and leased them back for a term of 20 years. Under one of the arrangements, the Company sold the land related to a restaurant constructed during 2018 and leased it back for a term of 20 years. The sale of these properties resulted in a net loss of approximately $0.2 million which is included in loss on disposal of assets and adjustments to assets held for sale, net in the consolidated statements of comprehensive income (loss). The assets sold were included in assets held for sale as of January 1, 2019. During the twelve weeks ended June 16, 2020, following the sale of a company-operated restaurant to a franchisee, the related lease was assigned to the franchisee. The Company is a guarantor on the lease which has a remaining term of 19 years, expiring in 2039, and remaining lease payments total approximately $1.6 million. The Company would remain a guarantor of the lease in the event the lease is extended for any established renewal periods. As of September 8, 2020, the Company does not anticipate any material defaults under the forgoing lease, and therefore, no liability has been provided. Additionally, another Del Taco franchisee has a direct sublease with a third party where the Company is a guarantor on the sublease. The lease has a remaining term of 11 years, expiring in 2031, and remaining lease payments total approximately $1.6 million. The Company would remain a guarantor of the lease in the event the lease is extended for any established renewal periods. In 2019, the franchisee defaulted on the lease payments. The Company had a liability of $0.04 million and $0.08 million as of September 8, 2020 and December 31, 2019, respectively, representing the estimated payments that the Company will be liable for until it is able to find a new franchisee or convert the restaurant to a company-operated restaurant. During the twelve weeks ended June 16, 2020, in response to the COVID-19 pandemic, the Company negotiated temporary deferrals of certain rent payments until future periods. As permitted by recent FASB staff guidance, the Company elected to not evaluate whether these concessions were considered lease modifications and adopted a policy to not account for these concessions as lease modifications. As such, the Company continued to account for the related lease liabilities and right-of-use assets using the rights and obligations of the existing leases and included $1.3 million related to temporary rent payment |
Leases | LeasesThe Company's material leases consist of restaurant locations and its executive offices with expiration dates through 2044. In general, the leases have remaining terms of 1-20 years, most of which include options to extend the leases for additional five year periods. The lease term is generally the minimum noncancelable period of the lease. The Company does not include option periods unless the Company determines that it is reasonably certain of exercising the option at inception or when a triggering event occurs. The Company has subleased certain properties to other third parties where the Company remains primarily liable to the landlord for the performance of all obligations in the event that the sublessee does not perform its obligations under the lease. As a result of the sublease arrangements, future rental commitments under operating leases will be offset by sublease amounts to be paid by the sublessee. In general, the terms of the sublease are similar to the terms of the master lease. The components of lease cost for the twelve and thirty-six weeks ended September 8, 2020 were as follows (in thousands): Classification Twelve Weeks Thirty-Six Weeks Operating lease cost Occupancy and other operating expenses, $ 9,251 $ 28,060 Finance lease cost: Amortization of right of use assets Depreciation and amortization 33 123 Interest on lease liabilities Interest expense 5 23 Short-term lease cost Occupancy and other operating expenses 71 238 Variable lease cost Occupancy and other operating expenses, 440 1,097 Sublease income Franchise sublease and other income (1,716) (4,988) Total lease cost $ 8,084 $ 24,553 The components of lease cost for the twelve and thirty-six weeks ended September 10, 2019 were as follows (in thousands): Classification Twelve Weeks Thirty-Six Weeks Operating lease cost Occupancy and other operating expenses, $ 8,792 $ 26,196 Finance lease cost: Amortization of right of use assets Depreciation and amortization 86 329 Interest on lease liabilities Interest expense 21 72 Short-term lease cost Occupancy and other operating expenses 53 231 Variable lease cost Occupancy and other operating expenses, 444 1,282 Sublease income Franchise sublease and other income (1,125) (3,261) Total lease cost $ 8,271 $ 24,849 Supplemental balance sheet information related to the Company's operating and finance leases (noting the financial statement caption each is included with) as of September 8, 2020 and December 31, 2019 was as follows (in thousands): September 8, 2020 December 31, 2019 Operating lease assets: Operating lease right-of-use assets $ 250,154 $ 258,278 Operating lease liabilities: Current portion of operating lease liabilities $ 20,116 $ 17,848 Operating lease liabilities, excluding current portion 253,121 257,361 Total operating lease liabilities $ 273,237 $ 275,209 Finance lease assets: Buildings under finance leases $ 441 $ 871 Accumulated depreciation (240) (334) Finance lease assets, net $ 201 $ 537 Finance lease obligations: Current portion of finance lease obligations and other debt $ 138 $ 162 Long-term debt, finance lease obligations and other debt, excluding current portion, net 70 412 Total finance lease obligations $ 208 $ 574 Weighted Average Remaining Lease Term (in years) September 8, 2020 Operating leases 12.5 Finance leases 2.1 Weighted Average Discount Rate September 8, 2020 Operating leases 6.58 % Finance leases 10.44 % Supplemental cash flow information related to leases was as follows (in thousands): Thirty-Six Weeks Ended September 8, 2020 Thirty-Six Weeks Ended September 10, 2019 Cash paid for amounts in the measurement of lease liabilities: Operating cash flows used for operating leases $ 25,529 $ 22,617 Operating cash flows used for finance leases $ 23 $ 72 Financing cash flows used for finance leases $ 119 $ 353 The estimated future lease payments as of September 8, 2020, are as follows (in thousands): Finance Lease Liabilities Operating Lease Liabilities Operating Subleases Net Lease Commitments 2020 $ 38 $ 9,957 $ (1,562) $ 8,433 2021 138 39,240 (6,140) 33,238 2022 19 41,029 (6,678) 34,370 2023 17 35,892 (6,005) 29,904 2024 16 30,076 (5,358) 24,734 Thereafter 4 253,707 (59,927) 193,784 Total lease payments $ 232 $ 409,901 $ (85,670) $ 324,463 Amounts representing interest (24) (136,664) (136,688) Present value of lease obligations $ 208 $ 273,237 $ 187,775 During the thirty-six weeks ended September 8, 2020, the Company entered into one sale-leaseback arrangement with a third party private investor during the first quarter of 2020. The sale-leaseback transaction does not provide for any continuing involvement by the Company other than a normal lease where the Company intends to use the property during the lease term. The lease has been accounted for as an operating lease. The net proceeds from the transaction totaled approximately $1.4 million. Under the arrangement, the Company sold the land and building of an existing restaurant and leased it back for a term of 20 years. The sale of this property resulted in a gain of approximately $0.6 million which is included in loss on disposal of assets and adjustments to assets held for sale, net in the consolidated statements of comprehensive income (loss). During the thirty-six weeks ended September 10, 2019, the Company entered into three sale-leaseback arrangements with third party private investors, with two arrangements occurring during the first quarter of 2019 and one during the second quarter of 2019. These sale-leaseback transactions do not provide for any continuing involvement by the Company other than normal leases where the Company intends to use the property during the lease term. The leases have been accounted for as operating leases. The net proceeds from the transactions totaled approximately $12.7 million. Under two of the arrangements, the Company sold the land and buildings related to restaurants constructed during 2018 and leased them back for a term of 20 years. Under one of the arrangements, the Company sold the land related to a restaurant constructed during 2018 and leased it back for a term of 20 years. The sale of these properties resulted in a net loss of approximately $0.2 million which is included in loss on disposal of assets and adjustments to assets held for sale, net in the consolidated statements of comprehensive income (loss). The assets sold were included in assets held for sale as of January 1, 2019. During the twelve weeks ended June 16, 2020, following the sale of a company-operated restaurant to a franchisee, the related lease was assigned to the franchisee. The Company is a guarantor on the lease which has a remaining term of 19 years, expiring in 2039, and remaining lease payments total approximately $1.6 million. The Company would remain a guarantor of the lease in the event the lease is extended for any established renewal periods. As of September 8, 2020, the Company does not anticipate any material defaults under the forgoing lease, and therefore, no liability has been provided. Additionally, another Del Taco franchisee has a direct sublease with a third party where the Company is a guarantor on the sublease. The lease has a remaining term of 11 years, expiring in 2031, and remaining lease payments total approximately $1.6 million. The Company would remain a guarantor of the lease in the event the lease is extended for any established renewal periods. In 2019, the franchisee defaulted on the lease payments. The Company had a liability of $0.04 million and $0.08 million as of September 8, 2020 and December 31, 2019, respectively, representing the estimated payments that the Company will be liable for until it is able to find a new franchisee or convert the restaurant to a company-operated restaurant. During the twelve weeks ended June 16, 2020, in response to the COVID-19 pandemic, the Company negotiated temporary deferrals of certain rent payments until future periods. As permitted by recent FASB staff guidance, the Company elected to not evaluate whether these concessions were considered lease modifications and adopted a policy to not account for these concessions as lease modifications. As such, the Company continued to account for the related lease liabilities and right-of-use assets using the rights and obligations of the existing leases and included $1.3 million related to temporary rent payment |
Derivative Instruments
Derivative Instruments | 8 Months Ended |
Sep. 08, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | Derivative Instruments 2016 Interest Rate Cap Agreement In June 2016, the Company entered into an interest rate cap agreement, which became effective July 1, 2016, to hedge cash flows associated with interest rate fluctuations on variable rate debt, with a termination date of March 31, 2020 ("2016 Interest Rate Cap Agreement"). The 2016 Interest Rate Cap Agreement had an initial notional amount of $70.0 million of the Senior Credit Facility that effectively converted that portion of the outstanding balance of the Senior Credit Facility from variable rate debt to capped variable rate debt, resulting in a change in the applicable interest rate from an interest rate of one-month LIBOR plus the applicable margin (as provided by the Senior Credit Facility) to a capped interest rate of 2.00% plus the applicable margin. During the period from July 1, 2016 through the expiration on March 31, 2020, the 2016 Interest Rate Cap Agreement had no hedge ineffectiveness. To ensure the effectiveness of the 2016 Interest Rate Cap Agreement, the Company elected the one-month LIBOR rate option for its variable rate interest payments on term balances equal to or in excess of the applicable notional amount of the interest rate cap agreement as of each reset date. The reset dates and other critical terms perfectly match with the interest rate cap reset dates and other critical terms during fiscal year 2020 through the expiration on March 31, 2020. During the thirty-six weeks ended September 8, 2020, the Company reclassified approximately $67,000 of interest expense related to the hedges of these transactions into earnings. The effective portion of the 2016 Interest Rate Cap Agreement through the expiration on March 31, 2020 was included in accumulated other comprehensive loss. |
Fair Value Measurements
Fair Value Measurements | 8 Months Ended |
Sep. 08, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The fair values of cash and cash equivalents, accounts receivable, accounts payable and other accrued liabilities approximate their carrying amounts due to their short maturities. The carrying value of the Senior Credit Facility, as amended, approximated its fair value. The 2016 Interest Rate Cap Agreement was recorded at fair value in the Company’s consolidated balance sheets. As of December 31, 2019, the Company held certain assets and liabilities that are required to be measured at fair value on a recurring basis, including a derivative instrument related to interest rates. The Company determined the fair value of the interest rate cap contract based on counterparty quotes, with appropriate adjustments for any significant impact of nonperformance risk of the parties to the interest rate cap contracts. Therefore, the Company categorized these interest rate cap contracts as Level 2 fair value measurements. The 2016 Interest Rate Cap Agreement expired on March 31, 2020. The fair value of the 2016 Interest Rate Cap Agreement was $0.0 million at December 31, 2019 and was included in other assets in the Company's consolidated balance sheets. The Company's assets and liabilities measured at fair value on a recurring basis as of December 31, 2019 were as follows (in thousands): December 31, 2019 Markets for Identical Assets (Level 1) Observable Inputs (Level 2) Unobservable Inputs (Level 3) 2016 Interest Rate Cap Agreement $ — $ — $ — $ — Total assets measured at fair value $ — $ — $ — $ — |
Other Accrued Liabilities and O
Other Accrued Liabilities and Other Non-current Liabilities | 8 Months Ended |
Sep. 08, 2020 | |
Other Liabilities Disclosure [Abstract] | |
Other Accrued Liabilities and Other Non-current Liabilities | Other Accrued Liabilities and Other Non-current Liabilities A summary of other accrued liabilities follows (in thousands): September 8, 2020 December 31, 2019 Employee compensation and related items $ 15,212 $ 10,008 Accrued income tax 6,575 1,605 Accrued insurance 5,389 5,900 Accrued sales tax 4,475 4,099 Accrued advertising 3,249 1,345 Accrued real property tax 2,708 1,652 Accrued rent and related items 1,451 1,382 Deferred gift card income 1,218 1,585 Accrued property and equipment purchases 915 3,190 Restaurant closure liabilities 198 129 Other 4,300 3,682 $ 45,690 $ 34,577 A summary of other non-current liabilities follows (in thousands): September 8, 2020 December 31, 2019 Insurance reserves $ 8,325 $ 8,110 Deferred development and initial franchise fees 4,510 4,241 Sublease liabilities 1,409 1,223 Deferred gift card income 733 1,474 Restaurant closure liability 253 308 Unearned trade discount, non-current 128 320 Other 916 925 $ 16,274 $ 16,601 |
Stock-Based Compensation
Stock-Based Compensation | 8 Months Ended |
Sep. 08, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation The Del Taco Restaurants, Inc. 2015 Omnibus Incentive Plan (the “2015 Plan”) was approved by shareholders to offer eligible employees, directors and consultants cash and stock-based incentive awards. Awards under the 2015 Plan are generally not restricted to any specific form or structure and could include, without limitation, stock options, stock appreciation rights, restricted stock, restricted stock units, other stock-based awards, other cash-based compensation and performance awards. Under the plan, there were 3,300,000 shares of common stock reserved and authorized. At September 8, 2020, there were 172,422 shares of common stock available for grant under the 2015 Plan. Stock-Based Compensation Expense The total compensation expense related to the 2015 Plan was $1.3 million for both the twelve weeks ended September 8, 2020 and September 10, 2019, respectively, and $3.9 million and $4.6 million for the thirty-six weeks ended September 8, 2020 and September 10, 2019, respectively. Restricted Stock Awards A summary of outstanding and unvested restricted stock activity as of September 8, 2020 and changes during the period from December 31, 2019 through September 8, 2020 are as follows: Shares Weighted-Average Nonvested at December 31, 2019 1,142,718 $ 12.92 Granted 614,518 6.36 Vested (429,936) 12.52 Forfeited (79,650) 12.64 Nonvested at September 8, 2020 1,247,650 $ 9.85 For the thirty-six weeks ended September 8, 2020 and September 10, 2019, the Company made payments of $1.0 million and $2.6 million, respectively, related to tax withholding obligations for the vesting of restricted stock awards in exchange for 164,545 and 204,494 shares withheld, respectively. As of September 8, 2020, there was $8.6 million of unrecognized stock compensation expense, net of estimated forfeitures, related to restricted stock awards that is expected to be recognized over a weighted-average remaining period of 2.7 years. The fair value of these awards was determined based on the Company’s stock price on the grant date. Stock Options A summary of stock option activity as of September 8, 2020 and changes during the period from December 31, 2019 through September 8, 2020 are as follows: Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value (in years) (in thousands) Options outstanding at December 31, 2019 412,750 $ 11.71 3.8 $ — Granted 236,453 6.40 Exercised — — Forfeited/Expired (74,250) 11.37 Options outstanding at September 8, 2020 574,953 $ 9.57 4.7 $ 443 Options exercisable at September 8, 2020 274,625 $ 11.34 3.1 $ — Options exercisable and expected to vest at September 8, 2020 499,064 $ 9.91 4.5 $ 319 The aggregate intrinsic value in the table above is the amount by which the current market price of the Company's stock exceeds the exercise price on September 8, 2020 and December 31, 2019, respectively. As of September 8, 2020, there was $0.6 million of unrecognized stock compensation expense, net of estimated forfeitures, related to stock option grants that is expected to be recognized over a weighted-average remaining period of 3.2 years. |
Shareholders' Equity
Shareholders' Equity | 8 Months Ended |
Sep. 08, 2020 | |
Equity [Abstract] | |
Shareholders' Equity | Shareholders’ EquityOn February 26, 2016, the Company's Board of Directors authorized a share repurchase program covering up to $25.0 million in the aggregate of the Company's common stock and warrants which was effective immediately and expires upon completion of the repurchase program, unless terminated earlier by the Board of Directors. On August 23, 2016, the Company announced that the Board of Directors increased the repurchase program by $25.0 million to $50.0 million. The Board of Directors authorized an additional increase for the repurchase program effective July 23, 2018 of another $25.0 million to a total of $75.0 million. Purchases under the program may be made in open market or privately negotiated transactions. During the twelve and thirty-six weeks ended September 8, 2020, the Company did not repurchase any shares or warrants. During the twelve weeks ended September 10, 2019, the Company did not repurchase any shares or warrants. During the thirty-six weeks ended September 10, 2019, the Company repurchased (1) 574,481 shares of common stock for an average price per share of $10.17 for an aggregate cost of approximately $5.9 million, including incremental direct costs to acquire the shares, and (2) 846,441 warrants for an average price per warrant of $1.78 for an aggregate cost of approximately $1.5 million, including incremental direct costs to acquire the warrants. As of September 8, 2020, there was approximately $22.3 million remaining under the share repurchase program. All of the Company's outstanding warrants expired on June 30, 2020. The Company has no obligations to repurchase shares under this authorization, and the timing and value of shares purchased will depend on the Company's stock price, market conditions and other factors. |
(Loss) Earnings Per Share
(Loss) Earnings Per Share | 8 Months Ended |
Sep. 08, 2020 | |
Earnings Per Share [Abstract] | |
(Loss) Earnings Per Share | Earnings (Loss) Per Share Basic income per share is calculated by dividing net income attributable to Del Taco’s common shareholders for the period by the weighted average number of common shares outstanding for the period. In computing dilutive income per share, basic income per share is adjusted for the assumed issuance of all applicable potentially dilutive share-based awards, including warrants, restricted stock, common stock options and restricted stock units. Below are basic and diluted net income per share for the periods indicated (amounts in thousands except share and per share data): 12 Weeks Ended 36 Weeks Ended September 8, 2020 September 10, 2019 September 8, 2020 September 10, 2019 Numerator: Net income (loss) $ 5,797 $ (7,669) $ (97,247) $ (4,152) Denominator: Weighted-average shares outstanding - basic 37,293,390 37,023,287 37,152,419 37,000,331 Dilutive effect of unvested restricted stock 126,653 — — — Dilutive effect of stock options — — — — Dilutive effect of warrants — — — — Weighted-average shares outstanding - diluted 37,420,043 37,023,287 37,152,419 37,000,331 Net income (loss) per share - basic $ 0.16 $ (0.21) $ (2.62) $ (0.11) Net income (loss) per share - diluted $ 0.15 $ (0.21) $ (2.62) $ (0.11) Antidilutive stock options, unvested restricted 1,929,726 897,881 5,137,453 4,587,387 |
Income Taxes
Income Taxes | 8 Months Ended |
Sep. 08, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income TaxesThe effective income tax rates were 14.2% and (50.0)% for the twelve weeks ended September 8, 2020 and September 10, 2019, respectively. The provision for income taxes was $1.0 million and $2.6 million for the twelve weeks ended September 8, 2020 and September 10, 2019, respectively. The effective income tax rates were 2.0% and (1,615.7)% for the thirty-six weeks ended September 8, 2020 and September 10, 2019, respectively. The (benefit) provision for income taxes was $(2.0) million and $3.9 million for the thirty-six weeks ended September 8, 2020 and September 10, 2019, respectively. The income tax expense for the twelve weeks ended September 8, 2020 is driven by the estimated effective income tax rate and consists of statutory federal and state tax rates based on estimated apportioned income for fiscal year 2020, the impact of non-tax deductible compensation to executives and the impact of lower stock compensation expense deductible for tax related to the June 30, 2020 vesting of certain restricted stock awards as compared to the cumulative amount recorded as stock-based compensation expense, partially offset by federal targeted job credits. The income tax expense for the twelve weeks ended September 10, 2019, despite a pre-tax loss, is primarily impacted by $14.8 million of non-tax deductible goodwill that was reclassified to assets held for sale, as well as statutory federal and state tax rates based on apportioned income and the impact of non-tax deductible compensation to executives, partially offset by federal targeted job credits. The income tax benefit for the thirty-six weeks ended September 8, 2020 is primarily impacted by impairment of non-tax deductible goodwill of $87.3 million and reclassification of $3.5 million of goodwill from held for sale, as well as statutory federal and state tax rates based on estimated apportioned income for fiscal year 2020, the impact of non-tax deductible compensation to executives and the impact of lower stock compensation expense deductible for tax related to the June 30, 2020 vesting of certain restricted stock awards as compared to the cumulative amount recorded as stock-based compensation expense, partially offset by federal targeted job credits. The income tax expense for the thirty-six weeks ended September 10, 2019, despite a pre-tax loss, is primarily impacted by $14.8 million of non-tax deductible goodwill that was reclassified to assets held for sale, as well as statutory federal and state tax rates based on apportioned income and the impact of non-tax deductible compensation to executives, partially offset by federal targeted job credits. Management believes it is more likely than not that all deferred tax assets will be realized, and therefore, no valuation allowance as of September 8, 2020 and December 31, 2019 is required. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was signed into law. The CARES Act provides numerous tax provisions and other stimulus measures, including temporary changes regarding the prior and future utilization of net operating losses, temporary changes to the prior and future limitations on interest deductions, temporary suspension of certain payment requirements for the employer portion of social security taxes, the creation of certain refundable employee retention credits, and technical corrections from prior tax legislation for tax depreciation of certain qualified improvement property. The Company has benefited from the technical correction for qualified leasehold improvements eligible for 100% tax bonus depreciation, recognizing accelerated tax depreciation deductions of $1.2 million and $2.0 million for 2018 and 2019, respectively. Beginning with pay dates on and after April 14, 2020, the Company has elected to defer the employer-paid portion of social security taxes. The Company is also currently assessing its eligibility for certain employee retention tax credits. |
Commitments and Contingencies
Commitments and Contingencies | 8 Months Ended |
Sep. 08, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies The primary claims in the Company’s business are workers’ compensation and general liabilities. These insurance programs are self-insured or high deductible programs with excess coverage that management believes is sufficient to adequately protect the Company. In the opinion of management, adequate provision has been made for all incurred claims up to the self-insured or high deductible limits, including provision for estimated claims incurred but not reported. Because of the uncertainty of the ultimate resolution of outstanding claims, as well as the uncertainty regarding claims incurred but not reported, it is possible that management’s provision for these losses could change materially. However, no estimate can currently be made of the range of additional losses. Purchasing Commitments The Company enters into various purchase obligations in the ordinary course of business, generally of a short-term nature. Those that are binding primarily relate to commitments for food purchases and supplies, amounts owed under contractor and subcontractor agreements, orders submitted for equipment for restaurants under construction, information technology service agreements and marketing initiatives, some of which are related to both company-operated and franchise-operated locations. The Company also has a long-term beverage supply agreement with a major beverage vendor whereby marketing rebates are provided to the Company and its franchisees based upon the volume of purchases for system-wide restaurants which vary according to demand for beverage syrup. This contract has terms extending into 2021. The Company’s future estimated cash payments under existing contractual purchase obligations for goods and services as of September 8, 2020 are approximately $28.6 million. The Company has excluded agreements that are cancellable without penalty. Litigation In March 2014, a former Del Taco employee filed a purported class action complaint alleging that Del Taco has not appropriately provided meal breaks and failed to pay wages to its California hourly employees. Discovery is in process and Del Taco intends to assert all of its defenses to this threatened class action and the individual claims. Del Taco has several defenses to the action that it believes could prevent the certification of the class, as well as the potential assessment of any damages on a class basis. Legal proceedings are inherently unpredictable, and the Company is not able to predict the ultimate outcome or cost of the unresolved matter. However, based on management’s current understanding of the relevant facts and circumstances, the Company does not believe that these proceedings give rise to a probable or estimable loss and should not have a material adverse effect on the Company’s financial position, operations or cash flows. Therefore, Del Taco has not recorded any amount for the claim as of September 8, 2020. In September 2018, the Equal Employment Opportunity Commission (“EEOC”) filed a complaint on behalf of an individual complainant and an additional class of individuals alleging that Del Taco engaged in unlawful employment practices on the basis of sex and retaliation in violation of Title VII and are seeking an unspecified amount of damages. The Company has tendered the claim to its insurance carrier under its employment practices liability insurance policy. The Company's insurance coverage and retention includes amounts incurred for legal defense and any potential settlement. The parties are engaged in settlement discussions which are now expected to give rise to a loss in excess of the Company's insurance retention, but less than the coverage limit, that is both probable and estimable. Therefore, the Company has recorded an expense for this overall action as of September 8, 2020. In the opinion of management, based on information currently available, and in consideration of the Company's insurance coverage, the ultimate liability with respect to this action will not have a material effect on the operating results, cash flows or financial position of the Company. The Company and its subsidiaries are parties to other legal proceedings incidental to their businesses, including claims alleging the Company’s restaurants do not comply with the Americans with Disabilities Act of 1990. In the opinion of management, based upon information currently available, the ultimate liability with respect to those other actions will not have a material effect on the operating results, cash flows or the financial position of the Company. However, due to the risks and uncertainties inherent in legal proceedings and litigation, actual results could differ from expectations. Construction Defect Issues During the second quarter of 2020, the Company identified various construction defects related to three closed restaurants in Texas. The Company believes the issues are attributable to defective construction performed by the same general contractor for all three restaurants. The Company plans to undertake voluntary rehabilitation of the three properties, and while the full extent of voluntary rehabilitation costs are not yet known, the Company is pursuing legal remedies against the general contractor to recover future incurred costs. |
Basis of Presentation and Sum_2
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 8 Months Ended |
Sep. 08, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited consolidated financial statements included herein have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). For additional information, these unaudited consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019 ("2019 Form 10-K"). The Company’s fiscal year ends on the Tuesday closest to December 31. Fiscal year 2020 is a fifty-two week period ending December 29, 2020. Fiscal year 2019 is the fifty-two week period ended December 31, 2019. In a fifty-two week fiscal year, the first, second and third quarters each include twelve weeks of operations and the fourth quarter includes sixteen weeks of operations. For fiscal year 2020, the Company’s accompanying financial statements reflect the twelve weeks ended September 8, 2020. For fiscal year 2019, the Company’s accompanying financial statements reflect the twelve weeks ended September 10, 2019. In the opinion of management, the accompanying consolidated financial statements reflect all adjustments which are necessary for a fair presentation of the consolidated financial position, results of operations and cash flows for the periods presented. The results of operations for such interim periods are not necessarily indicative of results of operations to be expected for the full fiscal year. |
Principles of Consolidation | Principles of Consolidation The accompanying unaudited consolidated financial statements include the accounts of the Company and its wholly and majority owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. |
Use of Estimates | Use of EstimatesThe preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Management believes that such estimates have been based on reasonable and supportable assumptions and the resulting estimates are reasonable for use in the preparation of the consolidated financial statements. Actual results could differ from these estimates. The Company’s significant estimates include estimates for impairment of goodwill, intangible assets and property and equipment, valuations provided in business combinations, insurance reserves, restaurant closure reserves, stock-based compensation, contingent liabilities, certain leasing activities and income tax valuation allowances |
Recently Issued and Recently Adopted Accounting Standards | Recently Issued Accounting Standards In December 2019, the Financial Accounting Standard Board ("FASB") issued Accounting Standards Update ("ASU") 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by removing the following exceptions: (1) exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or gain from other items; (2) exception to the requirement to recognize a deferred tax liability for equity method investments when a subsidiary becomes an equity method investment; and (3) exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. Furthermore, ASU 2019-12 simplifies the accounting for income taxes by doing the following: (1) requiring that an entity recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax; (2) requiring that an entity evaluate when a step up in the tax basis of goodwill should be considered part if the business combination in which the book goodwill was originally recognized and when it should be considered a separate transaction; (3) specifying that an entity is not required to allocate the consolidated amount of current and deferred tax expense to a legal entity that is not subject to tax in its separate financial statements; and (4) requiring that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020. Early adoption is permitted. The Company is currently evaluating the impact of the standard on its consolidated financial statements. Recently Adopted Accounting Standards In June 2016, the FASB issued ASU 2016-13, Financial Statements - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires companies to measure credit losses utilizing a methodology that reflects expected credit losses and requires a consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The standard is effective for fiscal years beginning after December 15, 2019. There was no material impact on the Company's consolidated financial statements and related disclosures as a result of adopting this standard. In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, which clarifies the accounting implementation costs in cloud computing arrangements. The standard is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted. There was no material impact on the Company's consolidated financial statements and related disclosures as a result of adopting this standard. |
Significant Accounting Policies | Summary of Significant Accounting Policies There have been no changes to our significant accounting policies described in the 2019 Form 10-K filed with the SEC on March 13, 2020 that have had a material impact on our consolidated financial statements and related notes. |
Impairment of Long-Lived Asse_2
Impairment of Long-Lived Assets and Restaurant Closure Charges (Tables) | 8 Months Ended |
Sep. 08, 2020 | |
Restructuring and Related Activities [Abstract] | |
Closure Liability Activity for 12 Closed Restaurants | A summary of the restaurant closure liability activity for these closed restaurants consisted of the following (in thousands): 36 Weeks Ended September 8, 2020 September 10, 2019 Beginning Balance $ 437 $ 2,092 Reclassified to operating lease right-of-use assets — (1,900) Cash payments (2) (192) Adjustments to estimates based on current activity — 118 Accretion 16 — Ending Balance $ 451 $ 118 |
Summary of Refranchising and _2
Summary of Refranchising and Franchise Acquisitions (Tables) | 8 Months Ended |
Sep. 08, 2020 | |
Franchise Acquisitions [Abstract] | |
Summary of refranchising [Table Text Block] | The following table summarizes the net loss recognized related to these transactions (dollars in thousands): 36 Weeks Ended September 8, 2020 36 Weeks Ended September 10, 2019 Company-operated restaurants sold to franchisees 6 13 Proceeds from the sale of company-operated restaurants, net of selling costs $ 2,558 $ 2,090 Net assets sold (primarily furniture, fixtures and equipment) (a) (2,086) (2,051) Goodwill related to the company-operated restaurants sold to franchisees (1,196) (83) Allocation to deferred franchise fees (193) (281) Sublease assets, net 220 260 Gain on lease termination 40 — Loss on sale of company-operated restaurants, net (b) $ (657) $ (65) |
Schedule of Business Acquisitions, by Acquisition [Table Text Block] | The following table provides detail of the combined acquisitions for the thirty-six weeks ended September 10, 2019 (dollars in thousands): 36 Weeks Ended Franchise-operated restaurants acquired from franchisees 4 Goodwill $ 4,302 Restaurant and other equipment and leasehold improvements 660 Operating lease right-of-use assets 2,006 Operating lease liabilities (2,006) Unfavorable lease liabilities (130) Total consideration $ 4,832 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 8 Months Ended |
Sep. 08, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | Changes in the carrying amount of goodwill for the thirty-six weeks ended September 8, 2020 are as follows (in thousands): Goodwill Balance as of December 31, 2019 $ 192,739 Goodwill reclassified from held for sale 3,517 Impairment of goodwill (87,277) Balance as of September 8, 2020 $ 108,979 |
Schedule of Other Intangible Assets | The Company’s other intangible assets at September 8, 2020 and December 31, 2019 consisted of the following (in thousands): September 8, 2020 December 31, 2019 Gross Accumulated Net Gross Accumulated Net Sublease assets $ 1,820 $ (157) $ 1,663 $ 1,340 $ (82) $ 1,258 Franchise rights 13,995 (6,118) 7,877 14,298 (5,465) 8,833 Reacquired franchise rights 943 (281) 662 943 (207) 736 Total amortized other intangible assets $ 16,758 $ (6,556) $ 10,202 $ 16,581 $ (5,754) $ 10,827 |
Debt, Obligations Under Capit_2
Debt, Obligations Under Capital Leases and Deemed Landlord Financing Liabilities (Tables) | 8 Months Ended |
Sep. 08, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | The Company’s long-term debt, finance lease obligations and other debt at September 8, 2020 and December 31, 2019 consisted of the following (in thousands): September 8, 2020 December 31, 2019 Senior Credit Facility, as amended, net of unamortized debt discount of $197 and $ 122,915 $ 143,731 Total outstanding indebtedness 122,915 143,731 Obligations under finance leases and other debt 664 1,070 Total debt 123,579 144,801 Less: amounts due within one year 199 220 Total amounts due after one year, net $ 123,380 $ 144,581 |
Leases (Tables)
Leases (Tables) | 8 Months Ended |
Sep. 08, 2020 | |
Leases [Abstract] | |
Schedule of Lease Cost, Remaining Lease Term, Discount Rate and Supplemental Cash Flow Information | The components of lease cost for the twelve and thirty-six weeks ended September 8, 2020 were as follows (in thousands): Classification Twelve Weeks Thirty-Six Weeks Operating lease cost Occupancy and other operating expenses, $ 9,251 $ 28,060 Finance lease cost: Amortization of right of use assets Depreciation and amortization 33 123 Interest on lease liabilities Interest expense 5 23 Short-term lease cost Occupancy and other operating expenses 71 238 Variable lease cost Occupancy and other operating expenses, 440 1,097 Sublease income Franchise sublease and other income (1,716) (4,988) Total lease cost $ 8,084 $ 24,553 The components of lease cost for the twelve and thirty-six weeks ended September 10, 2019 were as follows (in thousands): Classification Twelve Weeks Thirty-Six Weeks Operating lease cost Occupancy and other operating expenses, $ 8,792 $ 26,196 Finance lease cost: Amortization of right of use assets Depreciation and amortization 86 329 Interest on lease liabilities Interest expense 21 72 Short-term lease cost Occupancy and other operating expenses 53 231 Variable lease cost Occupancy and other operating expenses, 444 1,282 Sublease income Franchise sublease and other income (1,125) (3,261) Total lease cost $ 8,271 $ 24,849 Weighted Average Remaining Lease Term (in years) September 8, 2020 Operating leases 12.5 Finance leases 2.1 Weighted Average Discount Rate September 8, 2020 Operating leases 6.58 % Finance leases 10.44 % Supplemental cash flow information related to leases was as follows (in thousands): Thirty-Six Weeks Ended September 8, 2020 Thirty-Six Weeks Ended September 10, 2019 Cash paid for amounts in the measurement of lease liabilities: Operating cash flows used for operating leases $ 25,529 $ 22,617 Operating cash flows used for finance leases $ 23 $ 72 Financing cash flows used for finance leases $ 119 $ 353 |
Schedule of Supplemental Balance Sheet Information | Supplemental balance sheet information related to the Company's operating and finance leases (noting the financial statement caption each is included with) as of September 8, 2020 and December 31, 2019 was as follows (in thousands): September 8, 2020 December 31, 2019 Operating lease assets: Operating lease right-of-use assets $ 250,154 $ 258,278 Operating lease liabilities: Current portion of operating lease liabilities $ 20,116 $ 17,848 Operating lease liabilities, excluding current portion 253,121 257,361 Total operating lease liabilities $ 273,237 $ 275,209 Finance lease assets: Buildings under finance leases $ 441 $ 871 Accumulated depreciation (240) (334) Finance lease assets, net $ 201 $ 537 Finance lease obligations: Current portion of finance lease obligations and other debt $ 138 $ 162 Long-term debt, finance lease obligations and other debt, excluding current portion, net 70 412 Total finance lease obligations $ 208 $ 574 |
Schedule of Estimated Future Minimum Finance Lease Payments | The estimated future lease payments as of September 8, 2020, are as follows (in thousands): Finance Lease Liabilities Operating Lease Liabilities Operating Subleases Net Lease Commitments 2020 $ 38 $ 9,957 $ (1,562) $ 8,433 2021 138 39,240 (6,140) 33,238 2022 19 41,029 (6,678) 34,370 2023 17 35,892 (6,005) 29,904 2024 16 30,076 (5,358) 24,734 Thereafter 4 253,707 (59,927) 193,784 Total lease payments $ 232 $ 409,901 $ (85,670) $ 324,463 Amounts representing interest (24) (136,664) (136,688) Present value of lease obligations $ 208 $ 273,237 $ 187,775 |
Schedule of Estimated Future Minimum Operating Lease Payment | The estimated future lease payments as of September 8, 2020, are as follows (in thousands): Finance Lease Liabilities Operating Lease Liabilities Operating Subleases Net Lease Commitments 2020 $ 38 $ 9,957 $ (1,562) $ 8,433 2021 138 39,240 (6,140) 33,238 2022 19 41,029 (6,678) 34,370 2023 17 35,892 (6,005) 29,904 2024 16 30,076 (5,358) 24,734 Thereafter 4 253,707 (59,927) 193,784 Total lease payments $ 232 $ 409,901 $ (85,670) $ 324,463 Amounts representing interest (24) (136,664) (136,688) Present value of lease obligations $ 208 $ 273,237 $ 187,775 |
Schedule of Minimum Rental Commitments | The estimated future lease payments as of September 8, 2020, are as follows (in thousands): Finance Lease Liabilities Operating Lease Liabilities Operating Subleases Net Lease Commitments 2020 $ 38 $ 9,957 $ (1,562) $ 8,433 2021 138 39,240 (6,140) 33,238 2022 19 41,029 (6,678) 34,370 2023 17 35,892 (6,005) 29,904 2024 16 30,076 (5,358) 24,734 Thereafter 4 253,707 (59,927) 193,784 Total lease payments $ 232 $ 409,901 $ (85,670) $ 324,463 Amounts representing interest (24) (136,664) (136,688) Present value of lease obligations $ 208 $ 273,237 $ 187,775 |
Schedule of Sublease Minimum Rental Receipts | The estimated future lease payments as of September 8, 2020, are as follows (in thousands): Finance Lease Liabilities Operating Lease Liabilities Operating Subleases Net Lease Commitments 2020 $ 38 $ 9,957 $ (1,562) $ 8,433 2021 138 39,240 (6,140) 33,238 2022 19 41,029 (6,678) 34,370 2023 17 35,892 (6,005) 29,904 2024 16 30,076 (5,358) 24,734 Thereafter 4 253,707 (59,927) 193,784 Total lease payments $ 232 $ 409,901 $ (85,670) $ 324,463 Amounts representing interest (24) (136,664) (136,688) Present value of lease obligations $ 208 $ 273,237 $ 187,775 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 8 Months Ended |
Sep. 08, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The Company's assets and liabilities measured at fair value on a recurring basis as of December 31, 2019 were as follows (in thousands): December 31, 2019 Markets for Identical Assets (Level 1) Observable Inputs (Level 2) Unobservable Inputs (Level 3) 2016 Interest Rate Cap Agreement $ — $ — $ — $ — Total assets measured at fair value $ — $ — $ — $ — |
Other Accrued Liabilities and_2
Other Accrued Liabilities and Other Non-current Liabilities (Tables) | 8 Months Ended |
Sep. 08, 2020 | |
Other Liabilities Disclosure [Abstract] | |
Summary of Other Accrued Liabilities | A summary of other accrued liabilities follows (in thousands): September 8, 2020 December 31, 2019 Employee compensation and related items $ 15,212 $ 10,008 Accrued income tax 6,575 1,605 Accrued insurance 5,389 5,900 Accrued sales tax 4,475 4,099 Accrued advertising 3,249 1,345 Accrued real property tax 2,708 1,652 Accrued rent and related items 1,451 1,382 Deferred gift card income 1,218 1,585 Accrued property and equipment purchases 915 3,190 Restaurant closure liabilities 198 129 Other 4,300 3,682 $ 45,690 $ 34,577 |
Summary of Other Non-current Liabilities | A summary of other non-current liabilities follows (in thousands): September 8, 2020 December 31, 2019 Insurance reserves $ 8,325 $ 8,110 Deferred development and initial franchise fees 4,510 4,241 Sublease liabilities 1,409 1,223 Deferred gift card income 733 1,474 Restaurant closure liability 253 308 Unearned trade discount, non-current 128 320 Other 916 925 $ 16,274 $ 16,601 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 8 Months Ended |
Sep. 08, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Summary of Outstanding and Unvested Restricted Stock Activity | A summary of outstanding and unvested restricted stock activity as of September 8, 2020 and changes during the period from December 31, 2019 through September 8, 2020 are as follows: Shares Weighted-Average Nonvested at December 31, 2019 1,142,718 $ 12.92 Granted 614,518 6.36 Vested (429,936) 12.52 Forfeited (79,650) 12.64 Nonvested at September 8, 2020 1,247,650 $ 9.85 |
Summary of Stock Options Activity | A summary of stock option activity as of September 8, 2020 and changes during the period from December 31, 2019 through September 8, 2020 are as follows: Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value (in years) (in thousands) Options outstanding at December 31, 2019 412,750 $ 11.71 3.8 $ — Granted 236,453 6.40 Exercised — — Forfeited/Expired (74,250) 11.37 Options outstanding at September 8, 2020 574,953 $ 9.57 4.7 $ 443 Options exercisable at September 8, 2020 274,625 $ 11.34 3.1 $ — Options exercisable and expected to vest at September 8, 2020 499,064 $ 9.91 4.5 $ 319 |
(Loss) Earnings Per Share (Tabl
(Loss) Earnings Per Share (Tables) | 8 Months Ended |
Sep. 08, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of Basic and Diluted Net Income (Loss) Per Share Data | Below are basic and diluted net income per share for the periods indicated (amounts in thousands except share and per share data): 12 Weeks Ended 36 Weeks Ended September 8, 2020 September 10, 2019 September 8, 2020 September 10, 2019 Numerator: Net income (loss) $ 5,797 $ (7,669) $ (97,247) $ (4,152) Denominator: Weighted-average shares outstanding - basic 37,293,390 37,023,287 37,152,419 37,000,331 Dilutive effect of unvested restricted stock 126,653 — — — Dilutive effect of stock options — — — — Dilutive effect of warrants — — — — Weighted-average shares outstanding - diluted 37,420,043 37,023,287 37,152,419 37,000,331 Net income (loss) per share - basic $ 0.16 $ (0.21) $ (2.62) $ (0.11) Net income (loss) per share - diluted $ 0.15 $ (0.21) $ (2.62) $ (0.11) Antidilutive stock options, unvested restricted 1,929,726 897,881 5,137,453 4,587,387 |
Description of Business (Detail
Description of Business (Details) | Sep. 08, 2020restaurantstate | Sep. 10, 2019restaurantstate |
Franchisor Disclosure [Line Items] | ||
Number of states in which entity operates | state | 15 | 14 |
Entity Operated Units | ||
Franchisor Disclosure [Line Items] | ||
Number of restaurants | 295 | 312 |
Franchised Units | ||
Franchisor Disclosure [Line Items] | ||
Number of restaurants | 301 | 274 |
Franchised Units | GUAM | ||
Franchisor Disclosure [Line Items] | ||
Number of restaurants | 1 | 1 |
Impairment of Long-Lived Asse_3
Impairment of Long-Lived Assets and Restaurant Closure Charges (Details) | 3 Months Ended | 8 Months Ended | ||||
Sep. 08, 2020USD ($) | Sep. 10, 2019USD ($)location | Sep. 08, 2020USD ($)location | Sep. 10, 2019USD ($)location | Dec. 31, 2019USD ($) | Jan. 01, 2019USD ($) | |
Restructuring Cost and Reserve [Line Items] | ||||||
Impairment of long-lived assets | $ 0 | $ 1,407,000 | $ 8,287,000 | $ 5,101,000 | ||
Number of underperforming locations | location | 1 | 8 | 3 | |||
Restructuring closure liability | 500,000 | $ 500,000 | $ 400,000 | |||
Current portion of restaurant closure liability | 198,000 | 198,000 | 129,000 | |||
Noncurrent portion of restaurant closure liability | 253,000 | 253,000 | 308,000 | |||
Contract Termination [Member] | Closure of 12 Underperforming Restaurants [Member] | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Restructuring closure liability | $ 451,000 | $ 118,000 | 451,000 | $ 118,000 | $ 437,000 | $ 2,092,000 |
Reclassified to operating lease right-of-use assets | $ 0 | $ 1,900,000 |
Impairment of Long-Lived Asse_4
Impairment of Long-Lived Assets and Restaurant Closure Charges (Details) - USD ($) $ in Thousands | 8 Months Ended | ||
Sep. 08, 2020 | Sep. 10, 2019 | Dec. 31, 2019 | |
Restructuring Reserve [Roll Forward] | |||
Beginning Balance | $ 400 | ||
Accretion | 16 | $ 0 | |
Ending Balance | 500 | ||
Noncurrent portion of restaurant closure liability | 253 | $ 308 | |
Restaurant closure liabilities | 198 | $ 129 | |
Closure of 12 Underperforming Restaurants [Member] | Contract Termination [Member] | |||
Restructuring Reserve [Roll Forward] | |||
Beginning Balance | 437 | 2,092 | |
Reclassified to operating lease right-of-use assets | 0 | (1,900) | |
Cash payments | (2) | (192) | |
Adjustments to estimates based on current activity | 0 | 118 | |
Ending Balance | $ 451 | $ 118 |
Summary of Refranchising and _3
Summary of Refranchising and Franchise Acquisitions - Summary of Refranchising (Details) $ in Thousands | 3 Months Ended | 8 Months Ended | ||
Jun. 16, 2020restaurants | Sep. 08, 2020USD ($)staterestaurants | Sep. 10, 2019USD ($)franchiserestaurants | Dec. 31, 2019USD ($) | |
Franchise Acquisitions [Abstract] | ||||
Company-operated restaurants sold to franchisees | restaurants | 5 | 6 | 13 | |
Proceeds from the sale of company-operated restaurants, net of selling costs | $ 2,558 | $ 2,090 | ||
Net assets sold (primarily furniture, fixtures and equipment) | (2,086) | (2,051) | ||
Goodwill related to the company-operated restaurants sold to franchisees | 1,196 | 83 | ||
Allocation to deferred franchise fees | (193) | (281) | ||
Sublease assets, net | 220 | 260 | ||
Gain on lease termination | 40 | 0 | ||
Loss on sale of company-operated restaurants | (657) | (65) | ||
Assets Held For Sale, Assets Sold | 700 | |||
Assets Held For Sale, Fair Value Adjustment | $ 600 | |||
Goodwill, Acquired During Period | 4,302 | |||
Property, Plant and Equipment, Additions | 660 | |||
Business combination recognized identifiable assets acquired and liabilities assumed, operating lease right of use assets | 2,006 | |||
Business combination recognized identifiable assets acquired and liabilities assumed, operating lease liabilities | 2,006 | |||
Below Market Lease, Acquired | 130 | |||
Business Combination, Consideration Transferred | $ 4,832 | |||
Significant Changes, Franchises Purchased During Period | 0 | 4 | ||
Other property and equipment | $ 0 | $ 4,025 | ||
Goodwill | 0 | 4,386 | ||
Assets Held-for-sale, Not Part of Disposal Group, Current, Total | 1,495 | 8,411 | ||
Land Available-for-sale | 561 | 0 | ||
Real Estate Held-for-sale | $ 934 | $ 0 |
Summary of Refranchising and _4
Summary of Refranchising and Franchise Acquisitions - Additional Information (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 8 Months Ended | ||
Sep. 08, 2020USD ($) | Jun. 16, 2020restaurants | Jun. 16, 2020restaurants | Sep. 08, 2020USD ($)staterestaurants | Sep. 10, 2019USD ($)franchiserestaurants | |
Franchise Acquisitions [Abstract] | |||||
Business combination recognized identifiable assets acquired and liabilities assumed, operating lease right of use assets | $ 2,006 | ||||
Business combination recognized identifiable assets acquired and liabilities assumed, operating lease liabilities | $ 2,006 | ||||
Significant Changes, Franchises Purchased During Period | 0 | 4 | |||
Goodwill, Acquired During Period | $ 4,302 | ||||
Company-operated restaurants sold to franchisees | restaurants | 5 | 6 | 13 | ||
Assets Held For Sale, Restaurants Reclassified To Held For Use | restaurants | 14 | ||||
Assets Held For Sale, Loss From Reclassification | $ 500 | ||||
Assets Held For Sale, Restaurants Classified As Held For Sale | restaurants | 19 | ||||
Below Market Lease, Acquired | $ 130 | ||||
Impairment of Long-Lived Assets to be Disposed of | $ 200 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets - Goodwill Rollforward (Details) - USD ($) $ in Thousands | 3 Months Ended | 8 Months Ended | |||
Sep. 08, 2020 | Sep. 10, 2019 | Sep. 08, 2020 | Sep. 10, 2019 | Dec. 31, 2019 | |
Goodwill [Roll Forward] | |||||
Balance as of beginning of period | $ 192,739 | ||||
Goodwill reclassified from held for sale | $ 14,800 | 3,517 | |||
Impairment of goodwill | $ 0 | $ 0 | (87,277) | $ 0 | |
Balance as of end of period | 108,979 | 108,979 | |||
Goodwill, Impaired, Accumulated Impairment Loss | $ 205,600 | $ 205,600 | $ 118,300 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets - Schedule of Other Intangible Assets (Detail) - USD ($) $ in Thousands | Sep. 08, 2020 | Dec. 31, 2019 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 16,758 | $ 16,581 |
Accumulated Amortization | (6,556) | (5,754) |
Net | 10,202 | 10,827 |
Sublease assets | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 1,820 | 1,340 |
Accumulated Amortization | (157) | (82) |
Net | 1,663 | 1,258 |
Franchise rights | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 13,995 | 14,298 |
Accumulated Amortization | (6,118) | (5,465) |
Net | 7,877 | 8,833 |
Reacquired franchise rights | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 943 | 943 |
Accumulated Amortization | (281) | (207) |
Net | $ 662 | $ 736 |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets - Additional Information (Details) $ in Thousands | 3 Months Ended | 8 Months Ended | |||
Sep. 08, 2020USD ($) | Sep. 10, 2019USD ($) | Sep. 08, 2020USD ($) | Sep. 10, 2019USD ($)location | Dec. 31, 2019USD ($) | |
Finite-Lived Intangible Assets [Line Items] | |||||
Impairment of goodwill | $ 0 | $ 0 | $ 87,277 | $ 0 | |
Impairment of trademarks | 0 | 0 | 11,900 | 0 | |
Intangible assets, net | 10,202 | 10,202 | $ 10,827 | ||
Indefinite-lived Intangible Assets, Written off Related to Sale of Business Unit | 300 | ||||
Franchise rights | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Intangible assets, net | 7,877 | 7,877 | $ 8,833 | ||
Trademarks | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Impairment of trademarks | 11,900 | ||||
One Franchise Location | Franchise rights | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Intangibles reclassified | 500 | ||||
Favorable lease assets write-off | $ 11 | ||||
Number of franchised restaurants acquired | location | 4 | ||||
Number of franchise restaurants closed | location | 1 | ||||
Sale of company-operated restaurants | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Intangible assets, net | $ 500 | $ 1,000 | $ 500 | $ 1,000 |
Debt, Obligations Under Capit_3
Debt, Obligations Under Capital Leases and Deemed Landlord Financing Liabilities - Schedule of Debt (Detail) - USD ($) $ in Thousands | Sep. 08, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||
Total outstanding indebtedness | $ 122,915 | $ 143,731 |
Obligations under finance leases and other debt | 664 | 1,070 |
Total debt | 123,579 | 144,801 |
Less: amounts due within one year | 199 | 220 |
Total amounts due after one year, net | 123,380 | 144,581 |
Finance Lease Write-Off | 300 | |
2015 Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Credit Facility | $ 122,915 | $ 143,731 |
Debt, Obligations Under Capit_4
Debt, Obligations Under Capital Leases and Deemed Landlord Financing Liabilities - Additional Information (Detail) - 2015 Revolving Credit Facility - USD ($) | Sep. 08, 2020 | Dec. 31, 2019 | Aug. 04, 2015 |
Debt Instrument [Line Items] | |||
Credit facility amount | $ 250,000,000 | ||
Letters of credit | $ 17,300,000 | ||
Interest rate on outstanding balance of credit facility (percent) | 2.16% | ||
Availability for additional borrowings under credit facility | $ 108,700,000 | ||
Credit facility outstanding borrowings | 124,000,000 | ||
Debt discount | 197,000 | $ 231,000 | |
Deferred finance costs | $ 888,000 | $ 1,038,000 | |
Letter of Credit | |||
Debt Instrument [Line Items] | |||
Credit facility amount | $ 35,000,000 |
Leases - Additional Information
Leases - Additional Information (Details) $ in Thousands | 3 Months Ended | 8 Months Ended | ||||
Sep. 08, 2020USD ($)leaseback_arrangement | Sep. 08, 2020USD ($)leaseback_arrangement | Sep. 10, 2019USD ($)leaseback_arrangement | Dec. 31, 2019USD ($) | Jun. 18, 2019leaseback_arrangement | May 10, 2019leaseback_arrangement | |
Lessee, Lease, Description [Line Items] | ||||||
Lease renewal period | 5 years | |||||
Number of sale leaseback transaction arrangements | leaseback_arrangement | 1 | 1 | 3 | 2 | 1 | |
Net proceeds from sale leaseback transaction | $ 1,400 | $ 12,700 | ||||
Gain (loss) on sale leaseback transaction | 600 | $ (200) | ||||
Guarantor Obligations, Maximum Exposure, Undiscounted | $ 1,600 | $ 1,600 | ||||
Guarantor Obligation Lease Term | 11 years | 19 years | ||||
Deferred Rent Credit, Current | $ 1,300 | $ 1,300 | ||||
Guarantor Obligations, Current Carrying Value | $ 40 | $ 40 | $ 80 | |||
Minimum | ||||||
Lessee, Lease, Description [Line Items] | ||||||
Remaining lease term | 1 year | |||||
Maximum | ||||||
Lessee, Lease, Description [Line Items] | ||||||
Remaining lease term | 20 years | |||||
Land and Building | ||||||
Lessee, Lease, Description [Line Items] | ||||||
Term of sale leaseback contract | 20 years | 20 years |
Leases - Components of Lease Co
Leases - Components of Lease Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 8 Months Ended | ||
Sep. 08, 2020 | Sep. 10, 2019 | Sep. 08, 2020 | Sep. 10, 2019 | |
Leases [Abstract] | ||||
Operating lease cost | $ 9,251 | $ 8,792 | $ 28,060 | $ 26,196 |
Finance lease cost: | ||||
Amortization of right of use assets | 33 | 86 | 123 | 329 |
Interest on lease liabilities | 5 | 21 | 23 | 72 |
Short-term lease cost | 71 | 53 | 238 | 231 |
Variable lease cost | 440 | 444 | 1,097 | 1,282 |
Sublease income | (1,716) | (1,125) | (4,988) | (3,261) |
Total lease cost | $ 8,084 | $ 8,271 | $ 24,553 | $ 24,849 |
Leases - Supplemental Balance S
Leases - Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands | Sep. 08, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
Operating lease right-of-use assets | $ 250,154 | $ 258,278 |
Current portion of operating lease liabilities | 20,116 | 17,848 |
Operating lease liabilities, excluding current portion | 253,121 | 257,361 |
Total operating lease liabilities | 273,237 | 275,209 |
Buildings under finance leases | 441 | 871 |
Accumulated depreciation | (240) | (334) |
Finance lease assets, net | 201 | 537 |
Current portion of finance lease obligations and other debt | 138 | 162 |
Long-term debt, finance lease obligations and other debt, excluding current portion, net | 70 | 412 |
Total finance lease obligations | $ 208 | $ 574 |
Leases - Weighed Average Remain
Leases - Weighed Average Remaining Lease Term (Details) | Sep. 08, 2020 |
Leases [Abstract] | |
Operating leases | 12 years 6 months |
Finance leases | 2 years 1 month 6 days |
Leases - Weighted Average Disco
Leases - Weighted Average Discount Rate (Details) | Sep. 08, 2020 |
Leases [Abstract] | |
Operating leases | 6.58% |
Finance leases | 10.44% |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 8 Months Ended | |
Sep. 08, 2020 | Sep. 10, 2019 | |
Leases [Abstract] | ||
Operating cash flows used for operating leases | $ 25,529 | $ 22,617 |
Operating cash flows used for finance leases | 23 | 72 |
Financing cash flows used for finance leases | $ 119 | $ 353 |
Leases - Estimated Minimum Futu
Leases - Estimated Minimum Future Lease Payments (Details) - USD ($) $ in Thousands | Sep. 08, 2020 | Dec. 31, 2019 |
Finance Lease Liabilities | ||
2020 | $ 38 | |
2021 | 138 | |
2022 | 19 | |
2023 | 17 | |
2024 | 16 | |
Thereafter | 4 | |
Total lease payments | 232 | |
Amounts representing interest | (24) | |
Present value of lease obligations | 208 | $ 574 |
Operating Lease Liabilities | ||
2020 | 9,957 | |
2021 | 39,240 | |
2022 | 41,029 | |
2023 | 35,892 | |
2024 | 30,076 | |
Thereafter | 253,707 | |
Total lease payments | 409,901 | |
Amounts representing interest | (136,664) | |
Present value of lease obligations | 273,237 | $ 275,209 |
Operating Subleases | ||
2020 | (1,562) | |
2021 | (6,140) | |
2022 | (6,678) | |
2023 | (6,005) | |
2024 | (5,358) | |
Thereafter | (59,927) | |
Total lease payments | (85,670) | |
Net Lease Commitments | ||
2020 | 8,433 | |
2021 | 33,238 | |
2022 | 34,370 | |
2023 | 29,904 | |
2024 | 24,734 | |
Thereafter | 193,784 | |
Total lease payments | 324,463 | |
Amounts representing interest | (136,688) | |
Present value of lease obligations | $ 187,775 |
Derivative Instruments (Details
Derivative Instruments (Details) $ in Thousands | 8 Months Ended |
Sep. 08, 2020USD ($) | |
Derivative [Line Items] | |
Interest expense reclassified into earnings | $ 67 |
Interest Rate Cap | Cash Flow Hedging | |
Derivative [Line Items] | |
Notional amount | $ 70,000 |
Cap interest rate | 2.00% |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Detail) $ in Millions | Dec. 31, 2019USD ($) |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Fair value of interest rate cap | $ 0 |
Fair Value Measurements Fair Va
Fair Value Measurements Fair Value Measurement Summary of Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Interest rate cap | $ 0 |
Total assets measured at fair value | 0 |
Markets for Identical Assets (Level 1) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Interest rate cap | 0 |
Total assets measured at fair value | 0 |
Observable Inputs (Level 2) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Interest rate cap | 0 |
Total assets measured at fair value | 0 |
Unobservable Inputs (Level 3) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Interest rate cap | 0 |
Total assets measured at fair value | $ 0 |
Other Accrued Liabilities and_3
Other Accrued Liabilities and Other Non-current Liabilities - Summary of Other Accrued Liabilities (Detail) - USD ($) $ in Thousands | Sep. 08, 2020 | Dec. 31, 2019 |
Other Liabilities Disclosure [Abstract] | ||
Employee compensation and related items | $ 15,212 | $ 10,008 |
Accrued insurance | 6,575 | 1,605 |
Accrued income tax | 5,389 | 5,900 |
Accrued sales tax | 4,475 | 4,099 |
Accrued advertising | 3,249 | 1,345 |
Accrued property and equipment purchases | 2,708 | 1,652 |
Accrued real property tax | 1,218 | 1,585 |
Deferred gift card income | 1,451 | 1,382 |
Accrued rent and related items | 915 | 3,190 |
Restaurant closure liabilities | 198 | 129 |
Other | 4,300 | 3,682 |
Other accrued liabilities | $ 45,690 | $ 34,577 |
Other Accrued Liabilities and_4
Other Accrued Liabilities and Other Non-current Liabilities - Summary of Other Non-current Liabilities (Detail) - USD ($) $ in Thousands | Sep. 08, 2020 | Dec. 31, 2019 |
Other Liabilities Disclosure [Abstract] | ||
Insurance reserves | $ 8,325 | $ 8,110 |
Deferred development and initial franchise fees | 4,510 | 4,241 |
Sublease liabilities | 1,409 | 1,223 |
Deferred gift card income | 733 | 1,474 |
Restaurant closure liability | 253 | 308 |
Unearned trade discount, non-current | 128 | 320 |
Other | 916 | 925 |
Other non-current liabilities | $ 16,274 | $ 16,601 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 8 Months Ended | |
Sep. 08, 2020 | Sep. 08, 2020 | Sep. 10, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Payment of tax withholding related to restricted stock vesting | $ (999) | $ (2,602) | |
Shares paid for tax withholding for share based compensation | 164,545 | 204,494 | |
Weighted average period of recognition (in years) | 3 years 2 months 12 days | ||
Unrecognized stock compensation expense | $ 600 | $ 600 | |
Restricted Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Payment of tax withholding related to restricted stock vesting | (1,000) | ||
Unrecognized compensation expense, net | $ 8,600 | $ 8,600 | |
Weighted average period of recognition (in years) | 2 years 8 months 12 days | ||
2015 Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Common stock reserved and authorized for issuance (in shares) | 3,300,000 | 3,300,000 | |
Common stock authorized and available for grant (in shares) | 172,422 | 172,422 | |
Stock-based compensation expense recorded | $ 1,300 | $ 3,900 | $ 4,600 |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of Outstanding and Unvested Restricted Stock Activity (Details) - Restricted Stock | 8 Months Ended |
Sep. 08, 2020$ / sharesshares | |
Shares | |
Nonvested Shares, Beginning balance (in shares) | shares | 1,142,718 |
Granted (in shares) | shares | 614,518 |
Vested (in shares) | shares | (429,936) |
Forfeited (in shares) | shares | (79,650) |
Nonvested Shares, Ending balance (in shares) | shares | 1,247,650 |
Weighted-Average Grant Date Fair Value | |
Weighted-Average Grant Date Fair Value, Beginning balance (in dollars per share) | $ / shares | $ 12.92 |
Weighted-Average Grant Date Fair Value, Granted (in dollars per share) | $ / shares | 6.36 |
Weighted-Average Grant Date Fair Value, Vested (in dollars per share) | $ / shares | 12.52 |
Weighted-Average Grant Date Fair Value, Forfeited (in dollars per share) | $ / shares | 12.64 |
Weighted-Average Grant Date Fair Value, Ending balance (in dollars per share) | $ / shares | $ 9.85 |
Stock-Based Compensation - Su_2
Stock-Based Compensation - Summary of Stock Options Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 8 Months Ended | |
Mar. 24, 2020 | Sep. 08, 2020 | Dec. 31, 2019 | |
Shares | |||
Options outstanding, Beginning balance (in shares) | 412,750 | 412,750 | |
Granted (in shares) | 236,453 | ||
Exercised (in shares) | 0 | ||
Forfeited (in shares) | (74,250) | ||
Options outstanding, Ending balance (in shares) | 574,953 | ||
Options exercisable (in shares) | 274,625 | ||
Options exercisable and expected to vest (in shares) | 499,064 | ||
Weighted Average Exercise Price | |||
Weighted Average Exercise Price, Options outstanding, Beginning balance (in dollars per share) | $ 11.71 | $ 11.71 | |
Weighted Average Exercise Price, Granted (in dollars per share) | 6.40 | ||
Weighted Average Exercise Price, Exercised (in dollars per share) | 0 | ||
Weighted Average Exercise Price, Forfeited (in dollars per share) | 11.37 | ||
Weighted Average Exercise Price, Options outstanding, Ending balance (in dollars per share) | 9.57 | ||
Weighted Average Exercise Price, Options exercisable (in dollars per share) | 11.34 | ||
Weighted Average Exercise Price, Options exercisable and expected (in dollars per share) | $ 9.91 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract] | |||
Weighted Average Remaining Contractual Term, Options outstanding (in years) | 3 years 9 months 18 days | 4 years 8 months 12 days | |
Weighted Average Remaining Contractual Term, Options exercisable (in years) | 3 years 1 month 6 days | ||
Weighted Average Remaining Contractual Term, Options exercisable and expected to vest (in years) | 4 years 6 months | ||
Aggregate Intrinsic Value, Options outstanding | $ 443 | $ 0 | |
Aggregate Intrinsic Value, Options exercisable | 0 | ||
Aggregate Intrinsic Value, Options excersiable and expected to vest | $ 319 |
Shareholders' Equity (Details)
Shareholders' Equity (Details) - USD ($) | 3 Months Ended | 8 Months Ended | |||||
Jun. 18, 2019 | Mar. 26, 2019 | Sep. 08, 2020 | Sep. 10, 2019 | Jul. 23, 2018 | Aug. 23, 2016 | Feb. 26, 2016 | |
Class of Stock [Line Items] | |||||||
Shares repurchased, value | $ 3,067,000 | $ 4,306,000 | |||||
Common Stock and Warrants | |||||||
Class of Stock [Line Items] | |||||||
Maximum authorized stock repurchase amount (up to) | $ 75,000,000 | $ 50,000,000 | $ 25,000,000 | ||||
Remaining authorized stock repurchase amount | $ 22,300,000 | ||||||
Common Stock | |||||||
Class of Stock [Line Items] | |||||||
Shares repurchased (in shares) | 574,481 | ||||||
Average price per share (in dollars per share) | $ 10.17 | ||||||
Shares repurchased, value | $ 5,900,000 | ||||||
Warrants | |||||||
Class of Stock [Line Items] | |||||||
Shares repurchased (in shares) | 846,441 | ||||||
Average price per share (in dollars per share) | $ 1.78 | ||||||
Shares repurchased, value | $ 1,500,000 |
(Loss) Earnings Per Share - Sch
(Loss) Earnings Per Share - Schedule of Basic and Diluted Net Income per Share Data (Detail) - USD ($) | 3 Months Ended | 8 Months Ended | ||||||
Sep. 08, 2020 | Jun. 16, 2020 | Mar. 24, 2020 | Sep. 10, 2019 | Jun. 18, 2019 | Mar. 26, 2019 | Sep. 08, 2020 | Sep. 10, 2019 | |
Net income (loss) | ||||||||
Net loss | $ 5,797,000 | $ (576,000) | $ (102,468,000) | $ (7,669,000) | $ 2,092,000 | $ 1,425,000 | $ (97,247,000) | $ (4,152,000) |
Weighted-average shares outstanding - diluted | ||||||||
Weighted-average shares outstanding - basic (in shares) | 37,293,390 | 37,023,287 | 37,152,419 | 37,000,331 | ||||
Weighted-average shares outstanding - diluted | 37,420,043 | 37,023,287 | 37,152,419 | 37,000,331 | ||||
Net (loss) income per share - basic (in dollars per share) | $ 0.16 | $ (0.21) | $ (2.62) | $ (0.11) | ||||
Net (loss) income per share - diluted (in dollars per share) | $ 0.15 | $ (0.21) | $ (2.62) | $ (0.11) | ||||
Antidilutive stock options, unvested restricted stock awards, unvested RSUs and warrants excluded from the computations (in dollars per share) | 1,929,726 | 897,881 | 5,137,453 | 4,587,387 | ||||
Warrants and Rights Outstanding | $ 5,105,982 | $ 5,105,982 | ||||||
Restricted Stock and RSUs | ||||||||
Weighted-average shares outstanding - diluted | ||||||||
Dilutive effect (in shares) | 126,653 | 0 | 0 | 0 | ||||
Stock Options | ||||||||
Weighted-average shares outstanding - diluted | ||||||||
Dilutive effect (in shares) | 0 | 0 | 0 | 0 | ||||
Warrants | ||||||||
Weighted-average shares outstanding - diluted | ||||||||
Dilutive effect (in shares) | 0 | 0 | 0 | 0 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 8 Months Ended | |||
Sep. 08, 2020 | Sep. 10, 2019 | Sep. 08, 2020 | Sep. 10, 2019 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |||||
Effective income tax rates (percent) | 14.20% | (50.00%) | 2.00% | (1615.70%) | |
Provision (benefit) for income taxes | $ 962,000 | $ 2,556,000 | $ (2,028,000) | $ 3,910,000 | |
Impairment of non-tax deductible goodwill | 87,300,000 | ||||
Goodwill reclassified from held for sale | $ 14,800,000 | 3,517,000 | |||
Valuation allowance | $ 0 | $ 0 | $ 0 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | Sep. 08, 2020USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Contractual purchase obligations for goods and services | $ 28.6 |