Papa Murphy's 10-Q 3 Aug 16 2016 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information Document - shares	6 Months Ended
	Jun. 27, 2016	Jul. 29, 2016
Document and Entity Information [Abstract]
Entity Registrant Name	Papa Murphy's Holdings, Inc.
Entity Central Index Key	1,592,379
Entity Filer Category	Accelerated Filer
Document Type	10-Q
Document Period End Date	Jun. 27, 2016
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--01-02
Document Fiscal Year Focus	2,016
Amendment Flag	false
Entity Common Stock, Shares Outstanding		16,957,420

Consolidated Statements of Oper

Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 27, 2016	Jun. 29, 2015	Jun. 27, 2016	Jun. 29, 2015
Revenues
Franchise royalties	$ 9,538	$ 9,753	$ 20,034	$ 20,433
Franchise and development fees	574	830	1,528	1,970
Company-owned store sales	19,470	18,156	40,144	35,323
Other	312	382	1,173	564
Total revenues	29,894	29,121	62,879	58,290
Store operating costs:
Cost of food and packaging	6,781	6,443	14,053	12,533
Compensation and benefits	5,577	4,722	11,311	9,076
Advertising	1,897	1,753	4,063	3,422
Occupancy	1,503	1,174	2,878	2,176
Other store operating costs	2,555	1,856	4,846	3,301
Selling, general and administrative	5,912	8,162	14,967	15,045
Depreciation and amortization	2,915	2,420	5,630	4,739
(Gain) loss on disposal of property and equipment	(59)	3	(5)	62
Total costs and expenses	27,081	26,533	57,743	50,354
Operating Income	2,813	2,588	5,136	7,936
Interest expense, net	1,208	1,143	2,387	2,273
Loss on impairment of investments	0	4,500	0	4,500
Other expense, net	43	44	85	46
Income (Loss) Before Income Taxes	1,562	(3,099)	2,664	1,117
Provision for (benefit from) income taxes	610	(1,160)	1,070	460
Net Income (Loss)	952	(1,939)	1,594	657
Net loss attributable to noncontrolling interests	0	(500)	0	(500)
Net Income (Loss) Attributable to Papa Murphy’s	$ 952	$ (1,439)	$ 1,594	$ 1,157
Earnings (loss) per share of common stock
Basic earnings (loss) per share (usd per share)	$ 0.06	$ (0.09)	$ 0.10	$ 0.07
Diluted earnings (loss) per share (usd per share)	$ 0.06	$ (0.09)	$ 0.10	$ 0.07
Weighted average common stock outstanding
Basic (in shares)	16,744,553	16,629,666	16,730,581	16,616,936
Diluted (in shares)	16,766,587	16,629,666	16,760,578	16,872,504

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 27, 2016	Dec. 28, 2015
Current Assets
Cash and cash equivalents	$ 435	$ 6,867
Accounts receivable, net	2,824	4,944
Current portion of notes receivable	85	78
Inventories	967	868
Prepaid expenses and other current assets	5,087	6,139
Total current assets	9,398	18,896
Property and equipment, net	27,816	21,261
Notes receivable, net of current portion	99	143
Goodwill	108,462	106,506
Trade name and trademarks	87,002	87,002
Definite-life intangibles, net	38,844	41,366
Other assets	405	297
Total assets	272,026	275,471
Current Liabilities
Accounts payable	5,446	9,798
Accrued expenses and other current liabilities	7,789	9,756
Current portion of unearned franchise and development fees	1,630	1,795
Current portion of long-term debt	3,679	2,800
Total current liabilities	18,544	24,149
Long-term debt, net of current portion	107,195	108,237
Unearned franchise and development fees, net of current portion	358	540
Deferred tax liability	42,671	42,439
Other long-term liabilities	3,268	2,450
Total liabilities	172,036	177,815
Commitments and contingencies (Note 14)
Stockholders’ Equity
Preferred stock, value issued	0	0
Common stock, value issued	170	169
Additional paid-in capital	119,481	118,842
Stock subscriptions receivable	0	100
Accumulated deficit	(19,661)	(21,255)
Total stockholders’ equity	99,990	97,656
Total liabilities and stockholders’ equity	$ 272,026	$ 275,471

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 27, 2016	Dec. 28, 2015
Statement of Financial Position [Abstract]
Preferred stock, par value per share	$ 0.01	$ 0.01
Preferred stock, shares authorized	15,000,000	15,000,000
Preferred stock, shares issued	0	0
Common stock, par value per share	$ 0.01	$ 0.01
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	16,957,420	16,949,720

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 27, 2016	Jun. 29, 2015
Operating Activities
Net income	$ 1,594	$ 657
Net loss attributable to noncontrolling interests	0	(500)
Net Income (Loss) Attributable to Papa Murphy’s	1,594	1,157
Adjustments to reconcile to cash from operating activities
Depreciation and amortization	5,630	4,739
(Gain) loss on disposal of property and equipment	5	(62)
Non-cash employee equity compensation	427	656
Loss on impairment of cost-method investment	0	4,000
Other non-cash items	158	485
Change in operating assets and liabilities
Accounts receivable	1,984	556
Prepaid expenses and other assets	1,072	(1,050)
Unearned franchise and development fees	(347)	(678)
Accounts payable	(3,840)	1,296
Accrued expenses and other liabilities	(1,520)	(1,025)
Deferred taxes	232	(468)
Net cash from operating activities	5,385	9,730
Investing Activities
Acquisition of property and equipment	(9,533)	(2,834)
Acquisition of stores, less cash acquired	(2,449)	(9,343)
Proceeds from sale of stores	136	0
Issuance of notes receivable	0	250
Payments received on notes receivable	37	32
Investment in cost-method investee	0	(500)
Net cash from investing activities	(11,809)	(12,895)
Financing Activities
Payments on long-term debt	3,321	1,400
Advances on revolver, net	3,000	500
Repurchases of common stock	(80)	(10)
Proceeds from exercise of stock options	293	51
Payments received on subscription receivables	100	0
Investment by noncontrolling interest holders	0	56
Net cash from financing activities	(8)	(803)
Net change in cash and cash equivalents	(6,432)	(3,968)
Cash and Cash Equivalents, beginning of year	6,867	5,056
Cash and Cash Equivalents, end of period	435	1,088
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for interest	2,243	2,164
Cash paid during the period for income taxes	136	1,422
Noncash Supplemental Disclosures of Investing and Financing Activities
Acquisition of property and equipment in accounts payable	$ 2,509	$ 1,074

Description of Business and Bas

Description of Business and Basis of Presentation	6 Months Ended
	Jun. 27, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Summary of Significant Accounting Policies	Description of business Papa Murphy’s Holdings, Inc. (“Papa Murphy’s” or the “Company”), together with its subsidiaries, is a franchisor and operator of a Take ‘N’ Bake pizza chain. The Company franchises the right to operate Papa Murphy’s Take ‘N’ Bake pizza franchises and operates Papa Murphy’s Take ‘N’ Bake pizza stores owned by the Company. As of June 27, 2016 , the Company had 1,570 stores consisting of 1,531 domestic stores ( 1,375 franchised stores and 156 Company-owned stores) across 38 states, plus 39 franchised stores in Canada and the United Arab Emirates. Substantially all of the Company’s revenues are derived from retail sales of pizza and other food and beverage products to the general public by Company-owned stores and the collection of franchise royalties and fees associated with franchise and development rights. Basis of presentation The accompanying interim unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “ SEC ”). Accordingly, they do not include all information and footnotes required by generally accepted accounting principles in the United States (“ GAAP ”) for complete financial statements. In the Company’s opinion, all necessary adjustments, consisting of only normal recurring adjustments, have been made for the fair statement of the results of the interim periods presented. The results of operations for such interim periods are not necessarily indicative of the results to be expected for the full year. The accompanying interim unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and the related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 28, 2015 . During the three months ended March 28, 2016, the Company early-adopted ASU No. 2016-09, Compensation — Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ ASU 2016-09 ”). The Company applied the new guidance on a modified retrospective basis through a cumulative-effect adjustment. As a result, changes have been made to the presentation of Stockholders’ Equity in the Condensed Consolidated Balance Sheets as of December 28, 2015 . See Recent Accounting Pronouncements below for additional information. A summary of the changes made to the Condensed Consolidated Balance Sheets as of December 28, 2015 , is included in the following table: (in thousands) As Filed Updated Additional paid-in capital $ 118,801 $ 118,842 Accumulated deficit (21,214 ) (21,255 ) Principles of consolidation The interim unaudited condensed consolidated financial statements include the accounts of Papa Murphy’s Holdings, Inc., its subsidiaries and certain entities which the Company consolidates as variable interest entities (“ VIE s”). All significant intercompany transactions and balances have been eliminated. Throughout the interim unaudited condensed consolidated financial statements and the related notes thereto, “Papa Murphy’s” and “the Company” refer to Papa Murphy’s Holdings, Inc. and its consolidated subsidiaries. Fiscal year The Company uses a 52- or 53-week fiscal year, ending on the Monday nearest to December 31. Fiscal year 2016 is a 53-week year and 2015 was a 52-week year. All three month periods presented herein contain 13 weeks. All references to years and quarters relate to fiscal periods rather than calendar periods. References to 2016 and 2015 are references to fiscal years ending January 2, 2017 , and ended December 28, 2015 , respectively. Accounting Pronouncements Recently Adopted In March 2016, the Financial Accounting Standards Board (“ FASB ”) issued ASU 2016-09 , which simplifies several aspects of the accounting for share-based payment awards to employees, including the accounting for income taxes, forfeitures, statutory tax withholding requirements and classification in the statement of cash flows. The effective date for ASU 2016-09 is for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted in any annual or interim period for which financial statements have not yet been issued. All amendments in ASU 2016-09 that apply must be adopted in the same period. The Company early-adopted ASU 2016-09 at the beginning of fiscal year 2016. As permitted under ASU 2016-09 , the Company has elected to account for forfeitures in compensation cost when they occur in order to ease the administrative burden of estimating forfeitures. The effect of adopting ASU 2016-09 is reflected in Stockholders’ Equity in the Condensed Consolidated Balance Sheets on a modified retrospective basis through a cumulative-effect adjustment. See Basis of Presentation above for additional information. Recent Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ ASU 2014-09 ”), a new standard to achieve a consistent application of revenue recognition within the U.S., resulting in a single revenue model to be applied by reporting companies under GAAP. The original effective date for ASU 2014-09 would have required adoption by the Company in the first quarter of fiscal 2017 with early adoption prohibited. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606) - Deferral of the Effective Date , which defers the effective date of ASU 2014-09 for one year and permits early adoption in accordance with the original effective date of ASU 2014-09 . In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) which is an amendment to the new revenue recognition standard on assessing whether an entity is a principal or an agent in a revenue transaction. This amendment addresses implementation issues that were discussed by the Revenue Recognition Transition Resource Group to clarify the principal versus agent assessment and lead to more consistent application. This new standard has the same effective date and transition requirements as ASU 2014-09 . The new revenue standard is required to be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the standard recognized at the date of initial application. The Company has not yet selected a transition method. The Company is continuing to evaluate the impact the adoption of this standard will have on the recognition of revenue. In February 2016, the FASB issued ASU No. 2016-02, Leases (“ ASU 2016-02 ”). This update requires that lessees recognize assets and liabilities on the balance sheet for the rights and obligations created by all leases with terms of more than twelve months. ASU 2016-02 also will require disclosures designed to give financial statement users information on the amount, timing, and uncertainty of cash flows arising from leases. These disclosures include both qualitative and quantitative information. The effective date for ASU 2016-02 is for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company is still evaluating the impact of ASU 2016-02 on its financial position and results of operations.

Acquisitions (Notes)

Acquisitions (Notes)	6 Months Ended
	Jun. 27, 2016
Acquisitions [Abstract]
Business Combination Disclosure [Text Block]	On April 11, 2016, Papa Murphy’s Company Stores, Inc., a wholly owned subsidiary of the Company, acquired certain assets used in the operation of nine Papa Murphy’s stores in the Joplin, Missouri, and Fort Smith, Arkansas, areas from a franchise owner. The total consideration paid of approximately $2.9 million was funded through existing cash, $0.5 million in insurance proceeds and advances on the Company's Senior Credit Facility (see Note 8 — Financing Arrangements ). The fair values of the assets acquired are summarized below (in thousands): Cash and cash equivalents $ 4 Inventory 23 Prepaid expenses and other current assets 22 Property and equipment 503 Asset retirement obligations (59 ) Total identifiable net assets acquired 493 Goodwill 1,956 Total net assets acquired 2,449 Dispute settlement 500 Total consideration $ 2,949 Goodwill represents the excess of the purchase price over the net tangible and intangible assets acquired and is expected to be fully deductible for income tax purposes. This goodwill is primarily attributable to the acquired customer bases and, to a lesser extent, economies of scale expected from combining the operations of the acquired stores with the existing operations of the Company. The pro forma effects of this acquisition and the operating results of the acquired stores are not presented because the effects were not material to reported results.

Prepaid Expenses and Other Curr

Prepaid Expenses and Other Current Assets	6 Months Ended
	Jun. 27, 2016
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Prepaid expenses and other current assets	Prepaid expenses and other current assets consist of the following: (in thousands) June 27, 2016 December 28, 2015 Prepaid media production costs $ 430 $ 352 Prepaid software and services 964 464 Prepaid rents 557 477 Prepaid insurance 84 602 Taxes receivable 2,170 2,872 POS software licenses for resale — 660 Assets held for sale 599 605 Advertising cooperative assets, restricted 208 26 Other 75 81 Total prepaid expenses and other current assets $ 5,087 $ 6,139 The Company recognizes software license revenue upon the resale of Point of Sale (“ POS ”) software licenses to franchise owners at cost. The income from the sale is included in Other revenues and the related expense is recorded in Selling, general and administrative costs on the Condensed Consolidated Statements of Net Income (Loss) . POS software license revenue during the periods reported was as follows: Three Months Ended Six Months Ended (in thousands) June 27, 2016 June 29, 2015 June 27, 2016 June 29, 2015 POS software license revenue $ — $ 115 $ 657 $ 301

Property and Equipment

Property and Equipment	6 Months Ended
	Jun. 27, 2016
Property, Plant and Equipment [Abstract]
Property and equipment	Property and equipment are net of accumulated depreciation of $14.1 million and $13.8 million at June 27, 2016 , and December 28, 2015 , respectively. Depreciation expense during the periods reported was as follows: Three Months Ended Six Months Ended (in thousands) June 27, 2016 June 29, 2015 June 27, 2016 June 29, 2015 Depreciation expense $ 1,664 $ 1,075 $ 3,108 $ 2,079

Goodwill (Notes)

Goodwill (Notes)	6 Months Ended
	Jun. 27, 2016
Goodwill [Abstract]
Goodwill	The following summarizes changes to the Company’s goodwill, by reportable segment: (in thousands) Domestic Company Stores Domestic Franchise Total Balance at December 28, 2015 $ 24,960 $ 81,546 $ 106,506 Acquisitions 1,956 — 1,956 Balance at June 27, 2016 $ 26,916 $ 81,546 $ 108,462 There is no goodwill associated with the International Segment. The Company has determined that during the three months ended June 27, 2016 , there were no triggering events that would require an updated impairment review.

Intangible Assets

Intangible Assets	6 Months Ended
	Jun. 27, 2016
Goodwill and Intangible Assets Disclosure [Abstract]
Intangible assets	Intangible assets are net of accumulated amortization of $24.8 million and $23.0 million as of June 27, 2016 , and December 28, 2015 , respectively. Amortization expense during the periods reported was as follows: Three Months Ended Six Months Ended (in thousands) June 27, 2016 June 29, 2015 June 27, 2016 June 29, 2015 Amortization expense $ 1,251 $ 1,345 $ 2,522 $ 2,660

Receivables

Receivables	6 Months Ended
	Jun. 27, 2016
Receivables [Abstract]
Notes receivable	Notes Receivable Notes receivable consist of a note maturing in 2020 that is collateralized by store assets. Changes in the account balance represent amortization payments collected pursuant to the terms of the note. Accounts Receivable The Company’s allowance for doubtful accounts is as follows: (in thousands) June 27, 2016 December 28, 2015 Allowance for doubtful accounts $ 34 $ 31

Financing Arrangements

Financing Arrangements	6 Months Ended
	Jun. 27, 2016
Debt Disclosure [Abstract]
Financing arrangements	Long-term debt consists of the following: (in thousands) June 27, 2016 December 28, 2015 Term loan $ 105,879 $ 109,200 Revolving line of credit 3,000 — Notes payable 3,000 3,000 Total principal amount of long-term debt 111,879 112,200 Unamortized debt issuance costs (1,005 ) (1,163 ) Total long-term debt 110,874 111,037 Less current portion (3,679 ) (2,800 ) Total long-term debt, net of current portion $ 107,195 $ 108,237 Senior secured credit facility On August 28, 2014, PMI Holdings, Inc., a wholly-owned subsidiary of Papa Murphy’s Holdings, Inc., entered into a $132.0 million senior secured credit facility (the “ Senior Credit Facility ”) consisting of a $112.0 million term loan and a $20.0 million revolving credit facility, which includes a $2.5 million letter of credit subfacility and a $1.0 million swing-line loan subfacility. The term loan and any loans made under the revolving credit facility mature in August 2019 . As of June 27, 2016 , the outstanding term loan balance was subject to the LIBOR rate option at 3.70% . As of June 27, 2016 , $2.5 million of the revolving credit facility was subject to the LIBOR rate option at 3.70% , and the remaining $0.5 million was subject to the base rate option at 5.75% . With a maturity date of over one year from June 27, 2016 , balances outstanding under the Senior Credit Facility are classified as non-current on the Condensed Consolidated Balance Sheets , except for mandatory, minimum term loan amortization payments due on the last day of each fiscal quarter. Minimum term loan amortization payments are $0.7 million , increasing to $1.4 million in the third fiscal quarter of 2016. A portion of the Company’s future term loan amortization payments have been made in advance of their due dates. The weighted average interest rate for all borrowings under our Senior Credit Facility for the second quarter of 2016 was 3.79% . Notes payable Papa Murphy’s Company Stores, Inc., a wholly owned subsidiary of Papa Murphy’s Holdings, Inc., has a $3.0 million note payable which bears interest at 5% and matures in December 2018 . This note is subordinated to the Senior Credit Facility .

Fair Value Measurement

Fair Value Measurement	6 Months Ended
	Jun. 27, 2016
Fair Value Disclosures [Abstract]
Fair value measurement	The Company determines the fair value of assets and liabilities based on the price that would be received to sell the asset or paid to transfer the liability to a market participant. GAAP defines a fair value hierarchy that prioritizes the assumptions used to measure fair value. The three levels of the fair value hierarchy are defined as follows: ▪ Level 1 — Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access. ▪ Level 2 — Observable inputs other than prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated with observable market data. ▪ Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies, and similar techniques that use significant unobservable inputs. The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis: June 27, 2016 December 28, 2015 (in thousands) Carrying Value Fair Value Carrying Value Fair Value Fair Value Measurement Financial assets Notes receivable (1) $ 184 $ 186 $ 221 $ 224 Level 3 (1) The fair value of notes receivable was estimated primarily using a discounted cash flow method based on a discount rate, reflecting the applicable credit spread. Financial instruments not included in the table above consist of cash and cash equivalents, accounts receivable, accounts payable and long-term debt. The fair values of cash and cash equivalents, accounts receivable and accounts payable approximate carrying value because of the short-term nature of the accounts. The fair value of long-term debt approximates carrying value because the borrowings are made with variable market rates and negotiated terms and conditions that are consistent with current market rates.

Accrued and Other Liabilities

Accrued and Other Liabilities	6 Months Ended
	Jun. 27, 2016
Payables and Accruals [Abstract]
Accrued and other liabilities	Accrued expenses and other current liabilities consist of the following: (in thousands) June 27, 2016 December 28, 2015 Accrued compensation and related costs $ 3,235 $ 3,699 Gift cards payable 2,312 2,902 Accrued interest and non-income taxes payable 656 855 Convention fund balance 803 626 Unearned product rebates 55 922 Advertising cooperative liabilities 295 137 Other 433 615 Total accrued expenses and other current liabilities $ 7,789 $ 9,756

Income Taxes

Income Taxes	6 Months Ended
	Jun. 27, 2016
Income Tax Disclosure [Abstract]
Income taxes	Information on the Company’s income taxes for the periods reported is as follows: Three Months Ended Six Months Ended (in thousands) June 27, 2016 June 29, 2015 June 27, 2016 June 29, 2015 Provision for (benefit from) income taxes $ 610 $ (1,160 ) $ 1,070 $ 460 Income (loss) before income taxes 1,562 (3,099 ) 2,664 1,117 Effective income tax rate 39.1 % 37.4 % 40.2 % 41.2 % The effective income tax rate for the three months ended June 27, 2016 includes the effect of an adjustment for a tax benefit shortfall created by share-based payments at settlement that were made during the period. The effective income tax rate for the three months ended June 29, 2015 , includes the effect of a discrete adjustment for the accelerated vesting of restricted stock during the period. The effective income tax rate for the six months ended June 27, 2016 includes the effect of an adjustment for a tax benefit shortfall created by share-based payments at settlement that were made during the period. The effective income tax rate for the six months ended June 29, 2015 , includes the effect of a discrete adjustment for the accelerated vesting of restricted stock during the period.

Share-based Compensation

Share-based Compensation	6 Months Ended
	Jun. 27, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Share-based Compensation	In May 2010, the Company’s Board of Directors approved the 2010 Amended Management Incentive Plan (the “ 2010 Plan ”). In May 2014, the Company’s Board of Directors adopted the 2014 Equity Incentive Plan (the “ 2014 Plan ,” and together with the 2010 Plan , the “ Incentive Plans ”). The Incentive Plans reserve 2,116,747 common shares for equity incentive awards consisting of incentive stock options, non-qualified stock options, restricted stock awards and unrestricted stock awards. Equity incentive awards may be issued from either the 2014 Plan or the 2010 Plan . Under the Incentive Plans , the Company has awarded 562,434 and 584,017 shares of restricted common stock to eligible employees as of June 27, 2016 , and December 28, 2015 , respectively. In addition, the Company has issued 1,213,151 and 1,076,555 stock options under the Incentive Plans to eligible employees as of June 27, 2016 , and December 28, 2015 , respectively. During the three months ended March 28, 2016, the Company early adopted ASU 2016-09 . As permitted under ASU 2016-09 , the Company has elected to account for forfeitures in compensation cost when they occur in order to ease the administrative burden of estimating forfeitures. See Recent Accounting Pronouncements in Note 1 — Description of Business and Basis of Presentation for additional information. Restricted common shares Information with respect to restricted stock activity is as follows: Number of Shares of Restricted Common Stock Weighted Average Sale/Grant Date Fair Value Per Share Time Vesting Performance Vesting Unvested, December 28, 2015 49,513 186,515 $ 3.11 Granted 15,000 — 7.90 Vested (9,764 ) — 12.22 Repurchased (15,086 ) (18,858 ) 2.27 Unvested, June 27, 2016 39,663 167,657 $ 2.77 The weighted average fair value of share-based compensation awards granted and the fair values of awards granted and vested during the periods reported were as follows: Three Months Ended Six Months Ended (in thousands, except per share amounts) June 27, 2016 June 29, 2015 June 27, 2016 June 29, 2015 Weighted average grant date fair value per share $ 7.90 $ 18.81 $ 7.90 $ 18.81 Total fair value of shares granted 119 90 119 90 Total fair value of shares vested 103 35 119 52 Stock options Information with respect to stock option activity is as follows: Number of Shares Subject to Options Weighted Weighted Aggregate Time Vesting Performance Vesting Outstanding, December 28, 2015 841,956 200,481 $ 11.55 Granted 173,450 — 11.04 Exercised (26,644 ) — 11.00 Forfeited (22,213 ) (14,641 ) 11.44 Outstanding, June 27, 2016 966,549 185,840 $ 11.49 8.2 years $ — Exercisable, June 27, 2016 506,017 — $ 11.38 7.9 years $ — Fair value information for options granted and vested and the intrinsic value of options exercised during the periods reported are as follows: Three Months Ended Six Months Ended (in thousands, except per share amounts) June 27, 2016 June 29, 2015 June 27, 2016 June 29, 2015 Weighted average grant date fair value per share $ 3.80 N/A $ 3.70 $ 5.41 Total fair value of awards granted 13 N/A 642 1,039 Total fair value of awards vested 151 314 480 324 Total intrinsic value of options exercised 25 N/A 25 32 Compensation cost and valuation Total compensation costs recognized in connection with the Incentive Plans during the periods reported were as follows: Three Months Ended Six Months Ended (in thousands) June 27, 2016 June 29, 2015 June 27, 2016 June 29, 2015 Stock compensation expense $ 196 $ 500 $ 427 $ 656 Associated income tax benefits 71 166 143 218 As of June 27, 2016 , the total unrecognized stock-based compensation expense was $2.7 million , with $2.0 million associated with time vesting awards and $0.7 million associated with performance vesting awards. The remaining weighted average contractual life for unrecognized stock-based compensation expense was 2.8 years as of June 27, 2016 . The fair value of the stock option awards granted during the periods reported was estimated using the Black-Scholes model with the following weighted-average assumptions: Three Months Ended Six Months Ended June 27, 2016 June 29, 2015 June 27, 2016 June 29, 2015 Risk free rate 1.7% N/A 1.8% 1.9% Expected volatility 30.4% N/A 30.4% 37.9% Expected term 6.3 years N/A 6.3 years 6.3 years Expected dividend yield 0.0% N/A 0.0% 0.0%

Earnings per Share (EPS)

Earnings per Share (EPS)	6 Months Ended
	Jun. 27, 2016
Earnings Per Share [Abstract]
Earnings per Share (EPS)	The number of shares and earnings per share (“ EPS ”) data for all periods presented are based on the historical weighted-average shares of common stock outstanding. Basic EPS is calculated by dividing income available to common stockholders by the weighted-average number of shares of common stock outstanding during each period. Diluted EPS is calculated using income available to common stockholders divided by diluted weighted-average shares of common stock outstanding during each period, which includes unvested restricted common stock and outstanding stock options. Diluted EPS considers the impact of potentially dilutive securities except in periods in which there is a loss because the inclusion of the potential common shares would have an anti-dilutive effect. The following table sets forth the computations of basic and dilutive EPS : Three Months Ended Six Months Ended (in thousands, except per share data) June 27, 2016 June 29, 2015 June 27, 2016 June 29, 2015 Earnings: Net income (loss) $ 952 $ (1,939 ) $ 1,594 $ 657 Less: Net loss attributable to noncontrolling interests — 500 — 500 Net income (loss) attributable to Papa Murphy’s 952 (1,439 ) 1,594 1,157 Shares: Weighted average common shares outstanding 16,745 16,630 16,731 16,617 Dilutive effect of restricted equity awards (1) 22 — 30 256 Diluted weighted average number of shares outstanding 16,767 16,630 16,761 16,873 Earnings (loss) per share: Basic earnings (loss) per share $ 0.06 $ (0.09 ) $ 0.10 $ 0.07 Diluted earnings (loss) per share $ 0.06 $ (0.09 ) $ 0.10 $ 0.07 (1) The Company’s potential common stock instruments such as stock options and restricted stock were not included in the computation of diluted EPS for the three months ended June 29, 2015, as the effect of including these shares in the calculation would have been anti-dilutive. For the three months ended June 27, 2016 , and June 29, 2015 , an aggregated total of 491,000 shares and 390,000 shares, respectively, have been excluded from the diluted EPS calculation because their effect would have been anti-dilutive. For the six months ended June 27, 2016 , and June 29, 2015 , an aggregated total of 414,000 shares and 88,000 shares, respectively, have been excluded from the diluted EPS calculation because their effect would have been anti-dilutive.

Commitments and Contingencies

Commitments and Contingencies	6 Months Ended
	Jun. 27, 2016
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Operating lease commitments The Company leases facilities and various office equipment under non-cancelable operating leases which expire through December 2025 . Lease terms for its store units are generally for five years with renewal options and generally require the Company to pay a proportionate share of real estate taxes, insurance, common area maintenance and other operating costs. The Company has entered into operating leases that it has subleased to three franchised stores. These operating leases have minimum base rent terms, contingent rent terms if individual franchised store sales exceed certain levels and have terms expiring on various dates from May 2020 to October 2020 . Lease guarantees The Company is the guarantor for operating leases of 17 franchised stores that have terms expiring on various dates from August 2016 to April 2021 . The obligations from these leases will generally continue to decrease over time as the leases expire. The applicable franchise owners continue to have primary liability for these operating leases. As of June 27, 2016 , the Company does not believe it is probable it would be required to perform under the outstanding guarantees. Legal proceedings There have been no material developments in the legal proceedings described in Part II, Item 1, of the Company's Quarterly Report on Form 10-Q for the quarter ended March 28, 2016.

Related Party Transactions

Related Party Transactions	6 Months Ended
	Jun. 27, 2016
Related Party Transactions [Abstract]
Related Party Transactions	Employee loans related to share purchases In connection with share-based compensation, the Company previously made loans to certain non-officer employees of the Company (see Note 12 — Share-based Compensation ). Loans made in connection with the issuance of the Company’s equity are recognized in Stock subscriptions receivable as a reduction of total equity. As of June 27, 2016 , the Company had no outstanding stock subscription receivables. As of December 28, 2015 , the Company had stock subscription receivables of $0.1 million .

Segment Information

Segment Information	6 Months Ended
	Jun. 27, 2016
Segment Reporting [Abstract]
Segment Information	The Company has the following reportable segments: (i) Domestic Franchise; (ii) Domestic Company Stores; and (iii) International. The Domestic Franchise segment includes operations with respect to franchised stores in the United States and derives its revenues primarily from franchise and development fees and franchise royalties from franchised stores in the United States. The Domestic Company Stores segment includes operations with respect to Company-owned stores in the United States and derives its revenues from retail sales of pizza and side items to the general public. The International segment includes operations related to the Company’s operations outside the United States and derives its revenues from franchise and development fees and franchise royalties from franchised stores outside the United States. The following tables summarize information on profit or loss and assets for each of the Company’s reportable segments: Three Months Ended Six Months Ended (in thousands) June 27, 2016 June 29, 2015 June 27, 2016 June 29, 2015 Revenues Domestic Franchise $ 10,337 $ 10,878 $ 22,552 $ 22,813 Domestic Company Stores 19,470 18,156 40,144 35,323 International 87 87 183 154 Total $ 29,894 $ 29,121 $ 62,879 $ 58,290 Segment Operating Income (Loss) Domestic Franchise $ 4,455 $ 4,208 $ 8,282 $ 10,135 Domestic Company Stores (716 ) 552 (808 ) 1,688 International 73 54 126 78 Corporate and unallocated (999 ) (2,226 ) (2,464 ) (3,965 ) Total $ 2,813 $ 2,588 $ 5,136 $ 7,936 Depreciation and amortization Domestic Franchise $ 1,605 $ 1,288 $ 3,068 $ 2,589 Domestic Company Stores 1,305 1,124 2,546 2,135 International 5 8 16 15 Total $ 2,915 $ 2,420 $ 5,630 $ 4,739 (in thousands) June 27, 2016 December 28, 2015 Total Assets Domestic Franchise $ 131,358 $ 139,705 Domestic Company Stores 51,052 45,217 International 379 438 Other (1) 89,237 90,111 Total $ 272,026 $ 275,471 (1) Other assets which are not allocated to the individual segments primarily include trade names and trademarks and taxes receivable.

Description of Business and B22

Description of Business and Basis of Presentation (Policies)	6 Months Ended
	Jun. 27, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of presentation	Basis of presentation The accompanying interim unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “ SEC ”). Accordingly, they do not include all information and footnotes required by generally accepted accounting principles in the United States (“ GAAP ”) for complete financial statements. In the Company’s opinion, all necessary adjustments, consisting of only normal recurring adjustments, have been made for the fair statement of the results of the interim periods presented. The results of operations for such interim periods are not necessarily indicative of the results to be expected for the full year. The accompanying interim unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and the related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 28, 2015 .
Principles of consolidation	Principles of consolidation The interim unaudited condensed consolidated financial statements include the accounts of Papa Murphy’s Holdings, Inc., its subsidiaries and certain entities which the Company consolidates as variable interest entities (“ VIE s”). All significant intercompany transactions and balances have been eliminated. Throughout the interim unaudited condensed consolidated financial statements and the related notes thereto, “Papa Murphy’s” and “the Company” refer to Papa Murphy’s Holdings, Inc. and its consolidated subsidiaries.
Fiscal year	Fiscal year The Company uses a 52- or 53-week fiscal year, ending on the Monday nearest to December 31. Fiscal year 2016 is a 53-week year and 2015 was a 52-week year. All three month periods presented herein contain 13 weeks. All references to years and quarters relate to fiscal periods rather than calendar periods. References to 2016 and 2015 are references to fiscal years ending January 2, 2017 , and ended December 28, 2015 , respectively.
New accounting pronouncements	During the three months ended March 28, 2016, the Company early-adopted ASU No. 2016-09, Compensation — Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ ASU 2016-09 ”). The Company applied the new guidance on a modified retrospective basis through a cumulative-effect adjustment. As a result, changes have been made to the presentation of Stockholders’ Equity in the Condensed Consolidated Balance Sheets as of December 28, 2015 . See Recent Accounting Pronouncements below for additional information. A summary of the changes made to the Condensed Consolidated Balance Sheets as of December 28, 2015 , is included in the following table: (in thousands) As Filed Updated Additional paid-in capital $ 118,801 $ 118,842 Accumulated deficit (21,214 ) (21,255 ) Accounting Pronouncements Recently Adopted In March 2016, the Financial Accounting Standards Board (“ FASB ”) issued ASU 2016-09 , which simplifies several aspects of the accounting for share-based payment awards to employees, including the accounting for income taxes, forfeitures, statutory tax withholding requirements and classification in the statement of cash flows. The effective date for ASU 2016-09 is for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted in any annual or interim period for which financial statements have not yet been issued. All amendments in ASU 2016-09 that apply must be adopted in the same period. The Company early-adopted ASU 2016-09 at the beginning of fiscal year 2016. As permitted under ASU 2016-09 , the Company has elected to account for forfeitures in compensation cost when they occur in order to ease the administrative burden of estimating forfeitures. The effect of adopting ASU 2016-09 is reflected in Stockholders’ Equity in the Condensed Consolidated Balance Sheets on a modified retrospective basis through a cumulative-effect adjustment. See Basis of Presentation above for additional information. Recent Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ ASU 2014-09 ”), a new standard to achieve a consistent application of revenue recognition within the U.S., resulting in a single revenue model to be applied by reporting companies under GAAP. The original effective date for ASU 2014-09 would have required adoption by the Company in the first quarter of fiscal 2017 with early adoption prohibited. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606) - Deferral of the Effective Date , which defers the effective date of ASU 2014-09 for one year and permits early adoption in accordance with the original effective date of ASU 2014-09 . In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) which is an amendment to the new revenue recognition standard on assessing whether an entity is a principal or an agent in a revenue transaction. This amendment addresses implementation issues that were discussed by the Revenue Recognition Transition Resource Group to clarify the principal versus agent assessment and lead to more consistent application. This new standard has the same effective date and transition requirements as ASU 2014-09 . The new revenue standard is required to be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the standard recognized at the date of initial application. The Company has not yet selected a transition method. The Company is continuing to evaluate the impact the adoption of this standard will have on the recognition of revenue. In February 2016, the FASB issued ASU No. 2016-02, Leases (“ ASU 2016-02 ”). This update requires that lessees recognize assets and liabilities on the balance sheet for the rights and obligations created by all leases with terms of more than twelve months. ASU 2016-02 also will require disclosures designed to give financial statement users information on the amount, timing, and uncertainty of cash flows arising from leases. These disclosures include both qualitative and quantitative information. The effective date for ASU 2016-02 is for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company is still evaluating the impact of ASU 2016-02 on its financial position and results of operations.

Description of Business and B23

Description of Business and Basis of Presentation (Tables)	6 Months Ended
	Jun. 27, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Schedule of new accounting pronouncements	A summary of the changes made to the Condensed Consolidated Balance Sheets as of December 28, 2015 , is included in the following table: (in thousands) As Filed Updated Additional paid-in capital $ 118,801 $ 118,842 Accumulated deficit (21,214 ) (21,255 )

Acquisitions (Tables)

Acquisitions (Tables)	6 Months Ended
	Jun. 29, 2015
Acquisitions [Abstract]
Schedule of fair value of assets acquired	The fair values of the assets acquired are summarized below (in thousands): Cash and cash equivalents $ 4 Inventory 23 Prepaid expenses and other current assets 22 Property and equipment 503 Asset retirement obligations (59 ) Total identifiable net assets acquired 493 Goodwill 1,956 Total net assets acquired 2,449 Dispute settlement 500 Total consideration $ 2,949

Prepaid Expenses and Other Cu25

Prepaid Expenses and Other Current Assets (Tables)	6 Months Ended
	Jun. 27, 2016
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Prepaid expenses and other current assets	Prepaid expenses and other current assets consist of the following: (in thousands) June 27, 2016 December 28, 2015 Prepaid media production costs $ 430 $ 352 Prepaid software and services 964 464 Prepaid rents 557 477 Prepaid insurance 84 602 Taxes receivable 2,170 2,872 POS software licenses for resale — 660 Assets held for sale 599 605 Advertising cooperative assets, restricted 208 26 Other 75 81 Total prepaid expenses and other current assets $ 5,087 $ 6,139
Software license revenue	POS software license revenue during the periods reported was as follows: Three Months Ended Six Months Ended (in thousands) June 27, 2016 June 29, 2015 June 27, 2016 June 29, 2015 POS software license revenue $ — $ 115 $ 657 $ 301

Property and Equipment (Tables)

Property and Equipment (Tables)	6 Months Ended
	Jun. 27, 2016
Property, Plant and Equipment [Abstract]
Depreciation expense	Depreciation expense during the periods reported was as follows: Three Months Ended Six Months Ended (in thousands) June 27, 2016 June 29, 2015 June 27, 2016 June 29, 2015 Depreciation expense $ 1,664 $ 1,075 $ 3,108 $ 2,079

Goodwill (Tables)

Goodwill (Tables)	6 Months Ended
	Jun. 27, 2016
Goodwill [Abstract]
Summary of changes to goodwill	(in thousands) Domestic Company Stores Domestic Franchise Total Balance at December 28, 2015 $ 24,960 $ 81,546 $ 106,506 Acquisitions 1,956 — 1,956 Balance at June 27, 2016 $ 26,916 $ 81,546 $ 108,462

Intangible Assets Intangible As

Intangible Assets Intangible Assets (Tables)	6 Months Ended
	Jun. 27, 2016
Goodwill and Intangible Assets Disclosure [Abstract]
Finite-lived intangible assets amortization expense	Amortization expense during the periods reported was as follows: Three Months Ended Six Months Ended (in thousands) June 27, 2016 June 29, 2015 June 27, 2016 June 29, 2015 Amortization expense $ 1,251 $ 1,345 $ 2,522 $ 2,660

Receivables (Tables)

Receivables (Tables)	6 Months Ended
	Jun. 27, 2016
Receivables [Abstract]
Allowance for doubtful accounts	The Company’s allowance for doubtful accounts is as follows: (in thousands) June 27, 2016 December 28, 2015 Allowance for doubtful accounts $ 34 $ 31

Financing Arrangements (Tables)

Financing Arrangements (Tables)	6 Months Ended
	Jun. 27, 2016
Debt Disclosure [Abstract]
Long-term debt	Long-term debt consists of the following: (in thousands) June 27, 2016 December 28, 2015 Term loan $ 105,879 $ 109,200 Revolving line of credit 3,000 — Notes payable 3,000 3,000 Total principal amount of long-term debt 111,879 112,200 Unamortized debt issuance costs (1,005 ) (1,163 ) Total long-term debt 110,874 111,037 Less current portion (3,679 ) (2,800 ) Total long-term debt, net of current portion $ 107,195 $ 108,237

Fair Value Measurement (Tables)

Fair Value Measurement (Tables)	6 Months Ended
	Jun. 27, 2016
Fair Value Disclosures [Abstract]
Fair value	The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis: June 27, 2016 December 28, 2015 (in thousands) Carrying Value Fair Value Carrying Value Fair Value Fair Value Measurement Financial assets Notes receivable (1) $ 184 $ 186 $ 221 $ 224 Level 3 (1) The fair value of notes receivable was estimated primarily using a discounted cash flow method based on a discount rate, reflecting the applicable credit spread.

Accrued and Other Liabilities (

Accrued and Other Liabilities (Tables)	6 Months Ended
	Jun. 27, 2016
Payables and Accruals [Abstract]
Accrued and other liabilities	Accrued expenses and other current liabilities consist of the following: (in thousands) June 27, 2016 December 28, 2015 Accrued compensation and related costs $ 3,235 $ 3,699 Gift cards payable 2,312 2,902 Accrued interest and non-income taxes payable 656 855 Convention fund balance 803 626 Unearned product rebates 55 922 Advertising cooperative liabilities 295 137 Other 433 615 Total accrued expenses and other current liabilities $ 7,789 $ 9,756

Income Taxes Income Taxes (Tabl

Income Taxes Income Taxes (Tables)	6 Months Ended
	Jun. 27, 2016
Income Tax Disclosure [Abstract]
Income tax information	Information on the Company’s income taxes for the periods reported is as follows: Three Months Ended Six Months Ended (in thousands) June 27, 2016 June 29, 2015 June 27, 2016 June 29, 2015 Provision for (benefit from) income taxes $ 610 $ (1,160 ) $ 1,070 $ 460 Income (loss) before income taxes 1,562 (3,099 ) 2,664 1,117 Effective income tax rate 39.1 % 37.4 % 40.2 % 41.2 %

Share-based Compensation (Table

Share-based Compensation (Tables)	6 Months Ended
	Jun. 27, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Schedule of restricted stock activity	Information with respect to restricted stock activity is as follows: Number of Shares of Restricted Common Stock Weighted Average Sale/Grant Date Fair Value Per Share Time Vesting Performance Vesting Unvested, December 28, 2015 49,513 186,515 $ 3.11 Granted 15,000 — 7.90 Vested (9,764 ) — 12.22 Repurchased (15,086 ) (18,858 ) 2.27 Unvested, June 27, 2016 39,663 167,657 $ 2.77 The weighted average fair value of share-based compensation awards granted and the fair values of awards granted and vested during the periods reported were as follows: Three Months Ended Six Months Ended (in thousands, except per share amounts) June 27, 2016 June 29, 2015 June 27, 2016 June 29, 2015 Weighted average grant date fair value per share $ 7.90 $ 18.81 $ 7.90 $ 18.81 Total fair value of shares granted 119 90 119 90 Total fair value of shares vested 103 35 119 52
Schedule of stock option activity	Information with respect to stock option activity is as follows: Number of Shares Subject to Options Weighted Weighted Aggregate Time Vesting Performance Vesting Outstanding, December 28, 2015 841,956 200,481 $ 11.55 Granted 173,450 — 11.04 Exercised (26,644 ) — 11.00 Forfeited (22,213 ) (14,641 ) 11.44 Outstanding, June 27, 2016 966,549 185,840 $ 11.49 8.2 years $ — Exercisable, June 27, 2016 506,017 — $ 11.38 7.9 years $ —
Schedule of weighted average fair value of share-based compensation awards granted and vested, and the intrinsic value of options exercised	Fair value information for options granted and vested and the intrinsic value of options exercised during the periods reported are as follows: Three Months Ended Six Months Ended (in thousands, except per share amounts) June 27, 2016 June 29, 2015 June 27, 2016 June 29, 2015 Weighted average grant date fair value per share $ 3.80 N/A $ 3.70 $ 5.41 Total fair value of awards granted 13 N/A 642 1,039 Total fair value of awards vested 151 314 480 324 Total intrinsic value of options exercised 25 N/A 25 32
Schedule of employee service share-based compensation, allocation of recognized period costs	Total compensation costs recognized in connection with the Incentive Plans during the periods reported were as follows: Three Months Ended Six Months Ended (in thousands) June 27, 2016 June 29, 2015 June 27, 2016 June 29, 2015 Stock compensation expense $ 196 $ 500 $ 427 $ 656 Associated income tax benefits 71 166 143 218
Schedule of share-based payment award, stock options, valuation assumptions	The fair value of the stock option awards granted during the periods reported was estimated using the Black-Scholes model with the following weighted-average assumptions: Three Months Ended Six Months Ended June 27, 2016 June 29, 2015 June 27, 2016 June 29, 2015 Risk free rate 1.7% N/A 1.8% 1.9% Expected volatility 30.4% N/A 30.4% 37.9% Expected term 6.3 years N/A 6.3 years 6.3 years Expected dividend yield 0.0% N/A 0.0% 0.0%

Earnings per Share (EPS) (Table

Earnings per Share (EPS) (Tables)	6 Months Ended
	Jun. 27, 2016
Earnings Per Share [Abstract]
Computations of basic and dilutive earnings per share	The following table sets forth the computations of basic and dilutive EPS : Three Months Ended Six Months Ended (in thousands, except per share data) June 27, 2016 June 29, 2015 June 27, 2016 June 29, 2015 Earnings: Net income (loss) $ 952 $ (1,939 ) $ 1,594 $ 657 Less: Net loss attributable to noncontrolling interests — 500 — 500 Net income (loss) attributable to Papa Murphy’s 952 (1,439 ) 1,594 1,157 Shares: Weighted average common shares outstanding 16,745 16,630 16,731 16,617 Dilutive effect of restricted equity awards (1) 22 — 30 256 Diluted weighted average number of shares outstanding 16,767 16,630 16,761 16,873 Earnings (loss) per share: Basic earnings (loss) per share $ 0.06 $ (0.09 ) $ 0.10 $ 0.07 Diluted earnings (loss) per share $ 0.06 $ (0.09 ) $ 0.10 $ 0.07

Segment Information (Tables)

Segment Information (Tables)	6 Months Ended
	Jun. 27, 2016
Segment Reporting [Abstract]
Segment reporting information by segment	The following tables summarize information on profit or loss and assets for each of the Company’s reportable segments: Three Months Ended Six Months Ended (in thousands) June 27, 2016 June 29, 2015 June 27, 2016 June 29, 2015 Revenues Domestic Franchise $ 10,337 $ 10,878 $ 22,552 $ 22,813 Domestic Company Stores 19,470 18,156 40,144 35,323 International 87 87 183 154 Total $ 29,894 $ 29,121 $ 62,879 $ 58,290 Segment Operating Income (Loss) Domestic Franchise $ 4,455 $ 4,208 $ 8,282 $ 10,135 Domestic Company Stores (716 ) 552 (808 ) 1,688 International 73 54 126 78 Corporate and unallocated (999 ) (2,226 ) (2,464 ) (3,965 ) Total $ 2,813 $ 2,588 $ 5,136 $ 7,936 Depreciation and amortization Domestic Franchise $ 1,605 $ 1,288 $ 3,068 $ 2,589 Domestic Company Stores 1,305 1,124 2,546 2,135 International 5 8 16 15 Total $ 2,915 $ 2,420 $ 5,630 $ 4,739 (in thousands) June 27, 2016 December 28, 2015 Total Assets Domestic Franchise $ 131,358 $ 139,705 Domestic Company Stores 51,052 45,217 International 379 438 Other (1) 89,237 90,111 Total $ 272,026 $ 275,471 (1) Other assets which are not allocated to the individual segments primarily include trade names and trademarks and taxes receivable.

Description of Business and B37

Description of Business and Basis of Presentation - Description of business (Details)	Jun. 27, 2016statestore
Franchisor Disclosure [Line Items]
Number of stores	1,570
Number of states in which the Company operates | state	38
Domestic
Franchisor Disclosure [Line Items]
Number of stores	1,531
Domestic | Franchised stores
Franchisor Disclosure [Line Items]
Number of stores	1,375
Domestic | Company-owned stores
Franchisor Disclosure [Line Items]
Number of stores	156
Canada and the United Arab Emirates | Franchised stores
Franchisor Disclosure [Line Items]
Number of stores	39

Description of Business and B38

Description of Business and Basis of Presentation - Recent accounting pronouncements (Details) - USD ($) $ in Thousands	Jun. 27, 2016	Dec. 28, 2015
New Accounting Pronouncement, Early Adoption [Line Items]
Additional paid-in capital	$ 119,481	$ 118,842
Accumulated deficit	$ (19,661)	(21,255)
As filed | Adjustments for new accounting principle, early adoption
New Accounting Pronouncement, Early Adoption [Line Items]
Additional paid-in capital		118,801
Accumulated deficit		$ (21,214)

Acquisitions Narrative (Details

Acquisitions Narrative (Details) - Series of individually immaterial business acquisitions $ in Thousands	Apr. 11, 2016USD ($)store
Business Acquisition [Line Items]
Total purchase price	$ 2,949
Dispute settlement	$ 500
Papa Murphy's Company Stores, Inc.
Business Acquisition [Line Items]
Stores acquired | store	9
Total purchase price	$ 2,900

Acquisitions Fair value allocat

Acquisitions Fair value allocations (Details) - USD ($) $ in Thousands	Apr. 11, 2016	Jun. 27, 2016	Dec. 28, 2015
Business Acquisition [Line Items]
Goodwill		$ 108,462	$ 106,506
Series of individually immaterial business acquisitions
Business Acquisition [Line Items]
Cash and cash equivalents	$ 4
Inventory	23
Prepaid expenses and other current assets	22
Property and equipment	503
Asset retirement obligations	(59)
Total identifiable net assets acquired	493
Goodwill	1,956
Total net assets acquired	2,449
Dispute settlement	500
Total consideration	$ 2,949

Prepaid Expenses and Other Cu41

Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 27, 2016	Jun. 29, 2015	Jun. 27, 2016	Jun. 29, 2015	Dec. 28, 2015
Prepaid Expense and Other Assets, Current [Abstract]
Prepaid media production costs	$ 430		$ 430		$ 352
Prepaid software and services	964		964		464
Prepaid rents	557		557		477
Prepaid insurance	84		84		602
Taxes receivable	2,170		2,170		2,872
POS software licenses for resale	0		0		660
Assets held for sale	599		599		605
Advertising cooperative assets, restricted	208		208		26
Other	75		75		81
Total prepaid expenses and other current assets	5,087		5,087		$ 6,139
POS Systems
Revenue from External Customer [Line Items]
POS software license revenue	$ 0	$ 115	$ 657	$ 301

Property and Equipment (Details

Property and Equipment (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 27, 2016	Jun. 29, 2015	Jun. 27, 2016	Jun. 29, 2015	Dec. 28, 2015
Property, Plant and Equipment [Abstract]
Accumulated depreciation	$ 14,100		$ 14,100		$ 13,800
Depreciation expense	$ 1,664	$ 1,075	$ 3,108	$ 2,079

Goodwill Schedule of Goodwill (

Goodwill Schedule of Goodwill (Details) $ in Thousands	6 Months Ended
	Jun. 27, 2016USD ($)
Goodwill [Roll Forward]
Beginning balance	$ 106,506
Acquisitions	1,956
Ending balance	108,462
Domestic Company Stores
Goodwill [Roll Forward]
Beginning balance	24,960
Acquisitions	1,956
Ending balance	26,916
Domestic Franchise
Goodwill [Roll Forward]
Beginning balance	81,546
Acquisitions	0
Ending balance	$ 81,546

Goodwill Narrative (Details)

Goodwill Narrative (Details) - USD ($) $ in Thousands	Jun. 27, 2016	Dec. 28, 2015
Goodwill [Line Items]
Goodwill	$ 108,462	$ 106,506
International
Goodwill [Line Items]
Goodwill	$ 0	$ 0

Intangible Assets (Details)

Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 27, 2016	Jun. 29, 2015	Jun. 27, 2016	Jun. 29, 2015	Dec. 28, 2015
Intangible Assets, Net
Accumulated amortization	$ 24,800		$ 24,800		$ 23,000
Amortization expense	$ 1,251	$ 1,345	$ 2,522	$ 2,660

Receivables (Details)

Receivables (Details) - USD ($) $ in Thousands	Jun. 27, 2016	Dec. 28, 2015
Receivables [Abstract]
Allowance for doubtful accounts	$ 34	$ 31

Financing Arrangements - Sched

Financing Arrangements - Schedule of Long-term debt (Details) - USD ($) $ in Thousands	Jun. 27, 2016	Dec. 28, 2015
Debt Instrument [Line Items]
Principal amount of long-term debt	$ 111,879	$ 112,200
Unamortized debt issuance costs	(1,005)	(1,163)
Long-term debt	110,874	111,037
Less current portion	(3,679)	(2,800)
Total long-term debt, net of current portion	107,195	108,237
Secured debt | Term loan
Debt Instrument [Line Items]
Principal amount of long-term debt	105,879	109,200
Secured debt | Revolving credit facility
Debt Instrument [Line Items]
Principal amount of long-term debt	3,000	0
Notes payable
Debt Instrument [Line Items]
Principal amount of long-term debt	$ 3,000	$ 3,000

Financing Arrangements - Narrat

Financing Arrangements - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 26, 2016	Jun. 27, 2016	Jun. 27, 2016	Dec. 28, 2015
Debt Instrument [Line Items]
Long-term Debt		$ 110,874	$ 110,874	$ 111,037
Principal amount of long-term debt		111,879	111,879	112,200
Secured debt | Term loan
Debt Instrument [Line Items]
Principal amount of long-term debt		105,879	105,879	109,200
Secured debt | Revolving credit facility
Debt Instrument [Line Items]
Principal amount of long-term debt		3,000	3,000	0
Notes payable
Debt Instrument [Line Items]
Principal amount of long-term debt		3,000	3,000	$ 3,000
Papa Murphy's Company Stores, Inc. | Notes payable
Debt Instrument [Line Items]
Long-term Debt		$ 3,000	$ 3,000
Interest rate on notes payable		5.00%	5.00%
Senior secured credit facility | PMI Holdings Inc. | Secured debt
Debt Instrument [Line Items]
Maximum borrowing capacity		$ 132,000	$ 132,000
Minimum term loan amortization payments			700
Interest rate during period		3.79%
Senior secured credit facility | PMI Holdings Inc. | Secured debt | Term loan
Debt Instrument [Line Items]
Maximum borrowing capacity		$ 112,000	$ 112,000
Maturity date			Aug. 28, 2019
Senior secured credit facility | PMI Holdings Inc. | Secured debt | Revolving credit facility
Debt Instrument [Line Items]
Maximum borrowing capacity		20,000	$ 20,000
Senior secured credit facility | PMI Holdings Inc. | Secured debt | Letter of credit subfacility
Debt Instrument [Line Items]
Maximum borrowing capacity		2,500	2,500
Senior secured credit facility | PMI Holdings Inc. | Secured debt | Swing-line loan subfacility
Debt Instrument [Line Items]
Maximum borrowing capacity		$ 1,000	$ 1,000
LIBOR rate | Senior secured credit facility | PMI Holdings Inc. | Secured debt | Term loan
Debt Instrument [Line Items]
Interest rate at end of period		3.70%	3.70%
LIBOR rate | Senior secured credit facility | PMI Holdings Inc. | Secured debt | Revolving credit facility
Debt Instrument [Line Items]
Interest rate at end of period		3.70%	3.70%
Principal amount of long-term debt		$ 2,500	$ 2,500
Base rate | Senior secured credit facility | PMI Holdings Inc. | Secured debt | Revolving credit facility
Debt Instrument [Line Items]
Interest rate at end of period		5.75%	5.75%
Principal amount of long-term debt		$ 500	$ 500
Scenario, Forecast | Senior secured credit facility | PMI Holdings Inc. | Secured debt
Debt Instrument [Line Items]
Minimum term loan amortization payments	$ 1,400

Fair Value Measurement (Details

Fair Value Measurement (Details) - USD ($) $ in Thousands		Jun. 27, 2016	Dec. 28, 2015
Reported value measurement
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Notes receivable	[1]	$ 184	$ 221
Estimate of fair value measurement | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Notes receivable	[1]	$ 186	$ 224
[1]	The fair value of notes receivable was estimated primarily using a discounted cash flow method based on a discount rate, reflecting the applicable credit spread.

Accrued and Other Liabilities50

Accrued and Other Liabilities (Details) - USD ($) $ in Thousands	Jun. 27, 2016	Dec. 28, 2015
Payables and Accruals [Abstract]
Accrued compensation and related costs	$ 3,235	$ 3,699
Gift cards payable	2,312	2,902
Accrued interest and non-income taxes payable	656	855
Convention fund balance	803	626
Unearned product rebates	55	922
Advertising cooperative liabilities	295	137
Other	433	615
Accrued and other liabilities	$ 7,789	$ 9,756

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 27, 2016	Jun. 29, 2015	Jun. 27, 2016	Jun. 29, 2015
Income Tax Disclosure [Abstract]
Provision for (benefit from) income taxes	$ 610	$ (1,160)	$ 1,070	$ 460
Income (loss) before income taxes	$ 1,562	$ (3,099)	$ 2,664	$ 1,117
Effective income tax rate	39.10%	37.40%	40.20%	41.20%

Share-based Compensation (Restr

Share-based Compensation (Restricted Common Shares and Stock Options) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 27, 2016	Jun. 29, 2015	Jun. 27, 2016	Jun. 29, 2015	Dec. 28, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common shares reserved for equity incentive awards	2,116,747		2,116,747
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate number of shares issued under plan	562,434		562,434		584,017
Restricted common stock, weighted average sale date fair value (in dollars per share)
Unvested, Beginning balance (usd per share)			$ 3.11
Vested (usd per share)			12.22
Repurchased (usd per share)			2.27
Unvested, Ending balance (usd per share)	$ 2.77		2.77
Restricted Stock Grants:
Weighted average grant date fair value per share	$ 7.90	$ 18.81	$ 7.90	$ 18.81
Total fair value of shares granted	$ 119	$ 90	$ 119	$ 90
Total fair value of shares vested	$ 103	35	$ 119	$ 52
Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price			$ 11
Aggregate number of shares issued under plan	1,213,151		1,213,151		1,076,555
Stock options outstanding, weighted average exercise price (in dollars per share)
Outstanding, Beginning balance (usd per share)			$ 11.55
Granted (usd per share)			11.04
Forfeited (usd per share)			11.44
Outstanding, Ending balance (usd per share)	$ 11.49		11.49
Exercisable (usd per share)	$ 11.38		$ 11.38
Stock Option Grants
Weighted Average Remaining Contractual Term, Outstanding			8 years 2 months
Weighted Average Remaining Contractual Term, Exercisable			7 years 11 months
Aggregate Intrinsic Value, Outstanding	$ 0		$ 0
Aggregate Intrinsic Value, Exercisable	$ 0		$ 0
Weighted average grant date fair value per share	$ 3.80		$ 3.70	$ 5.41
Total fair value of awards granted	$ 13		$ 642	$ 1,039
Total fair value of awards vested	151	$ 314	480	324
Total intrinsic value of options exercised	$ 25		$ 25	$ 32
Time Vesting | Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period			15,000
Number of shares of restricted common stock, unvested [Roll Forward]
Unvested, Beginning balance (in shares)			49,513
Vested (in shares)			(9,764)
Repurchased (in shares)			(15,086)
Unvested, Ending balance (in shares)	39,663		39,663
Time Vesting | Stock Option
Number of shares of stock options, outstanding [Roll Forward]
Outstanding, Beginning balance (in shares)			841,956
Granted (in shares)			173,450
Forfeited (in shares)			(22,213)
Outstanding, Ending balance (in shares)	966,549		966,549
Exercisable (in shares)	506,017		506,017
Stock options outstanding, weighted average exercise price (in dollars per share)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period			26,644
Performance Vesting | Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period			0
Number of shares of restricted common stock, unvested [Roll Forward]
Unvested, Beginning balance (in shares)			186,515
Vested (in shares)			0
Repurchased (in shares)			(18,858)
Unvested, Ending balance (in shares)	167,657		167,657
Performance Vesting | Stock Option
Number of shares of stock options, outstanding [Roll Forward]
Outstanding, Beginning balance (in shares)			200,481
Granted (in shares)			0
Forfeited (in shares)			(14,641)
Outstanding, Ending balance (in shares)	185,840		185,840
Exercisable (in shares)	0		0
Stock options outstanding, weighted average exercise price (in dollars per share)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period			0

Share-based Compensation (Compe

Share-based Compensation (Compensation Cost and Valuation) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 27, 2016	Jun. 29, 2015	Jun. 27, 2016	Jun. 29, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock compensation expense	$ 196	$ 500	$ 427	$ 656
Associated income tax benefits	71	$ 166	143	$ 218
Total unrecognized stock-based compensation expense	$ 2,700		$ 2,700
Compensation not yet recognized, period for recognition			2 years 10 months
Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk free rate	1.70%		1.80%	1.90%
Expected volatility	30.40%		30.40%	37.90%
Expected term	6 years 3 months		6 years 3 months	6 years 3 months
Expected dividend yield	0.00%		0.00%	0.00%
Time Vesting
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total unrecognized stock-based compensation expense	$ 2,000		$ 2,000
Performance Vesting
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total unrecognized stock-based compensation expense	$ 700		$ 700

Earnings per Share (EPS) (Detai

Earnings per Share (EPS) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended			6 Months Ended
	Jun. 27, 2016	Jun. 29, 2015		Jun. 27, 2016	Jun. 29, 2015
Earnings:
Net income (loss)	$ 952	$ (1,939)		$ 1,594	$ 657
Shares:
Weighted average common shares outstanding	16,744,553	16,629,666		16,730,581	16,616,936
Dilutive effect of potential common stock	22,034	0	[1]	29,997	255,568
Diluted weighted average number of shares outstanding	16,766,587	16,629,666		16,760,578	16,872,504
Earnings (loss) per share:
Basic earnings (loss) per share	$ 0.06	$ (0.09)		$ 0.10	$ 0.07
Diluted earnings (loss) per share	$ 0.06	$ (0.09)		$ 0.10	$ 0.07
Antidilutive shares excluded from computation of earnings per share	491,000	390,000		414,000	88,000
[1]	The Company’s potential common stock instruments such as stock options and restricted stock were not included in the computation of diluted EPS for the three months ended June 29, 2015, as the effect of including these shares in the calculation would have been anti-dilutive.

Commitments and Contingencies (

Commitments and Contingencies (Details)	6 Months Ended
	Jun. 27, 2016store
Loss Contingencies [Line Items]
Lease terms for store units	5 years
Number of store locations	1,570
Guarantor for operating leases | Franchise owner store locations
Loss Contingencies [Line Items]
Number of store locations	17
Guarantor for subleased operating leases | Franchise owner store locations
Loss Contingencies [Line Items]
Number of store locations	3

Related Party Transactions (Det

Related Party Transactions (Details) - USD ($)	Jun. 27, 2016	Dec. 28, 2015
Related Party Transaction [Line Items]
Stock subscriptions receivable	$ 0	$ 100,000
Employee loans related to share purchases
Related Party Transaction [Line Items]
Stock subscriptions receivable	$ 0	$ 100,000

Segment Information - Profit o

Segment Information - Profit or Loss (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 27, 2016	Jun. 29, 2015	Jun. 27, 2016	Jun. 29, 2015
Segment Reporting Information [Line Items]
Revenues	$ 29,894	$ 29,121	$ 62,879	$ 58,290
Segment Operating Income (Loss)	2,813	2,588	5,136	7,936
Depreciation and amortization	2,915	2,420	5,630	4,739
Operating Segments
Segment Reporting Information [Line Items]
Revenues	29,894	29,121	62,879	58,290
Segment Operating Income (Loss)	2,813	2,588	5,136	7,936
Operating Segments | Domestic Franchise
Segment Reporting Information [Line Items]
Revenues	10,337	10,878	22,552	22,813
Segment Operating Income (Loss)	4,455	4,208	8,282	10,135
Depreciation and amortization	1,605	1,288	3,068	2,589
Operating Segments | Domestic Company Stores
Segment Reporting Information [Line Items]
Revenues	19,470	18,156	40,144	35,323
Segment Operating Income (Loss)	(716)	552	(808)	1,688
Depreciation and amortization	1,305	1,124	2,546	2,135
Operating Segments | International
Segment Reporting Information [Line Items]
Revenues	87	87	183	154
Segment Operating Income (Loss)	73	54	126	78
Depreciation and amortization	5	8	16	15
Operating Segments | Corporate and unallocated
Segment Reporting Information [Line Items]
Segment Operating Income (Loss)	$ (999)	$ (2,226)	$ (2,464)	$ (3,965)

Segment Information - Assets (

Segment Information - Assets (Details) - USD ($) $ in Thousands		Jun. 27, 2016	Dec. 28, 2015
Segment Reporting Information [Line Items]
Total Assets		$ 272,026	$ 275,471
Operating Segments
Segment Reporting Information [Line Items]
Total Assets		272,026	275,471
Operating Segments | Domestic Franchise
Segment Reporting Information [Line Items]
Total Assets		131,358	139,705
Operating Segments | Domestic Company Stores
Segment Reporting Information [Line Items]
Total Assets		51,052	45,217
Operating Segments | International
Segment Reporting Information [Line Items]
Total Assets		379	438
Operating Segments | Other
Segment Reporting Information [Line Items]
Total Assets	[1]	$ 89,237	$ 90,111
[1]	Other assets which are not allocated to the individual segments primarily include trade names and trademarks and taxes receivable.