Zoe's Kitchen (ZOES) 10-Q 17 Aug 17 2017 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jul. 10, 2017	Aug. 17, 2017
Document and Entity Information [Abstract]
Entity Registrant Name	ZOE'S KITCHEN, INC.
Entity Central Index Key	1,594,879
Current Fiscal Year End Date	--12-25
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Jul. 10, 2017
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Common Stock, Shares Outstanding		19,535,008

Unaudited Condensed Consolidate

Unaudited Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jul. 10, 2017	Dec. 26, 2016
Current Assets:
Cash and cash equivalents	$ 4,549	$ 5,493
Trade accounts receivable, net of allowance for doubtful accounts	2,118	2,287
Other accounts receivable	3,752	3,708
Inventories	2,378	1,878
Prepaid expenses and other	3,931	1,818
Total current assets	16,728	15,184
Property and equipment, net	184,961	162,033
Goodwill	29,528	29,528
Intangibles, net	7,123	7,962
Other long-term assets, net	546	512
Total long-term assets	222,158	200,035
Total assets	238,886	215,219
Current liabilities:
Accounts payable	11,762	7,229
Accrued expenses and other	14,885	14,260
Total current liabilities	26,647	21,489
Long-term liabilities:
Long-term Debt	10,000	0
Deemed landlord financing	32,367	29,777
Deferred rent	32,165	28,375
Deferred income taxes	5,368	5,476
Other long-term liabilities, net	79	136
Total long-term liabilities	79,979	63,764
Total liabilities	106,626	85,253
Commitments and contingencies (Note 8)
Stockholders' equity:
Common stock: $0.01 par value, 135,000,000 shares authorized as of July 10, 2017 and December 26, 2016; 19,535,008 and 19,460,467 issued and outstanding as of July 10, 2017 and December 26, 2016, respectively.	195	195
Additional paid-in capital	150,461	148,482
Accumulated deficit	(18,396)	(18,711)
Total stockholders' equity	132,260	129,966
Total liabilities and stockholders' equity	$ 238,886	$ 215,219

Unaudited Condensed Consolidat3

Unaudited Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jul. 10, 2017	Dec. 26, 2016
Statement of Financial Position [Abstract]
Common stock, par value (USD per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	135,000,000	135,000,000
Common stock, issued (in shares)	19,535,008	19,460,467
Common stock, outstanding (in shares)	19,535,008	19,460,467

Unaudited Condensed Consolidat4

Unaudited Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 10, 2017	Jul. 11, 2016	Jul. 10, 2017	Jul. 11, 2016
Revenue:
Restaurant sales	$ 74,261	$ 66,222	$ 164,765	$ 146,570
Royalty fees	44	51	101	114
Total revenue	74,305	66,273	164,866	146,684
Operating expenses:
Cost of sales	21,791	19,995	48,287	43,984
Labor	22,113	18,810	49,065	42,109
Store operating expenses	16,242	13,075	35,291	28,448
General and administrative expenses	7,124	7,270	17,109	16,715
Depreciation	4,161	3,292	9,213	7,284
Amortization	350	373	839	873
Pre-opening costs	679	552	1,246	1,292
Loss from disposal of equipment	748	100	1,007	337
Total operating expenses	73,208	63,467	162,057	141,042
Income from operations	1,097	2,806	2,809	5,642
Other income and expenses:
Interest expense, net	1,018	861	2,386	1,983
Other income	(20)	(20)	(49)	(47)
Total other income and expenses	998	841	2,337	1,936
Income before provision for income taxes	99	1,965	472	3,706
Provision (benefit) for income taxes	(480)	764	(126)	1,109
Net income	$ 579	$ 1,201	$ 598	$ 2,597
Earnings per share:
Basic (USD per share)	$ 0.03	$ 0.06	$ 0.03	$ 0.13
Diluted (USD per share)	$ 0.03	$ 0.06	$ 0.03	$ 0.13
Weighted average shares of common stock outstanding:
Basic (in shares)	19,488,851	19,436,315	19,479,293	19,413,132
Diluted (in shares)	19,493,514	19,631,272	19,513,743	19,595,542

Unaudited Condensed Consolidat5

Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jul. 10, 2017	Jul. 11, 2016
Cash flows from operating activities:
Net income	$ 598	$ 2,597
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	9,213	7,284
Amortization of intangible assets	839	873
Equity-based compensation	1,696	1,204
Deferred income taxes	(108)	1,021
Amortization of loan costs	12	12
Bad debt expense	12	35
Loss from disposal of equipment	1,007	337
Accretion of deemed landlord financing	159	182
Changes in operating assets and liabilities:
Trade accounts receivable	157	(394)
Other accounts receivable	(44)	(1,958)
Inventories	(499)	(237)
Prepaid expenses and other	(2,159)	(1,982)
Accounts payable	2,159	1,528
Accrued expenses and other	110	(417)
Deferred rent	3,877	4,823
Net cash provided by operating activities	17,029	14,908
Cash flows from investing activities:
Purchase of property and equipment	(28,255)	(22,820)
Proceeds from sale-leaseback transactions	0	2,089
Proceeds from sale of property and equipment	0	13
Net cash used in investing activities	(28,255)	(20,718)
Cash flows from financing activities:
Proceeds from line of credit	10,000	0
Proceeds from deemed landlord financing	282	71
Proceeds from exercise of stock options	0	1,050
Net cash provided by financing activities	10,282	1,121
Net change in cash and cash equivalents	(944)	(4,689)
Cash and cash equivalents:
Beginning of period	5,493	19,131
End of period	4,549	14,442
Supplemental disclosure of cash flow information:
Cash paid for interest related to long-term debt	12	0
Cash paid for interest related to deemed landlord financing	2,363	1,984
Non-cash deemed landlord financing	2,150	(850)
Change in accrued purchases of property and equipment	$ 2,802	$ 3,504

Nature of Operations and Basis

Nature of Operations and Basis of Presentation	6 Months Ended
	Jul. 10, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Nature of Operations and Basis of Presentation	Nature of Operations and Basis of Presentation Nature of Operations Zoe’s Kitchen, Inc. (the "Company", "Zoës", "we" or "us") primarily develops and operates fast-casual restaurants serving a distinct menu of freshly prepared Mediterranean-inspired dishes. As of July 10, 2017 , we operated 224 Company-owned restaurants and three franchise restaurants in 20 states across the United States. We have determined that we have one operating and reportable segment. All of our revenues are derived in the United States. All of our assets are located in the United States. Interim Financial Statements The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles and practices of the United States of America ("GAAP") for interim financial information. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement of the results for interim periods have been included. Certain information and footnote disclosures normally included in audited consolidated financial statements presented in accordance with GAAP have been omitted pursuant to rules and regulations of the Securities and Exchange Commission (the "SEC"). Due to the seasonality of our business, results for any interim financial period are not necessarily indicative of the results that may be achieved for a full fiscal year. In addition, quarterly results of operations may be impacted by the timing and amount of sales and costs associated with the opening of new restaurants. These interim unaudited condensed consolidated financial statements do not represent complete financial statements and should be read in conjunction with our annual financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 26, 2016 (the "2016 Form 10-K"). While the condensed consolidated balance sheet data as of December 26, 2016 was derived from audited financial statements, it does not include all disclosures required by GAAP. Comprehensive Income (Loss) Comprehensive income (loss) is the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. Comprehensive income (loss) is the same as net income (loss) for all periods presented. Therefore, a separate statement of comprehensive income (loss) is not included in the accompanying condensed consolidated financial statements. Principles of Consolidation The unaudited condensed consolidated financial statements include the accounts of Zoe’s Kitchen, Inc. and its wholly owned subsidiaries, Zoe’s Kitchen USA, LLC and Soho Franchising, LLC. All intercompany accounts and transactions have been eliminated in consolidation. The condensed consolidated financial statements presented herein reflect our financial position, results of operations and cash flows in conformity with GAAP. Fiscal Year We operate on a 52- or 53-week fiscal year that ends on the last Monday of the calendar year. Fiscal years ended December 25, 2017 and December 26, 2016 consist of 52 weeks. Our first fiscal quarter consists of 16 weeks, and each of our second, third and fourth fiscal quarters consists of 12 weeks, except for a 53-week year when the fourth quarter has 13 weeks. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions, such as valuation of long-lived, definite and indefinite-lived assets, estimated useful lives of assets, the reasonably assured lease terms of operating leases, the construction costs of leases where the Company is considered the owner during and after the construction period, allowance for doubtful accounts, the fair value related to equity-based compensation, the calculation of self-insurance reserves, and deferred tax valuation allowances, that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Recently Adopted Accounting Standards In March 2016, the FASB issued Accounting Standard Update ("ASU") No. 2016-09, “Compensation – Stock Compensation (Topic 718).” The pronouncement was issued to simplify the accounting for share-based payment transactions, including income tax consequences, the classification of awards as either equity or liabilities, and the classification on the statement of cash flows. This pronouncement is effective for reporting periods beginning after December 15, 2016. We adopted ASU 2016-09 effective December 27, 2016. The portion of ASU 2016-09 related to the accounting for income taxes was adopted using a modified retrospective approach and resulted in a net zero effect on our statement of financial position. As permitted under the new standard, the Company elected to recognize forfeitures as they occur rather than using an estimated forfeiture rate. Adopted using a modified retrospective approach, this election resulted in an increase to Accumulated deficit of $0.3 million offset by an equal increase to Additional paid-in capital. Recently Issued Accounting Standards In May 2017, the FASB issued ASU No. 2017-09, “Compensation - Stock Compensation (Topic 718) - Scope of Modification Accounting,” which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. An entity will account for the effects of a modification unless the fair value of the modified award is the same as the original award, the vesting conditions of the modified award are the same as the original award, and the classification of the modified award as an equity instrument or liability instrument is the same as the original award. This pronouncement is effective for reporting periods beginning after December 15, 2017 and early adoption is permitted. We do not expect the adoption of ASU 2017-09 to have a material impact on our financial position or results of operations. In January 2017, the FASB issued ASU No. 2017-04, “Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment,” which eliminates Step 2 from the goodwill impairment test. Under the new standard, annual and interim goodwill impairment tests will compare the fair value of a reporting unit with its carrying amount. An impairment charge will be recognized for the amount by which the carrying amount exceeds the reporting unit's fair value, not to exceed the total amount of goodwill. The pronouncement is effective for goodwill impairments tests in fiscal years beginning after December 15, 2019 and should will be applied on a prospective basis. Early adoption is permitted for goodwill impairment tests performed after January 1, 2017. We are currently evaluating the impact of adopting this update. In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments,” which provides specific guidance regarding presentation and classification on a variety of cash payments and receipts. Among the issues addressed is the classification of proceeds from the settlement of insurance claims. This pronouncement is effective for reporting periods beginning after December 15, 2017 and early adoption is permitted. We do not expect the adoption of ASU 2016-15 to have a material impact on our financial position or results of operations. In March 2016, the FASB issued ASU No. 2016-04, "Liabilities - Extinguishments of Liabilities (Subtopic 405-20)", which amends subtopic 405-20 to provide a scope exception that requires breakage for prepaid stored-value product liabilities to be accounted for consistent with the breakage guidance in Topic 606. The amendment is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. We do not expect the adoption of ASU 2016-04 to have a material impact on our financial position or results of operations. In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)," which requires entities to recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements. Previous lease accounting did not require certain lease types to be recognized on the balance sheet. This update is an amendment to the codification and is effective for fiscal years beginning after December 15, 2018 including interim periods within those fiscal years applied using a modified retrospective approach. Early adoption is permitted. We are currently evaluating the impact of the adoption of ASU 2016-02 on our financial position and results of operations, but expect that it will result in a significant increase in our long-term assets and liabilities given we have a significant number of leases. In addition, rental payments under most of our leases for which we are the accounting owner will no longer be considered debt service applied to deemed landlord financing and interest expense. Instead, these rental payments will be classified as rent expense. In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers." This update was issued to replace the current revenue recognition guidance, creating a more comprehensive revenue model. In August 2015, the FASB issued ASU 2015-14 to defer the effective date for adoption. The update is now effective for reporting periods beginning after December 15, 2017. In March 2016, April 2016, May 2016, and December 2016 the FASB also issued ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20, respectively, to further clarify performance obligations and licensing implementation guidance and other general topics. We expect to adopt the new standard using the modified retrospective approach for the fiscal year and quarter beginning December 26, 2017. We do not expect the adoption to have an impact on revenue from Company-owned restaurants or the recognition of royalty fees from our franchise agreement. In addition, we do not expect a material impact related to recognition of gift card breakage.

Supplemental Information

Supplemental Information	6 Months Ended
	Jul. 10, 2017
Statement of Financial Position [Abstract]
Supplemental Information	Supplemental Information Property and equipment, net consisted of the following (in thousands): July 10, December 26, Land $ 813 $ — Buildings under deemed landlord financing 25,980 23,830 Leasehold improvements 141,475 125,666 Machinery and equipment 36,692 32,566 Furniture and fixtures 7,335 6,604 Automobiles 4,019 4,019 Computer equipment 12,412 9,848 Construction in progress 10,720 6,256 Property and equipment, gross 239,446 208,789 Less: Accumulated depreciation (54,485 ) (46,756 ) Total Property and equipment, net $ 184,961 $ 162,033 Accrued expenses and other consisted of the following (in thousands): July 10, December 26, Accrued payroll and payroll taxes $ 4,687 $ 5,448 Accrued capital purchases 2,775 2,347 Sales tax payable 2,364 1,218 Gift card payable 796 1,200 Other accrued expenses 4,263 4,047 Total Accrued expenses and other $ 14,885 $ 14,260

Fair Value Measurements

Fair Value Measurements	6 Months Ended
	Jul. 10, 2017
Fair Value Disclosures [Abstract]
Fair Value Measurements	Fair Value Measurements The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and all other current liabilities approximate fair values due to the short maturities of these instruments.

Bank Line of Credit and Term Lo

Bank Line of Credit and Term Loan	6 Months Ended
	Jul. 10, 2017
Debt Disclosure [Abstract]
Bank Line of Credit and Term Loan	Bank Line of Credit and Term Loan On February 6, 2015, we entered into a credit facility with Wells Fargo Bank, National Association (the "2015 Credit Facility"). The 2015 Credit Facility consists of a revolving loan commitment in the aggregate amount of $20.0 million , and an incremental revolving credit commitment up to an aggregate amount of $30.0 million . The 2015 Credit Facility has a five year term and matures on February 6, 2020. As of July 10, 2017 , we had $10.0 million indebtedness under the 2015 Credit Facility. As of July 10, 2017 the amount available under the 2015 Credit Facility was $40.0 million . Revolving credit loans under the 2015 Credit Facility bear interest, at the Company’s election, at either the base rate plus an applicable margin, or LIBOR plus an applicable margin. The base rate consists of the highest of the prime rate, the federal funds rate plus 0.5% and LIBOR plus 1.0% . The applicable margin and associated loan commitment fee consists of two pricing levels based on the Company’s consolidated total debt ratio. If this debt ratio is greater than or equal to 2.50 to 1, then the unused commitment fee is 0.15% per annum, and the applicable margin is LIBOR plus 1.5% or the base rate plus 0.5% . If this debt ratio is less than 2.50 to 1, then the unused commitment fee is 0.125% per annum and the applicable margin is LIBOR plus 1.0% or the base rate. The weighted-average interest rate for the 2015 Credit Facility was 2.4% for the twelve weeks ended July 10, 2017 . The 2015 Credit Facility includes specific financial covenants such as a leverage ratio and an interest coverage ratio. We are also subject to other customary covenants, including limitations on additional borrowings, dividend payments and acquisitions. As of July 10, 2017 , we were in compliance with these financial and other customary covenants.

Equity-based Compensation

Equity-based Compensation	6 Months Ended
	Jul. 10, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Equity-based Compensation	Equity-based Compensation In connection with our initial public offering in April 2014 (the "IPO"), we adopted the 2014 Omnibus Incentive Plan (the “2014 Incentive Plan”), which provides for grants of stock options, stock appreciation rights, restricted stock, other stock-based awards and other cash-based awards available to directors, officers and other employees of us and our subsidiaries, as well as others performing consulting or advisory services to us. The number of shares of common stock available for issuance under the 2014 Incentive Plan may not exceed 1,905,799 . The following table summarizes our stock option plan activity during the twenty-eight weeks ended July 10, 2017 : Stock Options Weighted Average Exercise Price Outstanding as of December 26, 2016 710,597 $ 26.28 Granted 449,121 20.31 Exercised — — Forfeited (3,987 ) 32.09 Expired (468 ) 42.05 Outstanding as of July 10, 2017 1,155,263 $ 23.93 Included in the summary of stock option plan activity are 250,000 stock options outstanding as of December 26, 2016 that vested immediately upon completion of the IPO and 130,000 stock options granted that vest in five equal annual installments following the date of the grant. All other options vest in four equal annual installments following the date of the grant. All options have a contractual term of 10 years. The following table reflects the weighted-average assumptions utilized in the Black-Scholes option-pricing model to value the stock options granted. Twenty-eight Weeks Ended July 10, 2017 Expected volatility (1) 31.5% Risk-free rate of return 2.0% Expected life (in years) (2) 6.3 Dividend yield 0% Weighted-average fair value per share at date of grant $7.15 (1) Expected volatility was based on competitors within the industry. (2) Expected life was calculated using the simplified method, which is an average of the contractual term of the option and its ordinary vesting period, as we do not have sufficient historical data for determining the expected term of our stock option awards. The following table summarizes our restricted stock unit plan activity twenty-eight weeks ended July 10, 2017 : Restricted Stock Units Weighted Average Grant Date Fair Value Non-vested at December 26, 2016 83,411 $28.13 Granted 64,821 21.54 Vested (28,541 ) 27.94 Forfeited (945 ) 26.47 Non-vested at July 10, 2017 118,746 24.59 The fair value of the non-vested restricted stock units is based on the closing price on the date of grant. All of our outstanding restricted stock units vest in three equal annual installments following the date of the grant. During the twenty-eight weeks ended July 10, 2017 , 46,000 shares of restricted stock were granted. All shares of restricted stock vest in five equal annual installments following the date of the grant. We recognized equity-based compensation as a component of general and administrative expenses of $0.8 million and $0.5 million during the twelve weeks ended July 10, 2017 and July 11, 2016 , respectively, and $1.7 million and $1.2 million during the twenty-eight weeks ended July 10, 2017 and July 11, 2016 , respectively. As of July 10, 2017 , total unrecognized compensation expense related to non-vested stock awards was $8.8 million , which is expected to be recognized over a weighted-average period of 3.1 years.

Earnings Per Share

Earnings Per Share	6 Months Ended
	Jul. 10, 2017
Earnings Per Share [Abstract]
Earnings Per Share	Earnings Per Share Basic net income per share is calculated by dividing net income by the weighted average shares outstanding during the period, without consideration of common stock equivalents. Diluted net income per share is calculated by adjusting weighted average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method. The following table presents the computation of basic and diluted net income per share for the period indicated: Twelve Weeks Ended Twenty-eight Weeks Ended July 10, July 11, July 10, July 11, Net income (in thousands): $ 579 $ 1,201 $ 598 $ 2,597 Shares: Basic weighted average shares outstanding 19,488,851 19,436,315 19,479,293 19,413,132 Diluted weighted average shares outstanding 19,493,514 19,631,272 19,513,743 19,595,542 Earnings per share: Basic EPS $ 0.03 $ 0.06 $ 0.03 $ 0.13 Diluted EPS $ 0.03 $ 0.06 $ 0.03 $ 0.13 During the twelve weeks ended July 10, 2017 , there were 957,463 stock options and 116,441 restricted stock units excluded from the diluted earnings per share calculation because their inclusion would have been anti-dilutive. During the twelve weeks ended July 11, 2016 , there were 327,995 stock options and 300 restricted stock units excluded from the diluted earnings per share calculation because their inclusion would have been anti-dilutive. During the twenty-eight weeks ended July 10, 2017 , there were 757,258 stock options and 98,528 restricted stock units excluded from the diluted earnings per share calculation because their inclusion would have been anti-dilutive. During the twenty-eight weeks ended July 11, 2016 , there were 387,556 stock options and 367 restricted stock units excluded from the diluted earnings per share calculation because their inclusion would have been anti-dilutive.

Income Taxes

Income Taxes	6 Months Ended
	Jul. 10, 2017
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes Benefit for income taxes was $0.1 million for the twenty-eight weeks ended July 10, 2017 compared to provision for income taxes of $1.1 million for the twenty-eight weeks ended July 11, 2016 , respectively. The effective tax rate was (27)% and 30% for the twenty-eight weeks ended July 10, 2017 and July 11, 2016 , respectively. Our tax expense for the year typically remains relatively constant as it primarily reflects the accrual of income tax expense related to a valuation allowance in connection with the tax amortization of the Company’s goodwill that was not available to offset existing deferred tax assets. Due to the uncertain timing of the reversal of this temporary difference, it cannot be considered as a source of future taxable income for purposes of determining a valuation allowance; therefore the deferred tax liability cannot offset deferred tax assets. Our quarterly provision for income taxes is measured using an annual estimated effective tax rate for the full year applied to period earnings. The comparison of our effective tax rate between periods is significantly impacted by the level of pre-tax income earned and projected for the year. We continue to monitor and evaluate the rationale for recording a full valuation allowance for the net amount of the deferred tax assets which are in excess of the indefinite-lived intangible asset deferred tax liabilities. We intend to continue maintaining a full valuation allowance on these net deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. However, given our current earnings and anticipated future earnings, we believe that there is a reasonable possibility within the foreseeable future, sufficient positive evidence may become available to allow us to reach a conclusion that a significant portion of the valuation allowance will no longer be needed. Release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded. However, the exact timing and amount of the valuation allowance release are subject to change on the basis of the level of profitability that we are able to actually achieve.

Commitments and Contingencies

Commitments and Contingencies	6 Months Ended
	Jul. 10, 2017
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies Franchise Agreement Our Kentucky franchise agreement, which requires the franchisee to remit continuing royalty fees at a specified percentage of the franchisee's gross sales revenue, provides that we as franchisor, or its authorized representative, will: (a) provide franchisee with written schedules of all foods, food products, beverages, and other items for sale, and the furniture, fixtures, supplies and equipment necessary and required for the operation of the restaurant; (b) provide franchisee with a list of approved suppliers for the products and services necessary and required for the restaurant; (c) upon the reasonable written request of franchisee, render reasonable advisory services by telephone or in writing pertaining to the operation of the restaurant; (d) provide franchisee with a sample of the standard Zoës Kitchen menu, and any modifications to the menu; (e) loan franchisee a copy of the System's operating manual and any supplements to the manual that may be published by us; and, (f) provide franchisee the opportunity to participate in group purchasing programs that we may use, develop, sponsor or provide on terms and conditions determined solely by us. In addition, as a condition to the commencement of business by any of our franchises, the franchisee must attend and successfully complete our training program. The costs related to our franchise agreement are not significant. Litigation We are currently involved in various claims and legal actions that arise in the ordinary course of our business, including claims resulting from employment related matters. None of these claims, most of which are covered by insurance, has had a material effect on us, and as of the date of this report, other than as set forth below, we are not party to any material pending legal proceedings and are not aware of any claims that could have a material adverse effect on our business, financial condition, results of operations or cash flows. However, a significant increase in the number of these claims or an increase in amounts owing under successful claims could materially and adversely affect our business, financial condition, results of operations or cash flows. On October 31, 2014, Forsyth Consulting, Inc. ("Forsyth"), a former music vendor for the Company, filed a complaint against the Company in the Circuit Court of Jefferson County, Alabama alleging breach of contract with respect to its prior music service contract. We have removed the action to federal court and, on December 19, 2014, we filed a counterclaim in the United States District Court for the Northern District of Alabama, alleging breach of contract and tortious interference with business relations claims against Forsyth. On August 3, 2017, the parties resolved this dispute and thereafter entered into a settlement agreement.

Nature of Operations and Basi14

Nature of Operations and Basis of Presentation (Policies)	6 Months Ended
	Jul. 10, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Accounting	Interim Financial Statements The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles and practices of the United States of America ("GAAP") for interim financial information. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement of the results for interim periods have been included. Certain information and footnote disclosures normally included in audited consolidated financial statements presented in accordance with GAAP have been omitted pursuant to rules and regulations of the Securities and Exchange Commission (the "SEC"). Due to the seasonality of our business, results for any interim financial period are not necessarily indicative of the results that may be achieved for a full fiscal year. In addition, quarterly results of operations may be impacted by the timing and amount of sales and costs associated with the opening of new restaurants. These interim unaudited condensed consolidated financial statements do not represent complete financial statements and should be read in conjunction with our annual financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 26, 2016 (the "2016 Form 10-K"). While the condensed consolidated balance sheet data as of December 26, 2016 was derived from audited financial statements, it does not include all disclosures required by GAAP.
Comprehensive Income (Loss)	Comprehensive Income (Loss) Comprehensive income (loss) is the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. Comprehensive income (loss) is the same as net income (loss) for all periods presented. Therefore, a separate statement of comprehensive income (loss) is not included in the accompanying condensed consolidated financial statements.
Principles of Consolidation	Principles of Consolidation The unaudited condensed consolidated financial statements include the accounts of Zoe’s Kitchen, Inc. and its wholly owned subsidiaries, Zoe’s Kitchen USA, LLC and Soho Franchising, LLC. All intercompany accounts and transactions have been eliminated in consolidation. The condensed consolidated financial statements presented herein reflect our financial position, results of operations and cash flows in conformity with GAAP.
Fiscal Period	Fiscal Year We operate on a 52- or 53-week fiscal year that ends on the last Monday of the calendar year. Fiscal years ended December 25, 2017 and December 26, 2016 consist of 52 weeks. Our first fiscal quarter consists of 16 weeks, and each of our second, third and fourth fiscal quarters consists of 12 weeks, except for a 53-week year when the fourth quarter has 13 weeks.
Use of Estimates	Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions, such as valuation of long-lived, definite and indefinite-lived assets, estimated useful lives of assets, the reasonably assured lease terms of operating leases, the construction costs of leases where the Company is considered the owner during and after the construction period, allowance for doubtful accounts, the fair value related to equity-based compensation, the calculation of self-insurance reserves, and deferred tax valuation allowances, that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
Recently Issued Accounting Standards	Recently Adopted Accounting Standards In March 2016, the FASB issued Accounting Standard Update ("ASU") No. 2016-09, “Compensation – Stock Compensation (Topic 718).” The pronouncement was issued to simplify the accounting for share-based payment transactions, including income tax consequences, the classification of awards as either equity or liabilities, and the classification on the statement of cash flows. This pronouncement is effective for reporting periods beginning after December 15, 2016. We adopted ASU 2016-09 effective December 27, 2016. The portion of ASU 2016-09 related to the accounting for income taxes was adopted using a modified retrospective approach and resulted in a net zero effect on our statement of financial position. As permitted under the new standard, the Company elected to recognize forfeitures as they occur rather than using an estimated forfeiture rate. Adopted using a modified retrospective approach, this election resulted in an increase to Accumulated deficit of $0.3 million offset by an equal increase to Additional paid-in capital. Recently Issued Accounting Standards In May 2017, the FASB issued ASU No. 2017-09, “Compensation - Stock Compensation (Topic 718) - Scope of Modification Accounting,” which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. An entity will account for the effects of a modification unless the fair value of the modified award is the same as the original award, the vesting conditions of the modified award are the same as the original award, and the classification of the modified award as an equity instrument or liability instrument is the same as the original award. This pronouncement is effective for reporting periods beginning after December 15, 2017 and early adoption is permitted. We do not expect the adoption of ASU 2017-09 to have a material impact on our financial position or results of operations. In January 2017, the FASB issued ASU No. 2017-04, “Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment,” which eliminates Step 2 from the goodwill impairment test. Under the new standard, annual and interim goodwill impairment tests will compare the fair value of a reporting unit with its carrying amount. An impairment charge will be recognized for the amount by which the carrying amount exceeds the reporting unit's fair value, not to exceed the total amount of goodwill. The pronouncement is effective for goodwill impairments tests in fiscal years beginning after December 15, 2019 and should will be applied on a prospective basis. Early adoption is permitted for goodwill impairment tests performed after January 1, 2017. We are currently evaluating the impact of adopting this update. In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments,” which provides specific guidance regarding presentation and classification on a variety of cash payments and receipts. Among the issues addressed is the classification of proceeds from the settlement of insurance claims. This pronouncement is effective for reporting periods beginning after December 15, 2017 and early adoption is permitted. We do not expect the adoption of ASU 2016-15 to have a material impact on our financial position or results of operations. In March 2016, the FASB issued ASU No. 2016-04, "Liabilities - Extinguishments of Liabilities (Subtopic 405-20)", which amends subtopic 405-20 to provide a scope exception that requires breakage for prepaid stored-value product liabilities to be accounted for consistent with the breakage guidance in Topic 606. The amendment is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. We do not expect the adoption of ASU 2016-04 to have a material impact on our financial position or results of operations. In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)," which requires entities to recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements. Previous lease accounting did not require certain lease types to be recognized on the balance sheet. This update is an amendment to the codification and is effective for fiscal years beginning after December 15, 2018 including interim periods within those fiscal years applied using a modified retrospective approach. Early adoption is permitted. We are currently evaluating the impact of the adoption of ASU 2016-02 on our financial position and results of operations, but expect that it will result in a significant increase in our long-term assets and liabilities given we have a significant number of leases. In addition, rental payments under most of our leases for which we are the accounting owner will no longer be considered debt service applied to deemed landlord financing and interest expense. Instead, these rental payments will be classified as rent expense. In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers." This update was issued to replace the current revenue recognition guidance, creating a more comprehensive revenue model. In August 2015, the FASB issued ASU 2015-14 to defer the effective date for adoption. The update is now effective for reporting periods beginning after December 15, 2017. In March 2016, April 2016, May 2016, and December 2016 the FASB also issued ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20, respectively, to further clarify performance obligations and licensing implementation guidance and other general topics. We expect to adopt the new standard using the modified retrospective approach for the fiscal year and quarter beginning December 26, 2017. We do not expect the adoption to have an impact on revenue from Company-owned restaurants or the recognition of royalty fees from our franchise agreement. In addition, we do not expect a material impact related to recognition of gift card breakage.

Supplemental Information (Table

Supplemental Information (Tables)	6 Months Ended
	Jul. 10, 2017
Statement of Financial Position [Abstract]
Schedule of Property and Equipment, Net	Property and equipment, net consisted of the following (in thousands): July 10, December 26, Land $ 813 $ — Buildings under deemed landlord financing 25,980 23,830 Leasehold improvements 141,475 125,666 Machinery and equipment 36,692 32,566 Furniture and fixtures 7,335 6,604 Automobiles 4,019 4,019 Computer equipment 12,412 9,848 Construction in progress 10,720 6,256 Property and equipment, gross 239,446 208,789 Less: Accumulated depreciation (54,485 ) (46,756 ) Total Property and equipment, net $ 184,961 $ 162,033
Schedule of Accrued Expenses	Accrued expenses and other consisted of the following (in thousands): July 10, December 26, Accrued payroll and payroll taxes $ 4,687 $ 5,448 Accrued capital purchases 2,775 2,347 Sales tax payable 2,364 1,218 Gift card payable 796 1,200 Other accrued expenses 4,263 4,047 Total Accrued expenses and other $ 14,885 $ 14,260

Equity-based Compensation (Tabl

Equity-based Compensation (Tables)	6 Months Ended
	Jul. 10, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Schedule of Equity-based Compensation, Stock Options, Activity	The following table summarizes our stock option plan activity during the twenty-eight weeks ended July 10, 2017 : Stock Options Weighted Average Exercise Price Outstanding as of December 26, 2016 710,597 $ 26.28 Granted 449,121 20.31 Exercised — — Forfeited (3,987 ) 32.09 Expired (468 ) 42.05 Outstanding as of July 10, 2017 1,155,263 $ 23.93
Schedule of Valuation Assumptions	The following table reflects the weighted-average assumptions utilized in the Black-Scholes option-pricing model to value the stock options granted. Twenty-eight Weeks Ended July 10, 2017 Expected volatility (1) 31.5% Risk-free rate of return 2.0% Expected life (in years) (2) 6.3 Dividend yield 0% Weighted-average fair value per share at date of grant $7.15 (1) Expected volatility was based on competitors within the industry. (2) Expected life was calculated using the simplified method, which is an average of the contractual term of the option and its ordinary vesting period, as we do not have sufficient historical data for determining the expected term of our stock option awards.
Schedule of Share-based Compensation, Restricted Stock Units Award Activity	The following table summarizes our restricted stock unit plan activity twenty-eight weeks ended July 10, 2017 : Restricted Stock Units Weighted Average Grant Date Fair Value Non-vested at December 26, 2016 83,411 $28.13 Granted 64,821 21.54 Vested (28,541 ) 27.94 Forfeited (945 ) 26.47 Non-vested at July 10, 2017 118,746 24.59

Earnings Per Share (Tables)

Earnings Per Share (Tables)	6 Months Ended
	Jul. 10, 2017
Earnings Per Share [Abstract]
Schedule of Earnings Per Share, Basic and Diluted	The following table presents the computation of basic and diluted net income per share for the period indicated: Twelve Weeks Ended Twenty-eight Weeks Ended July 10, July 11, July 10, July 11, Net income (in thousands): $ 579 $ 1,201 $ 598 $ 2,597 Shares: Basic weighted average shares outstanding 19,488,851 19,436,315 19,479,293 19,413,132 Diluted weighted average shares outstanding 19,493,514 19,631,272 19,513,743 19,595,542 Earnings per share: Basic EPS $ 0.03 $ 0.06 $ 0.03 $ 0.13 Diluted EPS $ 0.03 $ 0.06 $ 0.03 $ 0.13

Nature of Operations and Basi18

Nature of Operations and Basis of Presentation - Nature of Operations (Details)	6 Months Ended
	Jul. 10, 2017staterestaurantsegment	Jul. 11, 2016
Franchisor Disclosure [Line Items]
Number of states in which entity operates | state	20
Number of operating segments | segment	1
Number of reporting segments | segment	1
Days in fiscal year	364 days	364 days
Days in first fiscal quarter	112 days	112 days
Days in second fiscal quarter	84 days	84 days
Days in third fiscal quarter	84 days	84 days
Days in fourth fiscal quarter	84 days	84 days
Company-owned
Franchisor Disclosure [Line Items]
Number of restaurants | restaurant	224
Franchised
Franchisor Disclosure [Line Items]
Number of restaurants | restaurant	3

Nature of Operations and Basi19

Nature of Operations and Basis of Presentation New Accounting Pronouncement (Details) - USD ($) $ in Thousands	Jul. 10, 2017	Dec. 27, 2016	Dec. 26, 2016
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Adjustment to Additional Paid in Capital	$ 150,461		$ 148,482
Adjustment to Retained Earnings (Accumulated Deficit)	$ (18,396)		$ (18,711)
ASU201609CumulativeEffetofActualForfeitreRate [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Adjustment to Additional Paid in Capital		$ 300
Adjustment to Retained Earnings (Accumulated Deficit)		$ 300

Supplemental Information - Sche

Supplemental Information - Schedule of Property and Equipment, Net (Details) - USD ($) $ in Thousands	Jul. 10, 2017	Dec. 26, 2016
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 239,446	$ 208,789
Less: Accumulated depreciation	(54,485)	(46,756)
Total Property and equipment, net	184,961	162,033
Land [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	813	0
Buildings under deemed landlord financing
Property, Plant and Equipment [Line Items]
Property and equipment, gross	25,980	23,830
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	141,475	125,666
Machinery and equipment
Property, Plant and Equipment [Line Items]
Property and equipment, gross	36,692	32,566
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property and equipment, gross	7,335	6,604
Automobiles
Property, Plant and Equipment [Line Items]
Property and equipment, gross	4,019	4,019
Computer equipment
Property, Plant and Equipment [Line Items]
Property and equipment, gross	12,412	9,848
Construction in progress
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 10,720	$ 6,256

Supplemental Information - Sc21

Supplemental Information - Schedule of Accrued Expenses (Details) - USD ($) $ in Thousands	Jul. 10, 2017	Dec. 26, 2016
Statement of Financial Position [Abstract]
Accrued payroll and payroll taxes	$ 4,687	$ 5,448
Accrued capital purchases	2,775	2,347
Sales tax payable	2,364	1,218
Gift card payable	796	1,200
Other accrued expenses	4,263	4,047
Total Accrued expenses and other	$ 14,885	$ 14,260

Bank Line of Credit and Term 22

Bank Line of Credit and Term Loan - Narrative (Details) - Credit Facility 2015 [Member] - Line of Credit - Revolving Credit Facility [Member]	Feb. 06, 2015USD ($)	Jul. 10, 2017USD ($)
Debt Instrument [Line Items]
Borrowing Capacity	$ 20,000,000
Incremental borrowing capacity	$ 30,000,000
Term (in years)	5 years
Line of credit, outstanding amount		$ 10,000,000
Line of credit, remaining borrowing capacity		$ 40,000,000
Weighted Average Interest Rate		2.40%
Federal Funds Effective Swap Rate [Member]
Debt Instrument [Line Items]
Basis Spread on Variable Rate	0.50%
London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Basis Spread on Variable Rate	1.00%
Scenario One [Member]
Debt Instrument [Line Items]
Debt ratio (greater than or equal to)	2.50
Unused commitment fee	0.15%
Scenario One [Member] | Base Rate [Member]
Debt Instrument [Line Items]
Basis Spread on Variable Rate	0.50%
Scenario One [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Basis Spread on Variable Rate	1.50%
Scenario Two [Member]
Debt Instrument [Line Items]
Debt ratio (less than)	2.50
Unused commitment fee	0.125%
Scenario Two [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Basis Spread on Variable Rate	1.00%

Equity-based Compensation - Nar

Equity-based Compensation - Narrative (Details) - USD ($) $ in Millions	Apr. 16, 2014	Jul. 10, 2017	Jul. 11, 2016	Jul. 10, 2017	Jul. 11, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grants in period				449,121
Unrecognized compensation costs		$ 8.8		$ 8.8
Period of recognition				3 years 1 month 21 days
2014 Omnibus Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized	1,905,799
2014 Omnibus Incentive Plan | Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Contractual term				10 years
2014 Omnibus Incentive Plan | Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period				3 years
Grants in period				64,821
2014 Omnibus Incentive Plan | Immediate Vesting | Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grants in period	250,000
2014 Omnibus Incentive Plan | Five Year Vesting | Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grants in period				130,000
Award vesting period		5 years
2014 Omnibus Incentive Plan | Five Year Vesting | Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period		5 years
Grants in period				46,000
2014 Omnibus Incentive Plan | Four Year Vesting | Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period				4 years
General and Administrative Expense
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
General and administrative expenses		$ 0.8	$ 0.5	$ 1.7	$ 1.2

Equity-based Compensation - Sch

Equity-based Compensation - Schedule of Equity-based Compensation, Stock Options, Activity (Details)	6 Months Ended
	Jul. 10, 2017$ / sharesshares
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Stock options outstanding, beginning | shares	710,597
Stock options, grants in period | shares	449,121
Stock options, exercised in period | shares	0
Stock options, forfeitures in period | shares	(3,987)
Stock options, expired in period | shares	(468)
Stock options outstanding, ending | shares	1,155,263
Weighted Average Exercise Price
Stock options outstanding, weighted average exercise price, beginning | $ / shares	$ 26.28
Stock options, weighted average exercise price, grants in period | $ / shares	20.31
Stock Options, weighted average exercise price, exercises in period | $ / shares	0
Stock Options, weighted average exercise price, forfeitures in period | $ / shares	32.09
Stock Options, weighted average exercise price, expirations in period | $ / shares	42.05
Stock options outstanding, weighted average exercise price, ending | $ / shares	$ 23.93

Equity-based Compensation - S25

Equity-based Compensation - Schedule of Valuation Assumptions (Details)	6 Months Ended
	Jul. 10, 2017$ / shares
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Expected volatility	31.50%	[1]
Risk-free rate of return	2.00%
Expected life (in years)	6 years 3 months	[2]
Dividend yield	0.00%
Weighted-average fair value per share at date of grant	$ 7.15
[1]	Expected volatility was based on competitors within the industry.
[2]	Expected life was calculated using the simplified method, which is an average of the contractual term of the option and its ordinary vesting period, as we do not have sufficient historical data for determining the expected term of our stock option awards.

Equity-based Compensation Sched

Equity-based Compensation Schedule of Restricted Stock Unit Plan Activity (Details) - Omnibus Incentive Plan 2014 [Member] - Restricted Stock Units (RSUs)	6 Months Ended
	Jul. 10, 2017$ / sharesshares
Restricted Stock Units, Nonvested, Number of Shares [Roll Forward]
Restricted stock units outstanding, beginning | shares	83,411
Restricted stock units granted | shares	64,821
Restricted stock units vested | shares	(28,541)
Restricted stock units forfeited | shares	(945)
Restricted stock units outstanding, ending | shares	118,746
Restricted Stock Units, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Weighted-average grant-date fair value, restricted stock units outstanding, beginning | $ / shares	$ 28.13
Weighted-average grant-date fair value, restricted stock units, granted | $ / shares	21.54
Weighted-average grant-date fair value, restricted stock units, vested | $ / shares	27.94
Weighted-average grant-date fair value, restricted stock units, forfeited | $ / shares	26.47
Weighted-average grant-date fair value, restricted stock units outstanding, ending | $ / shares	$ 24.59

Earnings Per Share - Schedule o

Earnings Per Share - Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 10, 2017	Jul. 11, 2016	Jul. 10, 2017	Jul. 11, 2016
Earnings Per Share [Abstract]
Net income (loss)	$ 579	$ 1,201	$ 598	$ 2,597
Basic weighted average shares outstanding (in shares)	19,488,851	19,436,315	19,479,293	19,413,132
Diluted weighted average shares outstanding (in shares)	19,493,514	19,631,272	19,513,743	19,595,542
Basic EPS (USD per share)	$ 0.03	$ 0.06	$ 0.03	$ 0.13
Diluted EPS (USD per share)	$ 0.03	$ 0.06	$ 0.03	$ 0.13

Earnings Per Share - Narrative

Earnings Per Share - Narrative (Details) - shares	3 Months Ended		6 Months Ended
	Jul. 10, 2017	Jul. 11, 2016	Jul. 10, 2017	Jul. 11, 2016
Employee Stock Option
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	957,463	327,995	757,258	387,556
Restricted Stock Units (RSUs)
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	116,441	300	98,528	367

Income Taxes - Narrative (Detai

Income Taxes - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 10, 2017	Jul. 11, 2016	Jul. 10, 2017	Jul. 11, 2016
Income Tax Disclosure [Abstract]
Provision (benefit) for income taxes	$ (480)	$ 764	$ (126)	$ 1,109
Effective tax rate			(27.00%)	30.00%