| Summary of Significant Accounting Policies | Note 2 –
a)
Principles of Consolidation and Basis of Presentation The Consolidated Financial Statements are prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and include the accounts of J. Alexander’s Holdings, Inc. as well as the accounts of its majority-owned subsidiaries. All intercompany profits, transactions, and balances between J. Alexander’s Holdings, Inc. and its subsidiaries have been eliminated. Certain amounts from the prior years have been reclassified to conform with the fiscal year 2015 presentation. As discussed in Note 1, as a result of the Distribution, certain reorganization changes were made resulting in J. Alexander’s Holdings, Inc. owning all of the outstanding Class A Units and becoming the sole managing member of J. Alexander’s Holdings, LLC. The reorganization transactions were accounted for as a non-substantive transaction in a manner similar to a transaction between entities under common control pursuant to Accounting Standards Codification (“ASC”) 805-50 Transactions between Entities under Common Control
b)
Fiscal Year J. Alexander’s Holdings, Inc. utilizes a 52- or 53-week accounting period which ends on the Sunday closest to December 31 and each quarter typically consists of 13 weeks. Fiscal year 2015 included 53 weeks of operations, including a 14-week fourth quarter, and fiscal years 2014 and 2013 included 52 weeks of operations.
c)
Discontinued Operations and Restaurant Closing Costs During the year ended December 29, 2013, three underperforming J. Alexander’s restaurants were closed. The decision to close these restaurants was the result of an extensive review of the J. Alexander’s restaurant portfolio that examined each restaurant’s recent and historical financial and operating performance, its position in the marketplace, and other operating considerations. Two of these restaurants were considered to be discontinued operations. For fiscal 2013, net sales from the closed restaurants included in discontinued operations were $1,941 and the loss was $4,785. The loss consists of $2,657 in asset impairment charges, $1,827 of exit and disposal costs, and a loss from operations of $301. There were no related assets reclassified as held for sale related to these closures, as there were no significant remaining assets related to these locations subsequent to the asset impairment charges being recorded. Restaurant closing costs of $2,338 were incurred in fiscal 2013, $1,827 of which related to the two locations determined to be discontinued operations as discussed above. The remaining $511 associated with the third location is presented in the “Asset impairment charges and restaurant closing costs” line item. Restaurant closing costs in 2013 consisted largely of accruals of remaining rent payments, net of estimated or actual subleases, and the liabilities for the remaining payments are reflected within the “Other long‑term liabilities” line item. Additionally, brokerage fees, lease break payments, and moving and travel costs are included in restaurant closing costs. During fiscal years 2015 and 2014, restaurant closing costs totaled $432 and $448, respectively, $429 and $443, respectively, of which related to locations included in discontinued operations and consisted of ongoing rental payments, utilities, insurance and other costs to maintain the closed locations.
d)
Cash and Cash Equivalents Cash and cash equivalents consist of highly liquid investments with an original maturity of three months or less when purchased. Cash also consists of payments due from third‑party credit card issuers for purchases made by guests using the issuers’ credit cards. The issuers typically remit payment within three to four days of a credit card transaction.
e)
Accounts and Notes Receivable Accounts receivable are primarily related to income taxes due from governmental agencies and vendor rebates, which have been earned but not yet received. Related‑party accounts receivable pertain to payments made on behalf of certain employees of the company which are reimbursable by the employees.
f)
Inventory Inventories are stated at the lower of cost or market, with cost being determined on a first‑in, first‑out basis.
g)
Property and Equipment, Net J. Alexander’s Holdings, Inc. states property and equipment at cost less accumulated depreciation and amortization. Depreciation and amortization expense is calculated using the straight‑line method. The useful lives of assets are typically 30–40 years for buildings and land improvements and two–10 years for furniture, fixtures, and equipment. Leasehold improvements are amortized over the lesser of the useful life or the remaining lease term, generally inclusive of renewal periods. Equipment under capital leases is amortized to its expected residual value at the end of the lease term. Gains or losses are recognized upon the disposal of property and equipment, and the asset and related accumulated depreciation and amortization are removed from the accounts. Maintenance, repairs and betterments that do not enhance the value of or increase the life of the assets are expensed as incurred. J. Alexander’s Holdings, Inc. capitalizes all direct external costs associated with obtaining the land, building, and equipment for each new restaurant, as well as construction period interest. All direct external costs associated with obtaining the dining room and kitchen equipment, signage, and other assets and equipment are also capitalized. Certain direct and indirect costs are capitalized as building and leasehold improvement costs in conjunction with capital improvement projects at existing restaurants and acquiring and developing new restaurant sites. Such costs are amortized over the life of the related assets.
h)
Goodwill and Other Intangible Assets Goodwill represents the excess of cost over fair value of net assets acquired in the J. Alexander’s Acquisition. Intangible assets include trade names, deferred loan costs, and liquor licenses at certain restaurants. Goodwill, trade names, and liquor licenses are not subject to amortization, but are tested for impairment annually as of the fiscal year‑end date, or more frequently, if events or changes in circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount of the goodwill or indefinite‑lived intangible asset exceeds its fair value. J. Alexander’s Holdings, Inc. performed the fiscal year 2015 annual review of goodwill in accordance with Accounting Standards Update (“ASU”) No. 2011‑08, Testing Goodwill for Impairment Deferred loan costs are subject to amortization and are classified in the “Deferred Charges” line item on the Consolidated Balance Sheets. Deferred loan costs are amortized principally by the interest method over the life of the related debt. For the next five fiscal years, scheduled amortization of deferred loan costs is as follows: 2016 – $85; 2017 – $84; 2018 – $84; 2019 – $81; 2020 and thereafter – $23.
i )
Impairment of Long‑Lived Assets Long‑lived assets, such as property and equipment and intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset or asset group to estimated undiscounted future cash flows expected to be generated by the asset or asset group. If the carrying amount of an asset or asset group exceeds its estimated future cash flows, an impairment charge may be recognized for the amount by which the carrying amount of the asset or asset group exceeds the fair value of the asset or asset group based upon the future highest and best use of the impaired asset or asset group. Fair value is determined by projected future discounted cash flows for each location or the estimated market value of the assets. The asset impairment charges are generally recorded in the Consolidated Statements of Income and Comprehensive Income in the financial statement line item “Asset impairment charges and restaurant closing costs,” but are also recorded in the line item “Loss from discontinued operations, net” when applicable. Assets to be disposed of are separately presented in the Consolidated Balance Sheets and reported at the lower of carrying amount or fair value less costs to sell, and are no longer depreciated. In accordance with ASC Topic 360, Property, Plant, and Equipment No impairment charges were recorded for the years ended January 3, 2016 or December 28, 2014.
j)
Operating Leases J. Alexander’s Holdings, Inc. through its subsidiaries has land only, building only, and land and building leases that are recorded as operating leases. Most of the leases have rent escalation clauses and some have rent holiday and contingent rent provisions. The rent expense under these leases is recognized on the straight‑line basis over an expected lease term, including cancelable option periods when it is reasonably assured that such option periods will be exercised because failure to do so would result in a significant economic penalty Rent expense incurred during the construction period for a leased restaurant location is included in pre‑opening expense. Contingent rent expense is based upon sales levels and is typically accrued when it is deemed probable that it will be payable. Tenant improvement allowances received from landlords under operating leases are recorded as deferred rent obligations. The same lease life that is used for the straight‑line rent calculation is also used for assessing leases for capital or operating lease accounting.
k)
Revenue Recognition Restaurant revenues are recognized when food and service are provided. Unearned revenue represents the liability for gift cards, which have been sold but not redeemed. Upon redemption, net sales are recorded and the liability is reduced by the amount of card values redeemed. Reductions in liabilities for gift cards that, although they do not expire, are considered to be only remotely likely to be redeemed and for which there is no legal obligation to remit balances under unclaimed property laws of the relevant jurisdictions (breakage), have been recorded as revenue and are included in net sales in the Consolidated Statements of Income and Comprehensive Income. Based on historical experience, management considers the probability of redemption of a gift card to be remote when it has been outstanding for 24 months. J. Alexander’s Holdings, Inc. records breakage related to sold gift cards when the likelihood of redemption becomes remote. During the second quarter of 2014, sufficient information was obtained to reliably estimate breakage associated with Stoney River gift cards under this policy. Breakage of $343, $772 and $213 related to gift cards was recorded in fiscal years 2015, 2014 and 2013, respectively.
l)
Vendor Rebates Vendor rebates are received from various nonalcoholic beverage suppliers, and to a lesser extent, suppliers of food products and supplies. Rebates are recognized as a reduction to cost of sales in the period in which they are earned.
m)
Advertising Costs Costs of advertising are charged to expense at the time the costs are incurred. Advertising expense totaled $76, $203 and $510, during fiscal years 2015, 2014 and 2013, respectively.
n)
Transaction and Integration Costs J. Alexander’s Holdings, Inc. and its subsidiaries have historically grown through improving operations, food quality and the guest experience. However, during the periods presented as discussed above in Note 1, various transactions occurred, resulting in certain nonrecurring transaction and integration costs being incurred. In fiscal year 2013, J. Alexander’s Holdings, LLC received $406 in insurance proceeds from its insurance carrier under its directors and officers liability policy for costs previously incurred relating to certain shareholder litigation, which is netted against the $189 of transaction costs incurred, resulting in income of $217 being presented for the 2013 period. During fiscal year 2014, transaction and integration costs of approximately $785 were incurred related to the offering transaction discussed in Note 1 above as indirect costs. Additionally, transaction costs associated with the Distribution were incurred during 2015 in the amount of $7,181, a portion of which included the write-off of deferred offering costs previously capitalized in 2014. Transaction costs typically consist primarily of legal and consulting costs, accounting fees, accelerated expense associated with repurchased stock options, and to a lesser extent other professional fees and miscellaneous costs. Integration costs typically consist primarily of consulting and legal costs.
o)
Deferred Offering Costs Deferred offering costs, which primarily consisted of direct, incremental legal and accounting fees relating to the pursuit of an initial public offering, were capitalized within other current assets in fiscal year 2014 in the amount of $1,675 on the basis that such costs would be offset against proceeds upon the consummation of an initial public offering. However, as discussed in Note 1 above, the offering was abandoned during the second quarter of 2015. As noted in Note 2 (n) above, these deferred offering costs were expensed as transaction costs in the second quarter of fiscal year 2015 .
p)
Income Taxes Income taxes are accounted for using the assets and liability method, whereby deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that the deferred tax assets will not be realized. The benefits of uncertain tax positions are recognized in the financial statements only after determining a more likely than not probability that the uncertain tax positions will withstand challenge, if any, from taxing authorities. When facts and circumstances change, these probabilities are reassessed and any appropriate changes are recorded in the financial statements. Uncertain tax positions are accounted for by determining the minimum recognition threshold that a tax position is required to meet before being recognized in the financial statements. This determination requires the use of judgment in assessing the timing and amounts of deductible and taxable items. Tax positions that meet the more likely than not recognition threshold are recognized and measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. Interest and penalties accrued related to unrecognized tax benefits or income tax settlements are recognized as components of income tax expense.
q)
Concentration of Credit Risk Financial instruments that are potentially exposed to a concentration of credit risk are cash and cash equivalents and accounts receivable. Operating cash balances are maintained in noninterest‑bearing transaction accounts, which are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250. Additionally, J. Alexander’s Holdings, Inc. invests cash in a money market fund, which invests primarily in U.S. Treasury securities and is also insured by the FDIC up to $250. Further, a certain portion of the assets held in a rabbi trust (the “Trust”) consists of cash and cash equivalents. J. Alexander’s Holdings, Inc. places cash with high‑credit‑quality financial institutions, and at times, such cash may be in excess of the federally insured limit. However, there have been no losses experienced related to these balances, and the credit risk is believed to be minimal. Also, J. Alexander’s Holdings, Inc. believes that its risk related to cash equivalents from third‑party credit card issuers for purchases made by guests using the issuers’ credit cards is not significant due to the number of banks involved and the fact that payment is typically received within three to four days of a credit card transaction. Therefore, J. Alexander’s Holdings, Inc. does not believe it has significant risk related to its cash and cash equivalents accounts. Another portion of the assets held in the Trust consists of U.S. Treasury bonds as well as a small number of corporate bonds with ratings no lower than BBB+. J. Alexander’s Holdings, Inc. believes the credit risk associated with such bonds to be minimal given the historical stability of the U.S. government and the investment grade bond ratings relative to the corporate issuers. Concentrations of credit risk with respect to accounts receivable are related principally to receivables from governmental agencies related to refunds of franchise and income taxes. J. Alexander’s Holdings, Inc. does not believe it has significant risk related to accounts receivable due to the nature of the entities involved.
r)
Use of Estimates Management has made certain estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the periods presented to prepare these Consolidated Financial Statements in conformity with GAAP. Significant items subject to such estimates and assumptions include those related to the accounting for gift card breakage, determination of the valuation allowance relative to deferred tax assets, if any, estimates of useful lives of property and equipment and leasehold improvements, the carrying amount of intangible assets, fair market valuations, determination of lease terms, and accounting for impairment losses, contingencies, and litigation. Actual results could differ from these estimates.
s)
Sales Taxes Revenues are presented net of sales taxes. The obligation for sales taxes is included in accrued expenses and other current liabilities until the taxes are remitted to the appropriate taxing authorities.
t)
Pre‑opening Expense Pre‑opening costs are accounted for by expensing such costs as they are incurred.
u)
Comprehensive Income Total comprehensive income or loss is comprised solely of net income or net loss for all periods presented. Therefore, a separate statement of comprehensive income is not included in the accompanying Consolidated Financial Statements.
v)
Segment Reporting J. Alexander’s Holdings, Inc. through its subsidiaries owns and operates full‑service, upscale restaurants under three concepts exclusively in the United States that have similar economic characteristics, products and services, class of customer and distribution methods. J. Alexander’s Holdings, Inc. believes it meets the criteria for aggregating its operating segments into a single reportable segment.
w)
Non-controlling Interests Non-controlling interests on the Consolidated Balance Sheets represents the portion of net assets of J. Alexander’s Holdings, Inc. attributable to the non-controlling J. Alexander’s Holdings, LLC Class B Unit holders. As of January 3, 2016, the non-controlling interest presented on the Consolidated Balance Sheets was $1,184 and consists solely of the non-cash compensation expense relative to the profits interest awards to management and Black Knight discussed in Note 15 – Share-based Compensation below. The vesting requirements under either grant entitling Class B Unit holders to distributions of earnings of J. Alexander’s Holdings, LLC had not been met as of January 3, 2016 and, therefore, no allocation of net income was made to non-controlling interests for fiscal year 2015.
x)
Earnings per Share Basic earnings per share is computed by dividing net income by the weighted average number of shares outstanding for the reporting period. Diluted earnings per share gives effect during the reporting period to all dilutive potential shares outstanding resulting from share-based compensation awards. Diluted earnings per share of common stock is computed similarly to basic earnings per share except the weighted average shares outstanding are increased to include additional shares from the assumed exercise of any common stock equivalents, if dilutive. J. Alexander’s Holdings, LLC Class B Units are considered common stock equivalents for this purpose. The number of additional shares of common stock related to these common stock equivalents is calculated using the if-converted method, if dilutive. The number of additional shares of common stock related to stock option awards is calculated using the treasury method, if dilutive. Refer to Note 4 – Earnings per Share for the basic and diluted earnings per share calculations and additional discussion. As stated above, the periods prior to the Distribution presented in the accompanying Consolidated Financial Statements represents the historical operating results and financial position of J. Alexander’s Holdings, LLC. For comparison purposes, earnings per share amounts are calculated for such periods using a weighted-average number of common shares outstanding based on the number of shares outstanding on the Distribution date as if all shares had been outstanding since the first day of the earliest period presented.
y)
Recently Issued Accounting Standards In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, Revenue from Contracts with Customers Deferral of the Effective Date In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory In January 2016, the FASB issued 2016-01 , Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities . The pronouncement requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income, requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset, and eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. These changes become effective for J. Alexander’s Holdings, Inc.’s 2018 fiscal year. The expected adoption method of 2016-01 is being evaluated by J. Alexander’s Holdings, Inc., and the adoption is not expected to have a significant impact on its Consolidated Financial Statements and related disclosures. In February 2016, the FASB issued ASU No. 2016-02, Leases Leases, Leases
z)
Recently In April 2014, the FASB issued ASU No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes |
