Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Aug. 03, 2018 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Wingstop Inc. | |
Entity Central Index Key | 1,636,222 | |
Current Fiscal Year End Date | --12-29 | |
Entity Filer Category | Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 29,274,917 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 30, 2017 |
Current assets | ||
Cash and cash equivalents | $ 3,147 | $ 4,063 |
Accounts receivable, net | 4,484 | 4,567 |
Prepaid expenses and other current assets | 3,262 | 4,334 |
Advertising fund assets, restricted | 3,474 | 2,944 |
Total current assets | 14,367 | 15,908 |
Property and equipment, net | 6,328 | 5,826 |
Goodwill | 49,655 | 46,557 |
Trademarks | 32,700 | 32,700 |
Other non-current assets | 6,122 | 3,278 |
Total assets | 124,072 | 119,836 |
Current liabilities | ||
Accounts payable | 1,898 | 1,752 |
Other current liabilities | 10,646 | 10,929 |
Current portion of debt | 5,000 | 3,500 |
Advertising fund liabilities | 3,474 | 2,944 |
Total current liabilities | 21,018 | 19,125 |
Long-term debt, net | 214,569 | 129,841 |
Deferred revenues, net of current | 21,362 | 21,226 |
Deferred income tax liabilities, net | 5,763 | 5,920 |
Other non-current liabilities | 2,057 | 2,142 |
Total liabilities | 264,769 | 178,254 |
Commitments and contingencies (see Note 7) | ||
Stockholders' deficit | ||
Common stock, $0.01 par value; 100,000,000 shares authorized; 29,271,543 and 29,092,669 shares issued and outstanding as of June 30, 2018 and December 30, 2017, respectively | 293 | 291 |
Additional paid-in-capital | 38 | 262 |
Accumulated deficit | (141,028) | (58,971) |
Total stockholders' deficit | (140,697) | (58,418) |
Total liabilities and stockholders' deficit | 124,072 | 119,836 |
Customer Relationships [Member] | ||
Customer relationships, net | $ 14,900 | $ 15,567 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2018 | Dec. 30, 2017 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 29,271,543 | 29,092,669 |
Common stock, shares outstanding | 29,271,543 | 29,092,669 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | Feb. 14, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
Revenue: | |||||||
Royalty revenue, franchise fees and other | $ 17,204 | $ 15,267 | $ 34,985 | $ 32,863 | |||
Advertising fees and related income | 8,355 | 7,466 | 16,960 | 14,734 | |||
Company-owned restaurant sales | 11,478 | 8,845 | 22,481 | 17,391 | |||
Total revenue | 37,037 | 31,578 | 74,426 | 64,988 | |||
Costs and expenses: | |||||||
Cost of sales (1) | [1] | 7,745 | 6,867 | 15,142 | 13,467 | ||
Advertising expenses | 8,209 | 7,574 | 16,852 | 16,857 | |||
Selling, general and administrative | 10,078 | 8,180 | 20,911 | 16,427 | |||
Depreciation and amortization | 1,079 | 771 | 2,029 | 1,526 | |||
Total costs and expenses | 27,111 | 23,392 | 54,934 | 48,277 | |||
Operating income | 9,926 | 8,186 | 19,492 | 16,711 | |||
Interest expense, net | 2,342 | 1,307 | 4,078 | 2,606 | |||
Income before income tax expense | 7,584 | 6,879 | 15,414 | 14,105 | |||
Income tax expense | 745 | 1,972 | 2,407 | 2,941 | |||
Net income | $ 6,839 | $ 4,907 | $ 13,007 | $ 11,164 | |||
Earnings per share | |||||||
Basic (in usd per share) | $ 0.23 | $ 0.17 | $ 0.45 | $ 0.39 | |||
Diluted (in usd per share) | $ 0.23 | $ 0.17 | $ 0.44 | $ 0.38 | |||
Weighted average shares outstanding | |||||||
Basic (in shares) | 29,230 | 29,032 | 29,173 | 28,964 | |||
Diluted (in shares) | 29,528 | 29,394 | 29,509 | 29,361 | |||
Dividends per share | $ 3.17 | $ 0.07 | $ 0.07 | $ 0 | $ 3.31 | $ 0 | |
[1] | Cost of sales excludes depreciation and amortization, which are presented separately, and includes advertising expenses incurred at company-owned restaurants. |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jul. 01, 2017 | |
Operating activities | ||
Net income | $ 13,007 | $ 11,164 |
Adjustments to reconcile net income to cash provided by operating activities: | ||
Depreciation and amortization | 2,029 | 1,526 |
Deferred income taxes | (157) | (506) |
Stock-based compensation expense | 1,256 | 541 |
Amortization of debt issuance costs | 175 | 146 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 83 | (619) |
Prepaid expenses and other assets | (211) | (568) |
Advertising fund assets and liabilities, net | 189 | (121) |
Accounts payable and other current liabilities | 909 | (2,281) |
Deferred revenue | 351 | 1,366 |
Other non-current liabilities | (86) | (83) |
Cash provided by operating activities | 17,545 | 10,565 |
Investing activities | ||
Purchases of property and equipment | (1,311) | (1,301) |
Acquisition of restaurant from franchisee | 5,996 | 0 |
Cash used in investing activities | (7,307) | (1,301) |
Financing activities | ||
Proceeds from exercise of stock options | 455 | 1,062 |
Borrowings of long-term debt | 230,108 | 0 |
Repayments of long-term debt | (143,750) | (9,750) |
Payment of deferred financing costs | (782) | 0 |
Tax payments for restricted stock upon vesting | (142) | 0 |
Dividends paid | (96,854) | 0 |
Cash used in financing activities | (10,965) | (8,688) |
Net change in cash, cash equivalents, and restricted cash | (727) | 576 |
Cash, cash equivalents, and restricted cash at beginning of period | 6,392 | 5,693 |
Cash, cash equivalents, and restricted cash at end of period | $ 5,665 | $ 6,269 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation Basis of Presentation Wingstop Inc., through its primary operating subsidiary, Wingstop Restaurants Inc. (“WRI”), collectively referred to as “Wingstop” or the “Company,” is in the business of franchising and operating Wingstop restaurants. As of June 30, 2018 , 1,040 franchised restaurants were in operation domestically, and 122 international franchised restaurants were in operation across nine countries. As of June 30, 2018 , the Company owned and operated 26 restaurants. The accompanying unaudited consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Consequently, financial information and disclosures normally included in financial statements prepared annually in accordance with accounting principles generally accepted in the United States have been condensed or omitted. Balance sheet amounts are as of June 30, 2018 and December 30, 2017 and operating results are for the thirteen and twenty-six weeks ended June 30, 2018 and July 1, 2017 . In the Company’s opinion, all necessary adjustments have been made for the fair presentation 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 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 fiscal year ended December 30, 2017 . The Company uses a 52/53-week fiscal year that ends on the last Saturday of the calendar year. Fiscal years 2018 and 2017 have 52 weeks. The Company has reclassified certain prior period amounts due to the adoption of ASU 2014-09 and ASU 2016-18, as defined below. Advertising Fund The Company administers the Wingstop Restaurants Advertising Fund (“Ad Fund”), which is used for various forms of advertising for the Wingstop brand. Advertising fund contributions and expenditures are reported on a gross basis in the Consolidated Statements of Operations, which are largely offsetting and therefore do not significantly impact our reported net income. Advertising expenses incurred by company-owned restaurants are included within cost of sales in the Consolidated Statements of Operations. Administrative support services and compensation expenses of employees that provide services directly to the Ad Fund, are included in selling, general and administrative expenses (“SG&A”) in the Consolidated Statements of Operations. The Ad Fund contribution collected from Wingstop restaurant franchisees and company-owned and operated restaurants is equal to 3% of gross sales. For the twenty-six weeks ended June 30, 2018 and July 1, 2017 , the Company contributed $1.9 million and $3.8 million , respectively, for the purpose of supplementing the national advertising campaign, which were included in Advertising expenses in the Consolidated Statements of Operations. The Company consolidates and reports all assets and liabilities of the Ad Fund as restricted assets of the Ad Fund and liabilities of the Ad Fund within current assets and current liabilities, respectively, in the Consolidated Balance Sheets. The assets and liabilities of the Ad Fund consist primarily of cash, receivables, accrued expenses, other liabilities and any cumulative surplus related to the Ad Fund. Under the Company’s franchise agreements, contributions to the Ad Fund are restricted to advertising, public relations, merchandising, similar activities, and administrative expenses to increase sales and further enhance the public reputation of the Wingstop brand. The aforementioned administrative expenses may also include personnel expenses and allocated costs incurred by the Company which are directly associated with administering the Ad Fund, as outlined in the provisions of the applicable franchise agreements. Total cash balances related to the Ad Fund as of June 30, 2018 and December 30, 2017 were $2.5 million and $2.3 million , respectively. Recently Issued Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2016-02, Leases (Topic 842) . ASU 2016-02 amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU 2016-02 will be effective beginning in the first quarter of fiscal year 2019. Early adoption of ASU 2016-02 as of its issuance is permitted. This new guidance requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. We anticipate implementing the standard by taking advantage of the practical expedient option. The discounted minimum remaining rental payments will be the starting point for determining the right-of-use asset and lease liability. We expect that adoption of the new guidance will have a material impact on the consolidated balance sheets due to the recognition of the right-of-use asset and lease liability related to our current operating leases. The process of evaluating the full impact of the new guidance on our consolidated financial statements and disclosures is ongoing, but we anticipate the initial evaluation of the impact will be completed in fiscal 2018. In March 2018, the FASB issued ASU 2018-05, Income Taxes (Topic 740). ASU 2018-05 provides guidance on accounting for the income tax effects of the Tax Cuts and Jobs Act of 2017 (the “Act”), which impacts U.S. corporate tax rates, business-related exclusions, and deductions and credits. The Act also has tax consequences for many companies that operate internationally. The Company recognized the income tax effects of the Act in its 2017 financial statements in accordance with Staff Accounting Bulletin No. 118, which provides SEC staff guidance for the application of Accounting Standards Codification (“ASC”) Topic 740, "Income Taxes," in the reporting period in which the Act was signed into law. As such, the Company’s financial results reflect the income tax effects of the Act for which the accounting under ASC Topic 740 is complete and provisional amounts for those specific income tax effects of the Act for which the accounting under ASC Topic 740 is incomplete but a reasonable estimate could be determined. The Company will continue to analyze additional information and guidance related to the Act as supplemental legislation, regulatory guidance, or evolving technical interpretations become available. The final impacts may differ from the recorded amounts as of June 30, 2018, and we will continue to refine such amounts within the measurement period provided by Staff Accounting Bulletin No. 118. We expect to complete our analysis no later than the fourth quarter of 2018. Recently Adopted Accounting Pronouncements In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which superseded nearly all existing revenue recognition guidance. The new guidance provided a single framework in which revenue is required to be recognized to depict the transfer of goods or services to customers in amounts that reflect the consideration to which a company expects to be entitled in exchange for those goods or services. The Company adopted this new guidance effective the first day of fiscal year 2018, using the full retrospective transition method, which resulted in adjusting each prior reporting period presented and a cumulative effect adjustment, which was recorded as of the first day of 2016. The adoption changed the timing of recognition of initial franchise fees, development fees, territory fees for our international business and renewal and transfer fees, as well as the reporting of Ad Fund contributions and related expenditures. See Note 11 for further discussion. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”), which requires that restricted cash and cash equivalents be included as components of total cash and cash equivalents as presented on the statement of cash flows. ASU 2016-18 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017 and a retrospective transition method is required. The Company adopted this new guidance effective the first day of fiscal year 2018, using the full retrospective transition method, which resulted in adjusting the Statement of Cash Flows for each prior period presented. The following table presents the effect of the adoption of ASU 2014-09 on our consolidated balance sheets as of December 30, 2017 (in thousands): As reported Adjustments for adoption of ASU 2014-09 As Adjusted Assets Current assets Cash and cash equivalents $ 4,063 $ — $ 4,063 Accounts receivable, net 4,567 — 4,567 Prepaid expenses and other current assets 4,334 — 4,334 Advertising fund assets, restricted 2,944 — 2,944 Total current assets 15,908 — 15,908 Property and equipment, net 5,826 — 5,826 Goodwill 46,557 — 46,557 Trademarks 32,700 — 32,700 Customer relationships, net 15,567 — 15,567 Other non-current assets 3,278 — 3,278 Total assets $ 119,836 $ — $ 119,836 Liabilities and stockholders' deficit Current liabilities Accounts payable $ 1,752 $ — $ 1,752 Other current liabilities 10,683 246 10,929 Current portion of debt 3,500 — 3,500 Advertising fund liabilities 2,944 — 2,944 Total current liabilities 18,879 246 19,125 Long-term debt, net 129,841 — 129,841 Deferred revenues, net of current 8,427 12,799 21,226 Deferred income tax liabilities, net 8,799 (2,879 ) 5,920 Other non-current liabilities 2,142 — 2,142 Total liabilities 168,088 10,166 178,254 Stockholders' deficit Common stock 291 — 291 Additional paid-in-capital 262 — 262 Accumulated deficit (48,805 ) (10,166 ) (58,971 ) Total stockholders' deficit (48,252 ) (10,166 ) (58,418 ) Total liabilities and stockholders' deficit $ 119,836 $ — $ 119,836 The following table presents the effect of the adoption of ASU 2014-09 on our consolidated statements of operations for the thirteen weeks ended July 1, 2017 (in thousands, except per share amounts): Adjustments for adoption of ASU 2014-09 As reported Franchise Fees Advertising As Adjusted Revenue: Royalty revenue, franchise fees and other $ 15,827 $ (560 ) $ — $ 15,267 Advertising fees and related income — — 7,466 7,466 Company-owned restaurant sales 8,845 — — 8,845 Total revenue 24,672 (560 ) 7,466 31,578 Costs and expenses: Cost of sales (1) 6,867 — — 6,867 Advertising expenses — — 7,574 7,574 Selling, general and administrative 8,288 — (108 ) 8,180 Depreciation and amortization 771 — — 771 Total costs and expenses 15,926 — 7,466 23,392 Operating income 8,746 (560 ) — 8,186 Interest expense, net 1,307 — — 1,307 Income before income tax expense 7,439 (560 ) — 6,879 Income tax expense 2,174 (202 ) — 1,972 Net income $ 5,265 $ (358 ) $ — $ 4,907 Earnings per share Basic $ 0.18 $ (0.01 ) $ — $ 0.17 Diluted $ 0.18 $ (0.01 ) $ — $ 0.17 (1) Cost of sales excludes depreciation and amortization, which are presented separately, and includes advertising expenses incurred at company-owned restaurants. The following table presents the effect of the adoption of ASU 2014-09 on our consolidated statements of operations for the twenty-six weeks ended July 1, 2017 (in thousands, except per share amounts): Adjustments for adoption of ASU 2014-09 As reported Franchise Fees Advertising As Adjusted Revenue: Royalty revenue, franchise fees and other $ 33,850 $ (987 ) $ — $ 32,863 Advertising fees and related income — — 14,734 14,734 Company-owned restaurant sales 17,391 — — 17,391 Total revenue 51,241 (987 ) 14,734 64,988 Costs and expenses: Cost of sales (1) 13,467 — — 13,467 Advertising expenses — — 16,857 16,857 Selling, general and administrative 18,550 — (2,123 ) 16,427 Depreciation and amortization 1,526 — — 1,526 Total costs and expenses 33,543 — 14,734 48,277 Operating income 17,698 (987 ) — 16,711 Interest expense, net 2,606 — — 2,606 Income before income tax expense 15,092 (987 ) — 14,105 Income tax expense 3,297 (356 ) — 2,941 Net income $ 11,795 $ (631 ) $ — $ 11,164 Earnings per share Basic $ 0.41 $ (0.02 ) $ — $ 0.39 Diluted $ 0.40 $ (0.02 ) $ — $ 0.38 (1) Cost of sales excludes depreciation and amortization, which are presented separately, and includes advertising expenses incurred at company-owned restaurants. The following table presents the effect of the adoption of ASU 2014-09 and ASU 2016-18 on our consolidated statements of cash flows for the twenty-six weeks ended July 1, 2017 (in thousands): As reported Adjustments for adoption of ASU 2014-09 Adjustments for adoption of ASU 2016-18 As adjusted Operating activities Net income $ 11,795 $ (631 ) $ — $ 11,164 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 1,526 — — 1,526 Deferred income taxes (149 ) (357 ) — (506 ) Stock-based compensation expense 541 — — 541 Amortization of debt issuance costs 146 — — 146 Changes in operating assets and liabilities: Accounts receivable (619 ) — — (619 ) Prepaid expenses and other assets (568 ) — — (568 ) Advertising fund assets and liabilities, net — — (121 ) (121 ) Accounts payable and other current liabilities (2,281 ) — — (2,281 ) Deferred revenue 378 988 — 1,366 Other non-current liabilities (83 ) — — (83 ) Cash provided by operating activities 10,686 — (121 ) 10,565 Investing activities Purchases of property and equipment (1,301 ) — — (1,301 ) Cash used in investing activities (1,301 ) — — (1,301 ) Financing activities Proceeds from exercise of stock options 1,062 — — 1,062 Repayments of long-term debt (9,750 ) — — (9,750 ) Cash used in financing activities (8,688 ) — — (8,688 ) Net change in cash, cash equivalents, and restricted cash 697 — (121 ) 576 Cash, cash equivalents, and restricted cash at beginning of period 3,750 1,943 5,693 Cash, cash equivalents, and restricted cash at end of period $ 4,447 $ 1,822 $ 6,269 |
Earnings per Share (Notes)
Earnings per Share (Notes) | 6 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
Earnings Per Share [Text Block] | Earnings per Share Basic earnings per share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the reporting period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. For the calculation of diluted earnings per share, the basic weighted average number of shares is increased by the dilutive effect of stock options and restricted stock units, determined using the treasury stock method. Basic weighted average shares outstanding is reconciled to diluted weighted average shares outstanding as follows (in thousands): Thirteen Weeks Ended Twenty-Six Weeks Ended June 30, July 1, June 30, July 1, Basic weighted average shares outstanding 29,230 29,032 29,173 28,964 Dilutive shares 298 362 336 397 Diluted weighted average shares outstanding 29,528 29,394 29,509 29,361 For the thirteen weeks ended June 30, 2018 and July 1, 2017 , respectively, approximately 2,000 and 3,000 equity awards were excluded from the dilutive earnings per share calculation because the effect would have been anti-dilutive. For the twenty-six weeks ended June 30, 2018 and July 1, 2017 , respectively, approximately 13,000 and 20,000 equity awards were excluded from the dilutive earnings per share calculation because the effect would have been anti-dilutive. |
Dividends (Notes)
Dividends (Notes) | 6 Months Ended |
Jun. 30, 2018 | |
Dividends [Abstract] | |
Dividends Disclosure [Text Block] | Dividends In each of the first two quarters of 2018 , the Company’s Board of Directors approved a quarterly dividend of $0.07 per share of common stock, with aggregate dividends of $4.2 million , or $0.14 per common share, paid during the twenty-six weeks ended June 30, 2018 . On January 30, 2018, the Company’s Board of Directors declared a special cash dividend of $3.17 per share, which was paid on February 14, 2018, totaling $92.7 million . Subsequent to the second quarter, on August 2, 2018 , the Company’s Board of Directors declared a quarterly dividend of $0.09 per share of common stock for stockholders of record as of September 4, 2018 , to be paid on September 18, 2018 , totaling approximately $2.6 million . |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Fair value is the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. Assets and liabilities are classified using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value as follows: Level 1 — Unadjusted quoted prices for identical instruments traded in active markets. Level 2 — Observable market-based inputs or unobservable inputs corroborated by market data. Level 3 — Unobservable inputs reflecting management’s estimates and assumptions. The carrying values of cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to their short-term nature. Fair value of debt is determined on a non-recurring basis, which results are summarized as follows (in thousands): Fair Value Hierarchy June 30, 2018 December 30, 2017 Carrying Value (2) Fair Value (1) Carrying Value (2) Fair Value (1) Senior Secured Credit Facility: Term loan facility Level 2 $ 97,500 $ 97,500 $ 64,750 $ 64,750 Revolving credit facility Level 2 $ 122,608 $ 122,608 $ 69,000 $ 69,000 (1) The fair value of long-term debt was estimated using available market information. (2) Excluding issuance costs netted on the Consolidated Balance Sheet. The Company also measures certain non-financial assets at fair value on a non-recurring basis, primarily long-lived assets, intangible assets and goodwill, in connection with its periodic evaluations of such assets for potential impairment. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Income tax expense and the effective tax rate were $0.7 million and 9.8% , respectively, for the thirteen weeks ended June 30, 2018 , and $2.0 million and 28.7% , respectively, for the thirteen weeks ended July 1, 2017 . Income tax expense and the effective tax rate were $2.4 million and 15.6% , respectively, for the twenty-six weeks ended June 30, 2018 , and $2.9 million and 20.9% , respectively, for the twenty-six weeks ended July 1, 2017 . Income tax expense for the thirteen and twenty-six weeks ended June 30, 2018 includes $1.2 million and $1.5 million , respectively, in tax benefits resulting from the recognition of excess tax benefits from stock based compensation, compared to $0.7 million and $2.4 million of tax benefits recognized in the thirteen and twenty-six weeks ended July 1, 2017 , respectively. Income tax expense for the thirteen and twenty-six weeks ended June 30, 2018 also reflects the reduction in the federal statutory rate from 35% to 21% effective the first day of fiscal 2018. |
Debt Obligations
Debt Obligations | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Debt Obligations | Debt Obligations On January 30, 2018, the Company entered into an amended senior secured credit facility (the “2018 Facility”), which replaced its senior secured credit facility dated June 30, 2016 (the “2016 Facility”). The 2018 Facility includes a term loan facility in an aggregate principal amount of $100 million and a revolving credit facility up to an aggregate principal amount of $150 million . The Company used the proceeds from the 2018 Facility to refinance $133.8 million of indebtedness under the 2016 Facility and to pay a special dividend of $92.7 million to its stockholders. Borrowings under the facility bear interest, payable quarterly, at the Company’s option, at the base rate plus a margin ( 0.75% to 1.75% , dependent on the Company’s reported leverage ratio) or LIBOR plus a margin ( 1.75% to 2.75% , dependent on the Company’s reported leverage ratio). The 2018 Facility matures in January 2023 . As of June 30, 2018 , the term loan facility and the revolving credit facility had outstanding balances of $97.5 million and $122.6 million , respectively, bearing interest at 4.59% . During the twenty-six weeks ended June 30, 2018 , the Company made payments of $7.5 million and $2.5 million on the outstanding principal balance of its revolving credit facility and term loan facility, respectively, under the 2018 Facility. In conjunction with the 2018 Facility, the Company evaluated the refinancing of the 2016 Facility and determined $202.5 million should be accounted for as a debt modification and $47.5 million should be new debt issuance. The Company incurred $1.0 million in financing costs of which $0.2 million was expensed and $0.8 million was capitalized and is being amortized using the effective interest rate method. The 2018 Facility is secured by substantially all assets of the Company and requires compliance with certain financial and non-financial covenants. As of June 30, 2018 , the Company was in compliance with all covenants. As of June 30, 2018 , the scheduled principal payments on debt outstanding under the 2018 Facility were as follows (in thousands): Remainder of fiscal year 2018 $ 2,500 Fiscal year 2019 3,750 Fiscal year 2020 5,000 Fiscal year 2021 5,000 Fiscal year 2022 6,250 Fiscal year 2023 197,608 Total $ 220,108 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies WRI leases certain office and retail space and equipment under non-cancelable operating leases with terms expiring at various dates through April 2033 . A schedule of future minimum rental payments required under our operating leases, excluding contingent rent, that have initial or remaining non-cancelable lease terms in excess of one year, as of June 30, 2018 , is as follows (in thousands): Remainder of fiscal year 2018 $ 956 Fiscal year 2019 1,824 Fiscal year 2020 1,700 Fiscal year 2021 1,547 Fiscal year 2022 1,494 Fiscal year 2023 1,296 Thereafter 4,121 Total $ 12,938 Rent expense under cancelable and non-cancelable leases was $561,000 and $489,000 for the thirteen weeks ended June 30, 2018 and July 1, 2017 , respectively, and $1.1 million and $980,000 for the twenty-six weeks ended June 30, 2018 and July 1, 2017 , respectively. The Company is subject to legal proceedings, claims and liabilities, such as employment-related claims and premises-liability cases, which arise in the ordinary course of business and are generally covered by insurance. In the opinion of management, the amount of ultimate liability with respect to those actions should not have a material adverse impact on the Company’s financial position, results of operations or cash flows. |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation Stock-based compensation is measured at the grant date, based on the calculated fair value of the award, and is recognized as expense over the requisite employee service period (generally the vesting period of the grant). The Company recognized $1.3 million in stock compensation expense for the twenty-six weeks ended June 30, 2018 , with a corresponding increase to additional paid-in-capital. Stock compensation expense is included in SG&A in the Consolidated Statements of Operations. Stock Options The following table summarizes stock option activity (in thousands, except per share data): Stock Options Weighted Average Exercise Price Aggregate Intrinsic Value Weighted Average Remaining Term Outstanding - December 30, 2017 420 $ 5.45 $ 14,068 5.7 Options granted 2 44.03 Options exercised (136 ) 3.34 Options canceled (27 ) 6.68 Outstanding - June 30, 2018 259 $ 5.88 $ 11,963 5.3 The total grant-date fair value of stock options vested during the twenty-six weeks ended June 30, 2018 was $0.5 million . The total intrinsic value of stock options exercised during the twenty-six weeks ended June 30, 2018 was $6.3 million . As of June 30, 2018 , total unrecognized compensation expense related to unvested stock options was $0.6 million , which is expected to be recognized over a weighted-average period of 1.4 years. Restricted Stock Units and Performance Stock Units The following table summarizes activity related to restricted stock units and performance stock units (in thousands, except per share data): Restricted Stock Units Weighted Average Grant Date Fair Value Performance Stock Units Weighted Average Grant Date Fair Value Outstanding - December 30, 2017 94 $ 27.11 86 $ 27.63 Units granted 59 44.25 54 44.27 Units vested (28 ) 26.74 (14 ) 26.25 Units canceled (12 ) 27.83 (7 ) 26.30 Outstanding - June 30, 2018 113 $ 36.07 119 $ 38.31 The fair value of restricted stock units and performance stock units is based on the closing market price of the stock on the date of grant. The restricted stock units granted during the twenty-six weeks ended June 30, 2018 vest over a three year service period. As of June 30, 2018 , total unrecognized compensation expense related to unvested restricted stock units was $3.5 million , which is expected to be recognized over a weighted-average period of 2.2 years. The performance stock units vest based on the outcome of certain performance criteria. For performance stock units granted during the twenty-six weeks ended June 30, 2018 , the amount of units that can be earned range from 0% to 100% of the number of performance awards granted, based on the achievement of certain adjusted EBITDA targets, as defined by the applicable award agreement, over a performance period of one to three years. The compensation expense related to the performance stock units is recognized over the vesting period when the achievement of the performance conditions become probable. During the twenty-six weeks ended June 30, 2018 , there was a modification to certain awards resulting in additional compensation expense of $0.9 million over the remaining term of the awards. As of June 30, 2018 , total unrecognized compensation expense related to unvested performance stock units was $4.1 million , which is expected to be recognized over a weighted-average period of 2.0 years. Restricted Stock Awards The fair value of the non-vested restricted stock awards is based on the closing price on the date of grant. As of June 30, 2018 , total unrecognized compensation expense related to unvested restricted stock awards was $0.5 million , which will be recognized over a weighted average period of approximately 2.1 years . |
Business Segments
Business Segments | 6 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
Business Segments | Business Segments The Company’s business operates in two segments: the “Franchise” segment and the “Company” segment. The Franchise segment consists of domestic and international franchise restaurants, which represent the majority of our system-wide restaurants. As of June 30, 2018 , the franchise operations segment consisted of 1,162 restaurants operated by Wingstop franchisees in the United States and nine countries outside of the United States as compared to 1,035 franchised restaurants in operation as of July 1, 2017 . Franchise operations revenue consists primarily of franchise royalty revenue, advertising fee revenue, franchise and development fees revenue, international territory fees, and other revenue. As of June 30, 2018 , the Company segment consisted of 26 company-owned restaurants, located in the United States, as compared to 21 company-owned restaurants as of July 1, 2017 . Company restaurant sales are comprised of food and beverage sales at company-owned restaurants. Company restaurant expenses are operating expenses at company-owned restaurants and include food, beverage, labor, benefits, utilities, rent and other operating costs. Information on segments and a reconciliation to income before taxes are as follows (in thousands): Thirteen Weeks Ended Twenty-Six Weeks Ended June 30, July 1, June 30, July 1, As adjusted* As adjusted* Revenue: Franchise segment $ 25,559 $ 22,733 $ 51,945 $ 47,597 Company segment 11,478 8,845 22,481 17,391 Total segment revenue $ 37,037 $ 31,578 $ 74,426 $ 64,988 Segment Profit: Franchise segment $ 7,175 $ 7,108 $ 15,562 $ 14,554 Company segment 2,751 1,078 5,392 2,157 Total segment profit 9,926 8,186 20,954 16,711 Corporate and other (1) — — 1,462 — Interest expense, net 2,342 1,307 4,078 2,606 Income before taxes $ 7,584 $ 6,879 $ 15,414 $ 14,105 (1) Corporate and other includes corporate related items not allocated to reportable segments and consists primarily of expenses associated with the refinancing of the 2016 Facility and payment of a special dividend. * See Note 1 . |
Restaurant Acquisition (Notes)
Restaurant Acquisition (Notes) | 6 Months Ended |
Jun. 30, 2018 | |
Business Combinations [Abstract] | |
Business Combination Disclosure [Text Block] | Restaurant Acquisitions On February 19, 2018, April 16, 2018 and May 1, 2018, the Company acquired one existing restaurant from three separate franchisees. The total purchase prices were $1.9 million , $1.9 million , and $2.2 million , respectively, which were funded by cash flows from operations. The following table summarizes the preliminary allocations of the purchase prices to the estimated fair values of assets acquired and liabilities assumed at the date of the acquisitions (in thousands): Purchase Price Allocation February 19, 2018 April 16, 2018 May 1, 2018 Acquisition Acquisition Acquisition Working capital $ 4 $ 20 $ 7 Property and equipment 26 160 28 Reacquired franchise rights 541 1,277 887 Goodwill 1,331 458 1,309 Gift card liability (2 ) — — Total purchase price $ 1,900 $ 1,915 $ 2,231 The results of the operations of these locations are included in our Consolidated Statements of Operations as of the date of acquisitions. The acquisitions were accounted for as business combinations. The estimates of fair value are preliminary, and are therefore subject to further refinement. The excess of the purchase price over the aggregate fair value of assets acquired was allocated to goodwill and is attributable to the benefits expected as a result of the acquisition, including sales and unit growth opportunities. As of June 30, 2018 , $3.1 million of the goodwill from these acquisitions is expected to be deductible for federal income tax purposes. Pro-forma financial information of the combined entities is not presented due to the immaterial impact of the financial results of the acquired restaurants on our consolidated financial statements. The fair value measurements of tangible and intangible assets and liabilities as of the acquisition dates are based on significant inputs not observed in the market and thus represents a Level 3 fair value measurement. Fair value measurements for reacquired franchise rights were determined using the income approach. Fair value measurements for property and equipment were determined using the cost approach. |
Revenue from Contracts with Cus
Revenue from Contracts with Customers (Notes) | 6 Months Ended |
Jun. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contract with Customer [Text Block] | Revenue from Contracts with Customers Revenue from contracts with customers consist primarily of royalties, advertising fund contributions, initial and renewal franchise fees and upfront fees from development agreements and international territory agreements. These performance obligations under franchise agreements consist of (a) a franchise license, (b) pre-opening services, such as training, and (c) ongoing services, such as management of the Ad Fund, development of training materials and menu items and restaurant monitoring. These performance obligations are highly interrelated so they are not considered to be individually distinct and therefore are accounted for as a single performance obligation, which is satisfied by providing a right to use our intellectual property over the term of each franchise agreement. Royalties, including franchisee contributions to the advertising fund, are calculated as a percentage of franchise restaurant sales over the term of the franchise agreement. Initial and renewal franchise fees are payable by the franchisee prior to the restaurant opening or at the time of a renewal of an existing franchise agreement. Franchise agreement royalties, inclusive of advertising fund contributions, represent sales-based royalties that are related entirely to the performance obligation under the franchise agreement and are recognized as franchise sales occur. Additionally, initial and renewal franchise fees are recognized as revenue on a straight-line basis over the term of the respective agreement. The performance obligation under development agreements and international territory agreements generally consists of an obligation to grant exclusive development rights over a stated term. These development rights are not distinct from franchise agreements, so upfront fees paid by franchisees for development rights are deferred and apportioned to each franchise restaurant opened by the franchisee. The pro rata amount apportioned to each restaurant is accounted for as an initial franchise fee. The following table represents a disaggregation of revenue from contracts with customers for the thirteen and twenty-six weeks ended June 30, 2018 and July 1, 2017 (in thousands): Thirteen Weeks Ended Twenty-Six Weeks Ended June 30, 2018 July 1, 2017 June 30, 2018 July 1, 2017 As adjusted* As adjusted* Royalty revenue $ 14,950 $ 13,133 $ 30,336 $ 25,824 Advertising fees and related income 8,355 7,466 16,960 14,734 Franchise fees 618 527 1,304 1,268 * See Note 1 . Franchise fee, development fee, and international territory fee payments received by the Company are recorded as deferred revenue on the Consolidated Balance Sheets, which represents a contract liability. Deferred revenue is reduced as fees are recognized in revenue over the term of the franchise license for the respective restaurant. Approximately $9.3 million and $10.1 million of deferred revenue as of June 30, 2018 and December 30, 2017 , respectively, relates to restaurants that have not yet opened, so the fees are not yet being amortized. The weighted average remaining amortization period for deferred franchise and renewal fees related to open restaurants is 7.7 years . The Company does not have any material contract assets as of June 30, 2018 . |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Fiscal Year End | The Company uses a 52/53-week fiscal year that ends on the last Saturday of the calendar year. Fiscal years 2018 and 2017 have 52 weeks |
Advertising Fund | Advertising Fund The Company administers the Wingstop Restaurants Advertising Fund (“Ad Fund”), which is used for various forms of advertising for the Wingstop brand. Advertising fund contributions and expenditures are reported on a gross basis in the Consolidated Statements of Operations, which are largely offsetting and therefore do not significantly impact our reported net income. Advertising expenses incurred by company-owned restaurants are included within cost of sales in the Consolidated Statements of Operations. Administrative support services and compensation expenses of employees that provide services directly to the Ad Fund, are included in selling, general and administrative expenses (“SG&A”) in the Consolidated Statements of Operations. The Ad Fund contribution collected from Wingstop restaurant franchisees and company-owned and operated restaurants is equal to 3% of gross sales. For the twenty-six weeks ended June 30, 2018 and July 1, 2017 , the Company contributed $1.9 million and $3.8 million , respectively, for the purpose of supplementing the national advertising campaign, which were included in Advertising expenses in the Consolidated Statements of Operations. The Company consolidates and reports all assets and liabilities of the Ad Fund as restricted assets of the Ad Fund and liabilities of the Ad Fund within current assets and current liabilities, respectively, in the Consolidated Balance Sheets. The assets and liabilities of the Ad Fund consist primarily of cash, receivables, accrued expenses, other liabilities and any cumulative surplus related to the Ad Fund. Under the Company’s franchise agreements, contributions to the Ad Fund are restricted to advertising, public relations, merchandising, similar activities, and administrative expenses to increase sales and further enhance the public reputation of the Wingstop brand. The aforementioned administrative expenses may also include personnel expenses and allocated costs incurred by the Company which are directly associated with administering the Ad Fund, as outlined in the provisions of the applicable franchise agreements. Total cash balances related to the Ad Fund as of June 30, 2018 and December 30, 2017 were $2.5 million and $2.3 million , respectively. |
Recent Accounting Pronouncements | Recently Issued Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2016-02, Leases (Topic 842) . ASU 2016-02 amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU 2016-02 will be effective beginning in the first quarter of fiscal year 2019. Early adoption of ASU 2016-02 as of its issuance is permitted. This new guidance requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. We anticipate implementing the standard by taking advantage of the practical expedient option. The discounted minimum remaining rental payments will be the starting point for determining the right-of-use asset and lease liability. We expect that adoption of the new guidance will have a material impact on the consolidated balance sheets due to the recognition of the right-of-use asset and lease liability related to our current operating leases. The process of evaluating the full impact of the new guidance on our consolidated financial statements and disclosures is ongoing, but we anticipate the initial evaluation of the impact will be completed in fiscal 2018. In March 2018, the FASB issued ASU 2018-05, Income Taxes (Topic 740). ASU 2018-05 provides guidance on accounting for the income tax effects of the Tax Cuts and Jobs Act of 2017 (the “Act”), which impacts U.S. corporate tax rates, business-related exclusions, and deductions and credits. The Act also has tax consequences for many companies that operate internationally. The Company recognized the income tax effects of the Act in its 2017 financial statements in accordance with Staff Accounting Bulletin No. 118, which provides SEC staff guidance for the application of Accounting Standards Codification (“ASC”) Topic 740, "Income Taxes," in the reporting period in which the Act was signed into law. As such, the Company’s financial results reflect the income tax effects of the Act for which the accounting under ASC Topic 740 is complete and provisional amounts for those specific income tax effects of the Act for which the accounting under ASC Topic 740 is incomplete but a reasonable estimate could be determined. The Company will continue to analyze additional information and guidance related to the Act as supplemental legislation, regulatory guidance, or evolving technical interpretations become available. The final impacts may differ from the recorded amounts as of June 30, 2018, and we will continue to refine such amounts within the measurement period provided by Staff Accounting Bulletin No. 118. We expect to complete our analysis no later than the fourth quarter of 2018. Recently Adopted Accounting Pronouncements In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which superseded nearly all existing revenue recognition guidance. The new guidance provided a single framework in which revenue is required to be recognized to depict the transfer of goods or services to customers in amounts that reflect the consideration to which a company expects to be entitled in exchange for those goods or services. The Company adopted this new guidance effective the first day of fiscal year 2018, using the full retrospective transition method, which resulted in adjusting each prior reporting period presented and a cumulative effect adjustment, which was recorded as of the first day of 2016. The adoption changed the timing of recognition of initial franchise fees, development fees, territory fees for our international business and renewal and transfer fees, as well as the reporting of Ad Fund contributions and related expenditures. See Note 11 for further discussion. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”), which requires that restricted cash and cash equivalents be included as components of total cash and cash equivalents as presented on the statement of cash flows. ASU 2016-18 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017 and a retrospective transition method is required. The Company adopted this new guidance effective the first day of fiscal year 2018, using the full retrospective transition method, which resulted in adjusting the Statement of Cash Flows for each prior period presented. The following table presents the effect of the adoption of ASU 2014-09 on our consolidated balance sheets as of December 30, 2017 (in thousands): As reported Adjustments for adoption of ASU 2014-09 As Adjusted Assets Current assets Cash and cash equivalents $ 4,063 $ — $ 4,063 Accounts receivable, net 4,567 — 4,567 Prepaid expenses and other current assets 4,334 — 4,334 Advertising fund assets, restricted 2,944 — 2,944 Total current assets 15,908 — 15,908 Property and equipment, net 5,826 — 5,826 Goodwill 46,557 — 46,557 Trademarks 32,700 — 32,700 Customer relationships, net 15,567 — 15,567 Other non-current assets 3,278 — 3,278 Total assets $ 119,836 $ — $ 119,836 Liabilities and stockholders' deficit Current liabilities Accounts payable $ 1,752 $ — $ 1,752 Other current liabilities 10,683 246 10,929 Current portion of debt 3,500 — 3,500 Advertising fund liabilities 2,944 — 2,944 Total current liabilities 18,879 246 19,125 Long-term debt, net 129,841 — 129,841 Deferred revenues, net of current 8,427 12,799 21,226 Deferred income tax liabilities, net 8,799 (2,879 ) 5,920 Other non-current liabilities 2,142 — 2,142 Total liabilities 168,088 10,166 178,254 Stockholders' deficit Common stock 291 — 291 Additional paid-in-capital 262 — 262 Accumulated deficit (48,805 ) (10,166 ) (58,971 ) Total stockholders' deficit (48,252 ) (10,166 ) (58,418 ) Total liabilities and stockholders' deficit $ 119,836 $ — $ 119,836 The following table presents the effect of the adoption of ASU 2014-09 on our consolidated statements of operations for the thirteen weeks ended July 1, 2017 (in thousands, except per share amounts): Adjustments for adoption of ASU 2014-09 As reported Franchise Fees Advertising As Adjusted Revenue: Royalty revenue, franchise fees and other $ 15,827 $ (560 ) $ — $ 15,267 Advertising fees and related income — — 7,466 7,466 Company-owned restaurant sales 8,845 — — 8,845 Total revenue 24,672 (560 ) 7,466 31,578 Costs and expenses: Cost of sales (1) 6,867 — — 6,867 Advertising expenses — — 7,574 7,574 Selling, general and administrative 8,288 — (108 ) 8,180 Depreciation and amortization 771 — — 771 Total costs and expenses 15,926 — 7,466 23,392 Operating income 8,746 (560 ) — 8,186 Interest expense, net 1,307 — — 1,307 Income before income tax expense 7,439 (560 ) — 6,879 Income tax expense 2,174 (202 ) — 1,972 Net income $ 5,265 $ (358 ) $ — $ 4,907 Earnings per share Basic $ 0.18 $ (0.01 ) $ — $ 0.17 Diluted $ 0.18 $ (0.01 ) $ — $ 0.17 (1) Cost of sales excludes depreciation and amortization, which are presented separately, and includes advertising expenses incurred at company-owned restaurants. The following table presents the effect of the adoption of ASU 2014-09 on our consolidated statements of operations for the twenty-six weeks ended July 1, 2017 (in thousands, except per share amounts): Adjustments for adoption of ASU 2014-09 As reported Franchise Fees Advertising As Adjusted Revenue: Royalty revenue, franchise fees and other $ 33,850 $ (987 ) $ — $ 32,863 Advertising fees and related income — — 14,734 14,734 Company-owned restaurant sales 17,391 — — 17,391 Total revenue 51,241 (987 ) 14,734 64,988 Costs and expenses: Cost of sales (1) 13,467 — — 13,467 Advertising expenses — — 16,857 16,857 Selling, general and administrative 18,550 — (2,123 ) 16,427 Depreciation and amortization 1,526 — — 1,526 Total costs and expenses 33,543 — 14,734 48,277 Operating income 17,698 (987 ) — 16,711 Interest expense, net 2,606 — — 2,606 Income before income tax expense 15,092 (987 ) — 14,105 Income tax expense 3,297 (356 ) — 2,941 Net income $ 11,795 $ (631 ) $ — $ 11,164 Earnings per share Basic $ 0.41 $ (0.02 ) $ — $ 0.39 Diluted $ 0.40 $ (0.02 ) $ — $ 0.38 (1) Cost of sales excludes depreciation and amortization, which are presented separately, and includes advertising expenses incurred at company-owned restaurants. The following table presents the effect of the adoption of ASU 2014-09 and ASU 2016-18 on our consolidated statements of cash flows for the twenty-six weeks ended July 1, 2017 (in thousands): As reported Adjustments for adoption of ASU 2014-09 Adjustments for adoption of ASU 2016-18 As adjusted Operating activities Net income $ 11,795 $ (631 ) $ — $ 11,164 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 1,526 — — 1,526 Deferred income taxes (149 ) (357 ) — (506 ) Stock-based compensation expense 541 — — 541 Amortization of debt issuance costs 146 — — 146 Changes in operating assets and liabilities: Accounts receivable (619 ) — — (619 ) Prepaid expenses and other assets (568 ) — — (568 ) Advertising fund assets and liabilities, net — — (121 ) (121 ) Accounts payable and other current liabilities (2,281 ) — — (2,281 ) Deferred revenue 378 988 — 1,366 Other non-current liabilities (83 ) — — (83 ) Cash provided by operating activities 10,686 — (121 ) 10,565 Investing activities Purchases of property and equipment (1,301 ) — — (1,301 ) Cash used in investing activities (1,301 ) — — (1,301 ) Financing activities Proceeds from exercise of stock options 1,062 — — 1,062 Repayments of long-term debt (9,750 ) — — (9,750 ) Cash used in financing activities (8,688 ) — — (8,688 ) Net change in cash, cash equivalents, and restricted cash 697 — (121 ) 576 Cash, cash equivalents, and restricted cash at beginning of period 3,750 1,943 5,693 Cash, cash equivalents, and restricted cash at end of period $ 4,447 $ 1,822 $ 6,269 |
Basis of Presentation Disclosur
Basis of Presentation Disclosure - New Accounting Pronouncements (Tables) | 6 Months Ended | |
Jun. 30, 2018 | Jul. 01, 2017 | |
Accounting Changes and Error Corrections [Abstract] | ||
Schedule of New Accounting Pronouncements and Changes in Accounting Principles [Table Text Block] | The following table presents the effect of the adoption of ASU 2014-09 on our consolidated balance sheets as of December 30, 2017 (in thousands): As reported Adjustments for adoption of ASU 2014-09 As Adjusted Assets Current assets Cash and cash equivalents $ 4,063 $ — $ 4,063 Accounts receivable, net 4,567 — 4,567 Prepaid expenses and other current assets 4,334 — 4,334 Advertising fund assets, restricted 2,944 — 2,944 Total current assets 15,908 — 15,908 Property and equipment, net 5,826 — 5,826 Goodwill 46,557 — 46,557 Trademarks 32,700 — 32,700 Customer relationships, net 15,567 — 15,567 Other non-current assets 3,278 — 3,278 Total assets $ 119,836 $ — $ 119,836 Liabilities and stockholders' deficit Current liabilities Accounts payable $ 1,752 $ — $ 1,752 Other current liabilities 10,683 246 10,929 Current portion of debt 3,500 — 3,500 Advertising fund liabilities 2,944 — 2,944 Total current liabilities 18,879 246 19,125 Long-term debt, net 129,841 — 129,841 Deferred revenues, net of current 8,427 12,799 21,226 Deferred income tax liabilities, net 8,799 (2,879 ) 5,920 Other non-current liabilities 2,142 — 2,142 Total liabilities 168,088 10,166 178,254 Stockholders' deficit Common stock 291 — 291 Additional paid-in-capital 262 — 262 Accumulated deficit (48,805 ) (10,166 ) (58,971 ) Total stockholders' deficit (48,252 ) (10,166 ) (58,418 ) Total liabilities and stockholders' deficit $ 119,836 $ — $ 119,836 | The following table presents the effect of the adoption of ASU 2014-09 on our consolidated statements of operations for the thirteen weeks ended July 1, 2017 (in thousands, except per share amounts): Adjustments for adoption of ASU 2014-09 As reported Franchise Fees Advertising As Adjusted Revenue: Royalty revenue, franchise fees and other $ 15,827 $ (560 ) $ — $ 15,267 Advertising fees and related income — — 7,466 7,466 Company-owned restaurant sales 8,845 — — 8,845 Total revenue 24,672 (560 ) 7,466 31,578 Costs and expenses: Cost of sales (1) 6,867 — — 6,867 Advertising expenses — — 7,574 7,574 Selling, general and administrative 8,288 — (108 ) 8,180 Depreciation and amortization 771 — — 771 Total costs and expenses 15,926 — 7,466 23,392 Operating income 8,746 (560 ) — 8,186 Interest expense, net 1,307 — — 1,307 Income before income tax expense 7,439 (560 ) — 6,879 Income tax expense 2,174 (202 ) — 1,972 Net income $ 5,265 $ (358 ) $ — $ 4,907 Earnings per share Basic $ 0.18 $ (0.01 ) $ — $ 0.17 Diluted $ 0.18 $ (0.01 ) $ — $ 0.17 (1) Cost of sales excludes depreciation and amortization, which are presented separately, and includes advertising expenses incurred at company-owned restaurants. The following table presents the effect of the adoption of ASU 2014-09 on our consolidated statements of operations for the twenty-six weeks ended July 1, 2017 (in thousands, except per share amounts): Adjustments for adoption of ASU 2014-09 As reported Franchise Fees Advertising As Adjusted Revenue: Royalty revenue, franchise fees and other $ 33,850 $ (987 ) $ — $ 32,863 Advertising fees and related income — — 14,734 14,734 Company-owned restaurant sales 17,391 — — 17,391 Total revenue 51,241 (987 ) 14,734 64,988 Costs and expenses: Cost of sales (1) 13,467 — — 13,467 Advertising expenses — — 16,857 16,857 Selling, general and administrative 18,550 — (2,123 ) 16,427 Depreciation and amortization 1,526 — — 1,526 Total costs and expenses 33,543 — 14,734 48,277 Operating income 17,698 (987 ) — 16,711 Interest expense, net 2,606 — — 2,606 Income before income tax expense 15,092 (987 ) — 14,105 Income tax expense 3,297 (356 ) — 2,941 Net income $ 11,795 $ (631 ) $ — $ 11,164 Earnings per share Basic $ 0.41 $ (0.02 ) $ — $ 0.39 Diluted $ 0.40 $ (0.02 ) $ — $ 0.38 (1) Cost of sales excludes depreciation and amortization, which are presented separately, and includes advertising expenses incurred at company-owned restaurants. The following table presents the effect of the adoption of ASU 2014-09 and ASU 2016-18 on our consolidated statements of cash flows for the twenty-six weeks ended July 1, 2017 (in thousands): As reported Adjustments for adoption of ASU 2014-09 Adjustments for adoption of ASU 2016-18 As adjusted Operating activities Net income $ 11,795 $ (631 ) $ — $ 11,164 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 1,526 — — 1,526 Deferred income taxes (149 ) (357 ) — (506 ) Stock-based compensation expense 541 — — 541 Amortization of debt issuance costs 146 — — 146 Changes in operating assets and liabilities: Accounts receivable (619 ) — — (619 ) Prepaid expenses and other assets (568 ) — — (568 ) Advertising fund assets and liabilities, net — — (121 ) (121 ) Accounts payable and other current liabilities (2,281 ) — — (2,281 ) Deferred revenue 378 988 — 1,366 Other non-current liabilities (83 ) — — (83 ) Cash provided by operating activities 10,686 — (121 ) 10,565 Investing activities Purchases of property and equipment (1,301 ) — — (1,301 ) Cash used in investing activities (1,301 ) — — (1,301 ) Financing activities Proceeds from exercise of stock options 1,062 — — 1,062 Repayments of long-term debt (9,750 ) — — (9,750 ) Cash used in financing activities (8,688 ) — — (8,688 ) Net change in cash, cash equivalents, and restricted cash 697 — (121 ) 576 Cash, cash equivalents, and restricted cash at beginning of period 3,750 1,943 5,693 Cash, cash equivalents, and restricted cash at end of period $ 4,447 $ 1,822 $ 6,269 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of Reconciliation of Basic Shares Outstanding to Diluted Shares Outstanding | Basic weighted average shares outstanding is reconciled to diluted weighted average shares outstanding as follows (in thousands): Thirteen Weeks Ended Twenty-Six Weeks Ended June 30, July 1, June 30, July 1, Basic weighted average shares outstanding 29,230 29,032 29,173 28,964 Dilutive shares 298 362 336 397 Diluted weighted average shares outstanding 29,528 29,394 29,509 29,361 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value Measurements, Nonrecurring | Fair value of debt is determined on a non-recurring basis, which results are summarized as follows (in thousands): Fair Value Hierarchy June 30, 2018 December 30, 2017 Carrying Value (2) Fair Value (1) Carrying Value (2) Fair Value (1) Senior Secured Credit Facility: Term loan facility Level 2 $ 97,500 $ 97,500 $ 64,750 $ 64,750 Revolving credit facility Level 2 $ 122,608 $ 122,608 $ 69,000 $ 69,000 (1) The fair value of long-term debt was estimated using available market information. (2) Excluding issuance costs netted on the Consolidated Balance Sheet. |
Debt Obligations Debt Obligatio
Debt Obligations Debt Obligations - Schedule of Maturities (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Maturities of Long-term Debt [Table Text Block] | As of June 30, 2018 , the scheduled principal payments on debt outstanding under the 2018 Facility were as follows (in thousands): Remainder of fiscal year 2018 $ 2,500 Fiscal year 2019 3,750 Fiscal year 2020 5,000 Fiscal year 2021 5,000 Fiscal year 2022 6,250 Fiscal year 2023 197,608 Total $ 220,108 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contractual Obligation, Fiscal Year Maturity Schedule [Table Text Block] | A schedule of future minimum rental payments required under our operating leases, excluding contingent rent, that have initial or remaining non-cancelable lease terms in excess of one year, as of June 30, 2018 , is as follows (in thousands): Remainder of fiscal year 2018 $ 956 Fiscal year 2019 1,824 Fiscal year 2020 1,700 Fiscal year 2021 1,547 Fiscal year 2022 1,494 Fiscal year 2023 1,296 Thereafter 4,121 Total $ 12,938 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Stock Option Activity | The following table summarizes stock option activity (in thousands, except per share data): Stock Options Weighted Average Exercise Price Aggregate Intrinsic Value Weighted Average Remaining Term Outstanding - December 30, 2017 420 $ 5.45 $ 14,068 5.7 Options granted 2 44.03 Options exercised (136 ) 3.34 Options canceled (27 ) 6.68 Outstanding - June 30, 2018 259 $ 5.88 $ 11,963 5.3 |
Schedule of Unvested Restricted Stock Units Roll Forward [Table Text Block] | The following table summarizes activity related to restricted stock units and performance stock units (in thousands, except per share data): Restricted Stock Units Weighted Average Grant Date Fair Value Performance Stock Units Weighted Average Grant Date Fair Value Outstanding - December 30, 2017 94 $ 27.11 86 $ 27.63 Units granted 59 44.25 54 44.27 Units vested (28 ) 26.74 (14 ) 26.25 Units canceled (12 ) 27.83 (7 ) 26.30 Outstanding - June 30, 2018 113 $ 36.07 119 $ 38.31 |
Business Segments (Tables)
Business Segments (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | Information on segments and a reconciliation to income before taxes are as follows (in thousands): Thirteen Weeks Ended Twenty-Six Weeks Ended June 30, July 1, June 30, July 1, As adjusted* As adjusted* Revenue: Franchise segment $ 25,559 $ 22,733 $ 51,945 $ 47,597 Company segment 11,478 8,845 22,481 17,391 Total segment revenue $ 37,037 $ 31,578 $ 74,426 $ 64,988 Segment Profit: Franchise segment $ 7,175 $ 7,108 $ 15,562 $ 14,554 Company segment 2,751 1,078 5,392 2,157 Total segment profit 9,926 8,186 20,954 16,711 Corporate and other (1) — — 1,462 — Interest expense, net 2,342 1,307 4,078 2,606 Income before taxes $ 7,584 $ 6,879 $ 15,414 $ 14,105 (1) Corporate and other includes corporate related items not allocated to reportable segments and consists primarily of expenses associated with the refinancing of the 2016 Facility and payment of a special dividend. * See Note 1 . |
Restaurant Acquisition (Tables)
Restaurant Acquisition (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Business Combinations [Abstract] | |
Schedule of Business Acquisitions, by Acquisition [Table Text Block] | The following table summarizes the preliminary allocations of the purchase prices to the estimated fair values of assets acquired and liabilities assumed at the date of the acquisitions (in thousands): Purchase Price Allocation February 19, 2018 April 16, 2018 May 1, 2018 Acquisition Acquisition Acquisition Working capital $ 4 $ 20 $ 7 Property and equipment 26 160 28 Reacquired franchise rights 541 1,277 887 Goodwill 1,331 458 1,309 Gift card liability (2 ) — — Total purchase price $ 1,900 $ 1,915 $ 2,231 |
Revenue from Contracts with C26
Revenue from Contracts with Customers (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue [Table Text Block] | The following table represents a disaggregation of revenue from contracts with customers for the thirteen and twenty-six weeks ended June 30, 2018 and July 1, 2017 (in thousands): Thirteen Weeks Ended Twenty-Six Weeks Ended June 30, 2018 July 1, 2017 June 30, 2018 July 1, 2017 As adjusted* As adjusted* Royalty revenue $ 14,950 $ 13,133 $ 30,336 $ 25,824 Advertising fees and related income 8,355 7,466 16,960 14,734 Franchise fees 618 527 1,304 1,268 * See Note 1 . |
Revenue from Contracts with C27
Revenue from Contracts with Customers (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | Dec. 30, 2017 | |
Disaggregation of Revenue [Line Items] | |||||
Advertising fees and related income | $ 8,355 | $ 7,466 | $ 16,960 | $ 14,734 | |
Contract with Customer, Portion of Liability not yet being Amortized | 9,300 | $ 9,300 | $ 10,100 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 7 years 8 months 12 days | ||||
Franchise Segment [Member] | Transferred over Time [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Initial Franchise Fees | 618 | 527 | $ 1,304 | 1,268 | |
Franchise Segment [Member] | Transferred at Point in Time [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Royalty Revenue | 14,950 | 13,133 | 30,336 | 25,824 | |
Advertising fees and related income | $ 8,355 | $ 7,466 | $ 16,960 | $ 14,734 |
Basis of Presentation - Overvie
Basis of Presentation - Overview (Details) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2018USD ($)restaurantcountry | Jul. 01, 2017USD ($)restaurant | Dec. 30, 2017USD ($) | |
Franchisor Disclosure [Line Items] | |||
Percentage of Revenue Collected for Advertising Fund | 3.00% | ||
Restricted Cash and Cash Equivalents, Current | $ | $ 2,518 | $ 2,329 | |
Franchised Units | |||
Franchisor Disclosure [Line Items] | |||
Number of Restaurants | 1,162 | 1,035 | |
Franchised Units | United States | |||
Franchisor Disclosure [Line Items] | |||
Number of Restaurants | 1,040 | ||
Franchised Units | Non-US | |||
Franchisor Disclosure [Line Items] | |||
Number of Restaurants | 122 | ||
Number of Countries in which Entity Operates | country | 9 | ||
Entity Operated Units | |||
Franchisor Disclosure [Line Items] | |||
Number of Restaurants | 26 | 21 | |
Selling, General and Administrative Expenses | |||
Franchisor Disclosure [Line Items] | |||
Franchise Advertising Fund Discretionary Contributions | $ | $ 1,900 | $ 3,800 |
Basis of Presentation Disclos29
Basis of Presentation Disclosure - New Accounting Pronouncements (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | |||||||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | May 01, 2018 | Apr. 16, 2018 | Feb. 19, 2018 | Dec. 30, 2017 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Cash and cash equivalents | $ 3,147 | $ 3,147 | $ 4,063 | ||||||
Accounts receivable, net | 4,484 | 4,484 | 4,567 | ||||||
Prepaid expenses and other current assets | 3,262 | 3,262 | 4,334 | ||||||
Advertising fund assets, restricted | 3,474 | 3,474 | 2,944 | ||||||
Total current assets | 14,367 | 14,367 | 15,908 | ||||||
Property and equipment, net | 6,328 | 6,328 | 5,826 | ||||||
Goodwill | 49,655 | 49,655 | $ 1,309 | $ 458 | $ 1,331 | 46,557 | |||
Trademarks | 32,700 | 32,700 | 32,700 | ||||||
Other non-current assets | 6,122 | 6,122 | 3,278 | ||||||
Total assets | 124,072 | 124,072 | 119,836 | ||||||
Accounts payable | 1,898 | 1,898 | 1,752 | ||||||
Other current liabilities | 10,646 | 10,646 | 10,929 | ||||||
Current portion of debt | 5,000 | 5,000 | 3,500 | ||||||
Advertising fund liabilities | 3,474 | 3,474 | 2,944 | ||||||
Total current liabilities | 21,018 | 21,018 | 19,125 | ||||||
Long-term debt, net | 214,569 | 214,569 | 129,841 | ||||||
Deferred revenues, net of current | 21,362 | 21,362 | 21,226 | ||||||
Deferred income tax liabilities, net | 5,763 | 5,763 | 5,920 | ||||||
Other non-current liabilities | 2,057 | 2,057 | 2,142 | ||||||
Total liabilities | 264,769 | 264,769 | 178,254 | ||||||
Common stock | 293 | 293 | 291 | ||||||
Additional paid-in-capital | 38 | 38 | 262 | ||||||
Accumulated deficit | (141,028) | (141,028) | (58,971) | ||||||
Total stockholders' deficit | (140,697) | (140,697) | (58,418) | ||||||
Total liabilities and stockholders' deficit | 124,072 | 124,072 | 119,836 | ||||||
Royalty revenue, franchise fees and other | 17,204 | $ 15,267 | 34,985 | $ 32,863 | |||||
Advertising fees and related income | 8,355 | 7,466 | 16,960 | 14,734 | |||||
Company-owned restaurant sales | 11,478 | 8,845 | 22,481 | 17,391 | |||||
Total revenue | 37,037 | 31,578 | 74,426 | 64,988 | |||||
Cost of sales (1) | [1] | 7,745 | 6,867 | 15,142 | 13,467 | ||||
Advertising expenses | 8,209 | 7,574 | 16,852 | 16,857 | |||||
Selling, general and administrative | 10,078 | 8,180 | 20,911 | 16,427 | |||||
Total costs and expenses | 27,111 | 23,392 | 54,934 | 48,277 | |||||
Operating income | 9,926 | 8,186 | 19,492 | 16,711 | |||||
Interest expense, net | 2,342 | 1,307 | 4,078 | 2,606 | |||||
Income before income tax expense | (7,584) | (6,879) | (15,414) | (14,105) | |||||
Income tax expense | 745 | 1,972 | 2,407 | 2,941 | |||||
Net income | $ 6,839 | $ 4,907 | $ 13,007 | $ 11,164 | |||||
Basic (in usd per share) | $ 0.23 | $ 0.17 | $ 0.45 | $ 0.39 | |||||
Diluted (in usd per share) | $ 0.23 | $ 0.17 | $ 0.44 | $ 0.38 | |||||
Depreciation and amortization | $ 1,079 | $ 771 | $ 2,029 | $ 1,526 | |||||
Deferred income taxes | (157) | (506) | |||||||
Stock-based compensation expense | 1,256 | 541 | |||||||
Amortization of debt issuance costs | 175 | 146 | |||||||
Accounts receivable | 83 | (619) | |||||||
Prepaid expenses and other assets | (211) | (568) | |||||||
Advertising fund assets and liabilities, net | 189 | (121) | |||||||
Accounts payable and other current liabilities | 909 | (2,281) | |||||||
Deferred revenue | 351 | 1,366 | |||||||
Other non-current liabilities | (86) | (83) | |||||||
Cash provided by operating activities | 17,545 | 10,565 | |||||||
Purchases of property and equipment | (1,311) | (1,301) | |||||||
Cash used in investing activities | (7,307) | (1,301) | |||||||
Proceeds from exercise of stock options | 455 | 1,062 | |||||||
Repayments of long-term debt | (143,750) | (9,750) | |||||||
Cash used in financing activities | (10,965) | (8,688) | |||||||
Net change in cash, cash equivalents, and restricted cash | (727) | 576 | |||||||
Cash, cash equivalents, and restricted cash at beginning of period | 6,392 | 5,693 | |||||||
Cash, cash equivalents, and restricted cash at end of period | 5,665 | 6,269 | 5,665 | 6,269 | |||||
Customer Relationships [Member] | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Customer relationships, net | $ 14,900 | $ 14,900 | 15,567 | ||||||
Accounting Standards Update 2014-09 [Member] | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Cash and cash equivalents | 0 | ||||||||
Accounts receivable, net | 0 | ||||||||
Prepaid expenses and other current assets | 0 | ||||||||
Advertising fund assets, restricted | 0 | ||||||||
Total current assets | 0 | ||||||||
Property and equipment, net | 0 | ||||||||
Goodwill | 0 | ||||||||
Trademarks | 0 | ||||||||
Customer relationships, net | 0 | ||||||||
Other non-current assets | 0 | ||||||||
Total assets | 0 | ||||||||
Accounts payable | 0 | ||||||||
Other current liabilities | 246 | ||||||||
Current portion of debt | 0 | ||||||||
Advertising fund liabilities | 0 | ||||||||
Total current liabilities | 246 | ||||||||
Long-term debt, net | 0 | ||||||||
Deferred revenues, net of current | 12,799 | ||||||||
Deferred income tax liabilities, net | (2,879) | ||||||||
Other non-current liabilities | 0 | ||||||||
Total liabilities | 10,166 | ||||||||
Common stock | 0 | ||||||||
Additional paid-in-capital | 0 | ||||||||
Accumulated deficit | (10,166) | ||||||||
Total stockholders' deficit | (10,166) | ||||||||
Total liabilities and stockholders' deficit | 0 | ||||||||
Net income | (631) | ||||||||
Depreciation and amortization | 0 | ||||||||
Deferred income taxes | (357) | ||||||||
Stock-based compensation expense | 0 | ||||||||
Amortization of debt issuance costs | 0 | ||||||||
Accounts receivable | 0 | ||||||||
Prepaid expenses and other assets | 0 | ||||||||
Advertising fund assets and liabilities, net | 0 | ||||||||
Accounts payable and other current liabilities | 0 | ||||||||
Deferred revenue | 988 | ||||||||
Other non-current liabilities | 0 | ||||||||
Cash provided by operating activities | 0 | ||||||||
Purchases of property and equipment | 0 | ||||||||
Cash used in investing activities | 0 | ||||||||
Proceeds from exercise of stock options | 0 | ||||||||
Repayments of long-term debt | 0 | ||||||||
Cash used in financing activities | 0 | ||||||||
Net change in cash, cash equivalents, and restricted cash | 0 | ||||||||
Cash, cash equivalents, and restricted cash at beginning of period | |||||||||
Cash, cash equivalents, and restricted cash at end of period | |||||||||
Accounting Standards Update 2016-18 [Member] | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Net income | 0 | ||||||||
Depreciation and amortization | 0 | ||||||||
Deferred income taxes | 0 | ||||||||
Stock-based compensation expense | 0 | ||||||||
Amortization of debt issuance costs | 0 | ||||||||
Accounts receivable | 0 | ||||||||
Prepaid expenses and other assets | 0 | ||||||||
Advertising fund assets and liabilities, net | (121) | ||||||||
Accounts payable and other current liabilities | 0 | ||||||||
Deferred revenue | 0 | ||||||||
Other non-current liabilities | 0 | ||||||||
Cash provided by operating activities | (121) | ||||||||
Purchases of property and equipment | 0 | ||||||||
Cash used in investing activities | 0 | ||||||||
Proceeds from exercise of stock options | 0 | ||||||||
Repayments of long-term debt | 0 | ||||||||
Cash used in financing activities | 0 | ||||||||
Net change in cash, cash equivalents, and restricted cash | (121) | ||||||||
Cash, cash equivalents, and restricted cash at beginning of period | 1,943 | ||||||||
Cash, cash equivalents, and restricted cash at end of period | 1,822 | 1,822 | |||||||
Franchise Revenue [Member] | Accounting Standards Update 2014-09 [Member] | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Royalty revenue, franchise fees and other | (560) | (987) | |||||||
Advertising fees and related income | 0 | 0 | |||||||
Company-owned restaurant sales | 0 | 0 | |||||||
Total revenue | (560) | (987) | |||||||
Cost of sales (1) | [1] | 0 | 0 | ||||||
Advertising expenses | 0 | 0 | |||||||
Selling, general and administrative | 0 | 0 | |||||||
Depreciation and amortization | 0 | 0 | |||||||
Total costs and expenses | 0 | 0 | |||||||
Operating income | (560) | (987) | |||||||
Interest expense, net | 0 | 0 | |||||||
Income before income tax expense | (560) | (987) | |||||||
Income tax expense | (202) | (356) | |||||||
Net income | $ (358) | $ (631) | |||||||
Basic (in usd per share) | $ (0.01) | $ (0.02) | |||||||
Diluted (in usd per share) | $ (0.01) | $ (0.02) | |||||||
Franchise Advertising Fund Income [Member] | Accounting Standards Update 2014-09 [Member] | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Royalty revenue, franchise fees and other | $ 0 | $ 0 | |||||||
Advertising fees and related income | 7,466 | 14,734 | |||||||
Company-owned restaurant sales | 0 | 0 | |||||||
Total revenue | 7,466 | 14,734 | |||||||
Cost of sales (1) | [1] | 0 | 0 | ||||||
Advertising expenses | 7,574 | 16,857 | |||||||
Selling, general and administrative | (108) | (2,123) | |||||||
Depreciation and amortization | 0 | 0 | |||||||
Total costs and expenses | 7,466 | 14,734 | |||||||
Operating income | 0 | 0 | |||||||
Interest expense, net | 0 | 0 | |||||||
Income before income tax expense | 0 | 0 | |||||||
Income tax expense | 0 | 0 | |||||||
Net income | $ 0 | $ 0 | |||||||
Basic (in usd per share) | $ 0 | $ 0 | |||||||
Diluted (in usd per share) | $ 0 | $ 0 | |||||||
Scenario, Previously Reported [Member] | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Cash and cash equivalents | 4,063 | ||||||||
Accounts receivable, net | 4,567 | ||||||||
Prepaid expenses and other current assets | 4,334 | ||||||||
Advertising fund assets, restricted | 2,944 | ||||||||
Total current assets | 15,908 | ||||||||
Property and equipment, net | 5,826 | ||||||||
Goodwill | 46,557 | ||||||||
Trademarks | 32,700 | ||||||||
Other non-current assets | 3,278 | ||||||||
Total assets | 119,836 | ||||||||
Accounts payable | 1,752 | ||||||||
Other current liabilities | 10,683 | ||||||||
Current portion of debt | 3,500 | ||||||||
Advertising fund liabilities | 2,944 | ||||||||
Total current liabilities | 18,879 | ||||||||
Long-term debt, net | 129,841 | ||||||||
Deferred revenues, net of current | 8,427 | ||||||||
Deferred income tax liabilities, net | 8,799 | ||||||||
Other non-current liabilities | 2,142 | ||||||||
Total liabilities | 168,088 | ||||||||
Common stock | 291 | ||||||||
Additional paid-in-capital | 262 | ||||||||
Accumulated deficit | (48,805) | ||||||||
Total stockholders' deficit | (48,252) | ||||||||
Total liabilities and stockholders' deficit | 119,836 | ||||||||
Royalty revenue, franchise fees and other | $ 15,827 | $ 33,850 | |||||||
Advertising fees and related income | 0 | 0 | |||||||
Company-owned restaurant sales | 8,845 | 17,391 | |||||||
Total revenue | 24,672 | 51,241 | |||||||
Cost of sales (1) | [1] | 6,867 | 13,467 | ||||||
Advertising expenses | 0 | 0 | |||||||
Selling, general and administrative | 8,288 | 18,550 | |||||||
Depreciation and amortization | 771 | 1,526 | |||||||
Total costs and expenses | 15,926 | 33,543 | |||||||
Operating income | 8,746 | 17,698 | |||||||
Interest expense, net | 1,307 | 2,606 | |||||||
Income before income tax expense | 7,439 | 15,092 | |||||||
Income tax expense | 2,174 | 3,297 | |||||||
Net income | $ 5,265 | $ 11,795 | |||||||
Basic (in usd per share) | $ 0.18 | $ 0.41 | |||||||
Diluted (in usd per share) | $ 0.18 | $ 0.40 | |||||||
Depreciation and amortization | $ 1,526 | ||||||||
Deferred income taxes | (149) | ||||||||
Stock-based compensation expense | 541 | ||||||||
Amortization of debt issuance costs | 146 | ||||||||
Accounts receivable | (619) | ||||||||
Prepaid expenses and other assets | (568) | ||||||||
Advertising fund assets and liabilities, net | 0 | ||||||||
Accounts payable and other current liabilities | (2,281) | ||||||||
Deferred revenue | 378 | ||||||||
Other non-current liabilities | (83) | ||||||||
Cash provided by operating activities | 10,686 | ||||||||
Purchases of property and equipment | (1,301) | ||||||||
Cash used in investing activities | (1,301) | ||||||||
Proceeds from exercise of stock options | 1,062 | ||||||||
Repayments of long-term debt | (9,750) | ||||||||
Cash used in financing activities | (8,688) | ||||||||
Net change in cash, cash equivalents, and restricted cash | 697 | ||||||||
Cash, cash equivalents, and restricted cash at beginning of period | 3,750 | ||||||||
Cash, cash equivalents, and restricted cash at end of period | $ 4,447 | $ 4,447 | |||||||
Scenario, Previously Reported [Member] | Customer Relationships [Member] | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Customer relationships, net | $ 15,567 | ||||||||
[1] | Cost of sales excludes depreciation and amortization, which are presented separately, and includes advertising expenses incurred at company-owned restaurants. |
Earnings per Share (Details)
Earnings per Share (Details) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Basic weighted average shares outstanding | 29,230 | 29,032 | 29,173 | 28,964 |
Dilutive shares | 298 | 362 | 336 | 397 |
Diluted weighted average shares outstanding | 29,528 | 29,394 | 29,509 | 29,361 |
Employee Stock Option [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share, amount | 2 | 3 | 13 | 20 |
Dividends (Details)
Dividends (Details) - USD ($) $ / shares in Units, $ in Thousands | Aug. 02, 2018 | Feb. 14, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 |
Dividends Payable [Line Items] | |||||||
Common Stock, Dividends, Per Share, Cash Paid | $ 3.17 | $ 0.07 | $ 0.07 | $ 0 | $ 3.31 | $ 0 | |
Dividends paid | $ (92,740) | $ (96,854) | $ 0 | ||||
Quarterly Dividend [Member] | |||||||
Dividends Payable [Line Items] | |||||||
Common Stock, Dividends, Per Share, Cash Paid | $ 0.14 | ||||||
Dividends paid | $ (4,200) | ||||||
Subsequent Event [Member] | |||||||
Dividends Payable [Line Items] | |||||||
Common Stock, Dividends, Per Share, Declared | $ 0.09 | ||||||
Dividends Payable, Current | $ 2,600 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Nonrecurring - Level 2 - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 30, 2017 |
Reported Value Measurement [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Senior Secured Term Loan Facility | $ 97,500 | $ 64,750 |
Senior Secured Revolving Credit Facility | 122,608 | 69,000 |
Estimate of Fair Value Measurement [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Senior Secured Term Loan Facility | 97,500 | 64,750 |
Senior Secured Revolving Credit Facility | $ 122,608 | $ 69,000 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | Dec. 30, 2017 | |
Income Tax Disclosure [Abstract] | |||||
Income tax expense | $ 745 | $ 1,972 | $ 2,407 | $ 2,941 | |
Effective income tax rate | 9.80% | 28.70% | 15.60% | 20.90% | |
Excess Tax Benefit from Share-based Compensation | $ 1,200 | $ 700 | $ 1,500 | $ 2,400 | |
Federal Statutory Income Tax Rate, Percent | 21.00% | 35.00% |
Debt Obligations - Senior Secur
Debt Obligations - Senior Secured Credit Facility (Details) - USD ($) | Feb. 14, 2018 | Jan. 30, 2018 | Jun. 30, 2018 | Jul. 01, 2017 |
Debt Instrument [Line Items] | ||||
Dividends paid | $ 92,740,000 | $ 96,854,000 | $ 0 | |
Debt instrument, interest rate, end of period | 4.59% | |||
Debt Issuance, Accounted for as a Modification | $ 202,500,000 | |||
Debt Issuance, Accounted for as New Debt | 47,500,000 | |||
Payments of Debt Issuance Costs | 1,000,000 | |||
Debt Related Commitment Fees and Debt Issuance Costs | 200,000 | |||
Debt Issuance Costs, Gross | 800,000 | |||
Secured Debt [Member] | ||||
Debt Instrument [Line Items] | ||||
Long-term Line of Credit | 100,000,000 | $ 97,500,000 | ||
Repayments of Lines of Credit | (133,800,000) | |||
Repayments of Secured Debt | (2,500,000) | |||
Revolving Credit Facility [Member] | ||||
Debt Instrument [Line Items] | ||||
Line of Credit Facility, Current Borrowing Capacity | $ 150,000,000 | |||
Long-term Line of Credit | 122,600,000 | |||
Repayments of Lines of Credit | $ (7,500,000) | |||
Minimum [Member] | Base Rate [Member] | Secured Debt [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt Instrument, Basis Spread on Variable Rate | 0.75% | |||
Minimum [Member] | London Interbank Offered Rate (LIBOR) [Member] | Secured Debt [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt Instrument, Basis Spread on Variable Rate | 1.75% | |||
Maximum [Member] | Base Rate [Member] | Secured Debt [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt Instrument, Basis Spread on Variable Rate | 1.75% | |||
Maximum [Member] | London Interbank Offered Rate (LIBOR) [Member] | Secured Debt [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt Instrument, Basis Spread on Variable Rate | 2.75% |
Debt Obligations Debt Obligat35
Debt Obligations Debt Obligations - Schedule of Maturities (Details) $ in Thousands | Jun. 30, 2018USD ($) |
Debt Disclosure [Abstract] | |
Remainder of fiscal year 2018 | $ 2,500 |
Fiscal year 2019 | 3,750 |
Fiscal year 2020 | 5,000 |
Fiscal year 2021 | 5,000 |
Fiscal year 2022 | 6,250 |
Fiscal year 2023 | 197,608 |
Total | $ 220,108 |
Commitments and Contingencies36
Commitments and Contingencies (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2018 | Jul. 01, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Remainder of fiscal year 2018 | $ 956 | |
Fiscal year 2019 | 1,824 | |
Fiscal year 2020 | 1,700 | |
Fiscal year 2021 | 1,547 | |
Fiscal year 2022 | 1,494 | |
Fiscal year 2023 | 1,296 | |
Thereafter | 4,121 | |
Total | 12,938 | |
Rent expense | $ 561 | $ 489 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Option Plan (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Grant date fair value of stock options, vested | $ 0.5 |
Intrinsic value of stock options | 6.3 |
Stock-based compensation expense, unrecognized | $ 0.6 |
Employee Stock Option [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Stock-based compensation expense, recognition period | 1 year 4 months 13 days |
Additional Paid-in Capital [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Stock-based compensation expense | $ 1.3 |
Stock-Based Compensation - Sche
Stock-Based Compensation - Schedule of Stock Option Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||
Stock options outstanding (in shares) | 420 | |
Stock options granted (in shares) | 2 | |
Stock options exercised | (136) | |
Stock options forfeited (in shares) | (27) | |
Stock options outstanding (in shares) | 259 | 420 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | ||
Stock options outstanding, weighted average exercise price, beginning of period (in usd per share) | $ 5.45 | |
Stock options granted, weighted average exercise price (in usd per share) | 44.03 | |
Stock options exercised, weighted average exercise price (in usd per share) | 3.34 | |
Stock options forfeited, weighted average exercise price (in usd per share) | 6.68 | |
Stock options outstanding, weighted average exercise price, end of period (in usd per share) | $ 5.88 | $ 5.45 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract] | ||
Stock options outstanding, aggregate intrinsic value, beginning of period | $ 14,068 | |
Stock options outstanding, aggregate intrinsic value, end of period | $ 11,963 | $ 14,068 |
Stock options outstanding, weighted average remaining term | 5 years 3 months 11 days | 5 years 8 months 12 days |
Stock-Based Compensation Stock-
Stock-Based Compensation Stock-Based Compentsation - Schedule of Restricted Stock Units Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Dec. 30, 2017 | |
Restricted Stock Units (RSUs) [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Restricted stock units and performance stock units outstanding (in shares) | 113 | 94 |
Restricted stock units and performance stock units granted (in shares) | 59 | |
Restricted stock units and performance stock units released (in shares) | (28) | |
Restricted stock units and performance stock units canceled (in shares) | (12) | |
Restricted stock units and performance stock units outstanding, weighted average grant date fair value (in usd per share) | $ 36.07 | $ 27.11 |
Restricted stock units and performance stock units granted, weighted average grant date fair value (in usd per share) | 44.25 | |
Restricted stock units and performance stock units released, weighted average grant date fair value (in usd per share) | 26.74 | |
Restricted stock units and performance stock units canceled, weighted average grant date fair value (in usd per share) | $ 27.83 | |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Share-based Awards Other than Options | $ 3.5 | |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | 2 years 2 months 12 days | |
Performance Shares [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Restricted stock units and performance stock units outstanding (in shares) | 119 | 86 |
Restricted stock units and performance stock units granted (in shares) | 54 | |
Restricted stock units and performance stock units released (in shares) | (14) | |
Restricted stock units and performance stock units canceled (in shares) | (7) | |
Restricted stock units and performance stock units outstanding, weighted average grant date fair value (in usd per share) | $ 38.31 | $ 27.63 |
Restricted stock units and performance stock units granted, weighted average grant date fair value (in usd per share) | 44.27 | |
Restricted stock units and performance stock units released, weighted average grant date fair value (in usd per share) | 26.25 | |
Restricted stock units and performance stock units canceled, weighted average grant date fair value (in usd per share) | $ 26.30 | |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Share-based Awards Other than Options | $ 4.1 | |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | 2 years 11 days | |
Share-based Compensation Arrangement by Share-based Payment Award, Plan Modification, Incremental Compensation Cost | $ 0.9 | |
Performance Shares [Member] | Minimum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage | 0.00% | |
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 1 year | |
Performance Shares [Member] | Maximum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage | 100.00% | |
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 3 years | |
Restricted Stock [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Share-based Awards Other than Options | $ 0.5 | |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | 2 years 1 month 10 days |
Business Segments Business Segm
Business Segments Business Segments - Restaurant Counts (Details) | Jun. 30, 2018restaurantcountry | Jul. 01, 2017restaurant |
Franchised Units | ||
Franchisor Disclosure [Line Items] | ||
Number of Restaurants | 1,162 | 1,035 |
Entity Operated Units | ||
Franchisor Disclosure [Line Items] | ||
Number of Restaurants | 26 | 21 |
Non-US | Franchised Units | ||
Franchisor Disclosure [Line Items] | ||
Number of Restaurants | 122 | |
Number of Countries in which Entity Operates | country | 9 |
Business Segments (Details)
Business Segments (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | ||
Segment Reporting Information [Line Items] | |||||
Franchise segment | $ 17,204 | $ 15,267 | $ 34,985 | $ 32,863 | |
Company segment | 11,478 | 8,845 | 22,481 | 17,391 | |
Total revenue | 37,037 | 31,578 | 74,426 | 64,988 | |
Operating income | 9,926 | 8,186 | 19,492 | 16,711 | |
Interest expense, net | 2,342 | 1,307 | 4,078 | 2,606 | |
Income before taxes | 7,584 | 6,879 | 15,414 | 14,105 | |
Operating Segments [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Total revenue | 37,037 | 31,578 | 74,426 | 64,988 | |
Operating income | 9,926 | 8,186 | 20,954 | 16,711 | |
Corporate, Non-Segment [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Corporate and other | [1] | 0 | 0 | 1,462 | 0 |
Segment Reconciling Items [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Interest expense, net | 2,342 | 1,307 | 4,078 | 2,606 | |
Franchise Segment [Member] | Operating Segments [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Franchise segment | 25,559 | 22,733 | 51,945 | 47,597 | |
Operating income | 7,175 | 7,108 | 15,562 | 14,554 | |
Company Segment [Member] | Operating Segments [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Company segment | 11,478 | 8,845 | 22,481 | 17,391 | |
Operating income | $ 2,751 | $ 1,078 | $ 5,392 | $ 2,157 | |
[1] | Corporate and other includes corporate related items not allocated to reportable segments and consists primarily of expenses associated with the refinancing of the 2016 Facility and payment of a special dividend. |
Restaurant Acquisition (Details
Restaurant Acquisition (Details) $ in Thousands | May 01, 2018USD ($)restaurant | Apr. 16, 2018USD ($)restaurant | Feb. 19, 2018USD ($)restaurant | Jun. 30, 2018USD ($) | Jul. 01, 2017USD ($) | Dec. 30, 2017USD ($) |
Business Acquisition [Line Items] | ||||||
Number of Restaurants Acquired from a Franchisee | restaurant | 1 | 1 | 1 | |||
Acquisition of restaurant from franchisee | $ 2,200 | $ 1,900 | $ 1,900 | $ 5,996 | $ 0 | |
Business Acquisition, Goodwill, Expected Tax Deductible Amount | 3,100 | |||||
Working capital | 7 | 20 | 4 | |||
Property and equipment | 28 | 160 | 26 | |||
Reacquired franchise rights | 887 | 1,277 | 541 | |||
Goodwill | 1,309 | 458 | 1,331 | $ 49,655 | $ 46,557 | |
Gift card liability | 0 | 0 | (2) | |||
Total purchase price | $ 2,231 | $ 1,915 | $ 1,900 |