Cover
Cover - shares | 6 Months Ended | |
Jun. 26, 2021 | Jul. 27, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 26, 2021 | |
Document Transition Report | false | |
Entity File Number | 001-37425 | |
Entity Registrant Name | WINGSTOP INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 47-3494862 | |
Entity Address, Address Line One | 15505 Wright Brothers Drive | |
Entity Address, City or Town | Addison | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 75001 | |
City Area Code | 972 | |
Local Phone Number | 686-6500 | |
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Trading Symbol | WING | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding (in shares) | 29,745,482 | |
Entity Central Index Key | 0001636222 | |
Current Fiscal Year End Date | --12-25 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 26, 2021 | Dec. 26, 2020 |
Current assets | ||
Cash and cash equivalents | $ 43,504 | $ 40,858 |
Restricted cash | 4,657 | 4,815 |
Accounts receivable, net | 5,854 | 4,929 |
Prepaid expenses and other current assets | 9,132 | 5,532 |
Advertising fund assets, restricted | 21,561 | 16,486 |
Total current assets | 84,708 | 72,620 |
Property and equipment, net | 39,598 | 27,948 |
Goodwill | 53,690 | 53,690 |
Trademarks | 32,700 | 32,700 |
Customer relationships, net | 10,951 | 11,600 |
Other non-current assets | 12,617 | 13,007 |
Total assets | 234,264 | 211,565 |
Current liabilities | ||
Accounts payable | 3,812 | 3,658 |
Other current liabilities | 25,072 | 26,729 |
Current portion of debt | 1,200 | 3,600 |
Advertising fund liabilities | 21,561 | 16,486 |
Total current liabilities | 51,645 | 50,473 |
Long-term debt, net | 468,774 | 466,933 |
Deferred revenues, net of current | 26,156 | 24,962 |
Deferred income tax liabilities, net | 5,416 | 4,480 |
Other non-current liabilities | 4,516 | 6,027 |
Total liabilities | 556,507 | 552,875 |
Commitments and contingencies | ||
Stockholders' deficit | ||
Common stock, $0.01 par value; 100,000,000 shares authorized; 29,743,375 and 29,687,123 shares issued and outstanding as of June 26, 2021 and December 26, 2020, respectively | 298 | 297 |
Additional paid-in-capital | 594 | 421 |
Retained deficit | (323,026) | (342,028) |
Accumulated other comprehensive loss | (109) | 0 |
Total stockholders' deficit | (322,243) | (341,310) |
Total liabilities and stockholders' deficit | $ 234,264 | $ 211,565 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 26, 2021 | Dec. 26, 2020 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in USD per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 29,743,375 | 29,687,123 |
Common stock, shares outstanding (in shares) | 29,743,375 | 29,687,123 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 26, 2021 | Jun. 27, 2020 | Jun. 26, 2021 | Jun. 27, 2020 | ||
Revenue: | |||||
Advertising fees | $ 22,577 | $ 19,923 | $ 44,097 | $ 35,937 | |
Total revenue | 74,000 | 66,105 | 144,690 | 121,541 | |
Costs and expenses: | |||||
Cost of sales | [1] | 14,207 | 13,387 | 27,486 | 24,563 |
Advertising expenses | 23,301 | 20,424 | 45,328 | 37,420 | |
Selling, general and administrative | 16,066 | 13,375 | 29,852 | 25,613 | |
Depreciation and amortization | 1,523 | 1,398 | 3,318 | 2,953 | |
Gain on sale of restaurants and other expenses, net | 0 | (2,016) | 0 | (2,016) | |
Total costs and expenses | 55,097 | 46,568 | 105,984 | 88,533 | |
Operating income | 18,903 | 19,537 | 38,706 | 33,008 | |
Interest expense, net | 3,724 | 4,214 | 7,506 | 8,359 | |
Income before income tax expense | 15,179 | 15,323 | 31,200 | 24,649 | |
Income tax expense | 3,867 | 3,784 | 6,728 | 5,014 | |
Net income | $ 11,312 | $ 11,539 | $ 24,472 | $ 19,635 | |
Earnings per share | |||||
Basic (in USD per share) | $ 0.38 | $ 0.39 | $ 0.82 | $ 0.66 | |
Diluted (in USD per share) | $ 0.38 | $ 0.39 | $ 0.82 | $ 0.66 | |
Weighted average shares outstanding | |||||
Basic (in shares) | 29,739 | 29,588 | 29,722 | 29,538 | |
Diluted (in shares) | 29,873 | 29,793 | 29,859 | 29,751 | |
Dividends per share (in USD per share) | $ 0.14 | $ 0.11 | $ 0.28 | $ 0.22 | |
Other comprehensive income (loss) | |||||
Currency translation adjustment | $ (109) | $ 0 | $ (109) | $ 0 | |
Other comprehensive income (loss) | (109) | 0 | (109) | 0 | |
Comprehensive income | 11,203 | 11,539 | 24,363 | 19,635 | |
Royalty revenue, franchise fees and other | |||||
Revenue: | |||||
Royalty revenue, franchise fees and other | 33,135 | 27,858 | 64,741 | 52,057 | |
Company-owned restaurant sales | |||||
Revenue: | |||||
Total revenue | $ 18,288 | $ 18,324 | $ 35,852 | $ 33,547 | |
[1] | Cost of sales includes all operating expenses of company-owned restaurants, including advertising expenses, and excludes depreciation and amortization, which are presented separately. |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Deficit - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Retained Deficit | Accumulated Other Comprehensive Loss |
Balance at beginning of period (in shares) at Dec. 28, 2019 | 29,457,228 | ||||
Balance at beginning of period at Dec. 28, 2019 | $ (209,428) | $ 295 | $ 552 | $ (210,275) | $ 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 8,096 | 8,096 | |||
Shares issued under stock plans (in shares) | 128,585 | ||||
Shares issued under stock plans | 505 | $ 1 | 504 | ||
Tax payments for restricted stock upon vesting (in shares) | (2,419) | ||||
Tax payments for restricted stock upon vesting | (229) | (229) | |||
Stock-based compensation expense | 1,331 | 1,331 | |||
Dividends declared on common stock and equivalents | (3,223) | (2,168) | (1,055) | ||
Balance at end of period (in shares) at Mar. 28, 2020 | 29,583,394 | ||||
Balance at end of period at Mar. 28, 2020 | (202,948) | $ 296 | 219 | (203,463) | 0 |
Balance at beginning of period (in shares) at Dec. 28, 2019 | 29,457,228 | ||||
Balance at beginning of period at Dec. 28, 2019 | (209,428) | $ 295 | 552 | (210,275) | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 19,635 | ||||
Currency translation adjustment | 0 | ||||
Balance at end of period (in shares) at Jun. 27, 2020 | 29,596,347 | ||||
Balance at end of period at Jun. 27, 2020 | (192,672) | $ 296 | 43 | (193,011) | 0 |
Balance at beginning of period (in shares) at Mar. 28, 2020 | 29,583,394 | ||||
Balance at beginning of period at Mar. 28, 2020 | (202,948) | $ 296 | 219 | (203,463) | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 11,539 | 11,539 | |||
Shares issued under stock plans (in shares) | 13,057 | ||||
Shares issued under stock plans | 57 | $ 0 | 57 | ||
Tax payments for restricted stock upon vesting (in shares) | (104) | ||||
Tax payments for restricted stock upon vesting | (12) | (12) | |||
Stock-based compensation expense | 1,969 | 1,969 | |||
Dividends declared on common stock and equivalents | (3,277) | (2,202) | (1,075) | ||
Currency translation adjustment | 0 | ||||
Balance at end of period (in shares) at Jun. 27, 2020 | 29,596,347 | ||||
Balance at end of period at Jun. 27, 2020 | $ (192,672) | $ 296 | 43 | (193,011) | 0 |
Balance at beginning of period (in shares) at Dec. 26, 2020 | 29,687,123 | 29,687,123 | |||
Balance at beginning of period at Dec. 26, 2020 | $ (341,310) | $ 297 | 421 | (342,028) | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 13,160 | 13,160 | |||
Shares issued under stock plans (in shares) | 60,958 | ||||
Shares issued under stock plans | 156 | $ 1 | 155 | ||
Tax payments for restricted stock upon vesting (in shares) | (11,243) | ||||
Tax payments for restricted stock upon vesting | (1,862) | (1,862) | |||
Stock-based compensation expense | 2,316 | 2,316 | |||
Dividends declared on common stock and equivalents | (4,188) | (2,866) | (1,322) | ||
Balance at end of period (in shares) at Mar. 27, 2021 | 29,736,838 | ||||
Balance at end of period at Mar. 27, 2021 | $ (331,728) | $ 298 | 26 | (332,052) | 0 |
Balance at beginning of period (in shares) at Dec. 26, 2020 | 29,687,123 | 29,687,123 | |||
Balance at beginning of period at Dec. 26, 2020 | $ (341,310) | $ 297 | 421 | (342,028) | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 24,472 | ||||
Currency translation adjustment | $ (109) | ||||
Balance at end of period (in shares) at Jun. 26, 2021 | 29,743,375 | 29,743,375 | |||
Balance at end of period at Jun. 26, 2021 | $ (322,243) | $ 298 | 594 | (323,026) | (109) |
Balance at beginning of period (in shares) at Mar. 27, 2021 | 29,736,838 | ||||
Balance at beginning of period at Mar. 27, 2021 | (331,728) | $ 298 | 26 | (332,052) | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 11,312 | 11,312 | |||
Shares issued under stock plans (in shares) | 6,613 | ||||
Shares issued under stock plans | 0 | 0 | |||
Tax payments for restricted stock upon vesting (in shares) | (76) | ||||
Tax payments for restricted stock upon vesting | (11) | (11) | |||
Stock-based compensation expense | 2,456 | 2,456 | |||
Dividends declared on common stock and equivalents | (4,163) | (1,888) | (2,275) | ||
Currency translation adjustment | $ (109) | (109) | |||
Balance at end of period (in shares) at Jun. 26, 2021 | 29,743,375 | 29,743,375 | |||
Balance at end of period at Jun. 26, 2021 | $ (322,243) | $ 298 | $ 594 | $ (323,026) | $ (109) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 26, 2021 | Jun. 27, 2020 | |
Operating activities | ||
Net income | $ 24,472 | $ 19,635 |
Adjustments to reconcile net income to cash provided by operating activities: | ||
Depreciation and amortization | 3,318 | 2,953 |
Deferred income taxes | 936 | 1,720 |
Stock-based compensation expense | 4,772 | 3,300 |
(Gain)/Loss on disposal of assets | 0 | (2,016) |
Amortization of debt issuance costs | 711 | 815 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (925) | (405) |
Prepaid expenses and other assets | (2,217) | (652) |
Advertising fund assets and liabilities, net | 4,897 | 2,004 |
Accounts payable and other current liabilities | (5,231) | (675) |
Deferred revenue | 1,315 | 10 |
Other non-current liabilities | (436) | (1,077) |
Cash provided by operating activities | 31,612 | 25,612 |
Investing activities | ||
Purchases of property and equipment | (8,258) | (2,670) |
Proceeds from sales of assets | 0 | 2,300 |
Payments for investments (Note 6) | (4,163) | 0 |
Cash used in investing activities | (12,421) | (370) |
Financing activities | ||
Proceeds from exercise of stock options | 156 | 562 |
Borrowings of long-term debt | 0 | 16,000 |
Repayments of long-term debt | (1,200) | (800) |
Tax payments for restricted stock upon vesting | (1,873) | (241) |
Dividends paid | (8,889) | (6,500) |
Cash provided by (used in) financing activities | (11,806) | 9,021 |
Net increase in cash, cash equivalents, and restricted cash | 7,385 | 34,263 |
Cash, cash equivalents, and restricted cash at beginning of period | 59,270 | 21,175 |
Cash, cash equivalents, and restricted cash at end of period | 66,655 | 55,438 |
Supplemental information: | ||
Accrued capital expenditures | $ 6,325 | $ 0 |
Basis of Presentation and Updat
Basis of Presentation and Update to Significant Accounting Policies | 6 Months Ended |
Jun. 26, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Update to Significant Accounting Policies | Basis of Presentation and Update to Significant Accounting Policies Nature of operations. Wingstop Inc., together with its consolidated subsidiaries (collectively, “Wingstop” or the “Company”), is in the business of franchising and operating Wingstop restaurants. As of June 26, 2021, the Company had 1,415 domestic franchised restaurants and 175 international franchised restaurants. As of June 26, 2021, the Company owned and operated 34 restaurants. Basis of presentation. 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 (“GAAP”) have been condensed or omitted. Balance sheet amounts are as of June 26, 2021 and December 26, 2020, and operating results are for the thirteen and twenty-six weeks ended June 26, 2021 and June 27, 2020. The foreign currency translation adjustment included in the Consolidated Statements of Comprehensive Income represents the unrealized impact of translating our foreign investment. This amount is not included in Net Income and would only be realized upon disposition of our investment. The related Accumulated other comprehensive loss is presented in the Consolidated Balance Sheets. 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 26, 2020. Fiscal year. The Company uses a 52/53-week fiscal year that ends on the last Saturday of the calendar year. Fiscal years 2021 and 2020 each have 52 weeks. Cash, Cash Equivalents, and Restricted Cash. Cash, cash equivalents, and restricted cash within the Consolidated Balance Sheets and the Consolidated Statements of Cash Flows as of June 26, 2021 and December 26, 2020 were as follows (in thousands): June 26, 2021 December 26, 2020 Cash and cash equivalents $ 43,504 $ 40,858 Restricted cash 4,657 4,815 Restricted cash, included in Advertising fund assets, restricted 18,494 13,597 Total cash, cash equivalents, and restricted cash $ 66,655 $ 59,270 Change in presentation. Beginning in the first quarter of 2021, headcount related expenses that support our national advertising fund are presented within “Advertising expenses” on the Consolidated Statements of Comprehensive Income. Prior to the first quarter of 2021, these expenses were presented within “Selling, general and administrative expenses.” Prior period amounts have been reclassified to conform to the current presentation. This reclassification had no impact on operating income, balance sheets or statements of cash flows. Headcount related expenses associated with the national advertising fund were $1.9 million and $1.8 million for the thirteen weeks ended June 26, 2021 and June 27, 2020, respectively, and were $4.0 million and $3.9 million for the twenty-six weeks ended June 26, 2021 and June 27, 2020, respectively. Recently issued accounting pronouncements. We reviewed all recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact on our consolidated financial statements. |
Earnings per Share
Earnings per Share | 6 Months Ended |
Jun. 26, 2021 | |
Earnings Per Share [Abstract] | |
Earnings per Share | Earnings per ShareBasic earnings per share is computed by dividing income available to common stockholders by the weighted average number of shares of common stock outstanding for the reporting period. Diluted earnings per share reflects the potential dilution that could occur if securities convertible into, 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 the exercise and vesting of stock options and restricted stock units, respectively, as 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 26, June 27, June 26, June 27, Basic weighted average shares outstanding 29,739 29,588 29,722 29,538 Dilutive shares 134 205 137 213 Diluted weighted average shares outstanding 29,873 29,793 29,859 29,751 For the thirteen weeks ended June 26, 2021 and June 27, 2020, equity awards representing approximately 8,000 and 1,000 shares, respectively, were excluded from the dilutive earnings per share calculation because the effect would have been anti-dilutive. |
Dividends
Dividends | 6 Months Ended |
Jun. 26, 2021 | |
Dividends [Abstract] | |
Dividends | DividendsIn each of the first two quarters of 2021, the Company’s Board of Directors declared a quarterly dividend of $0.14 per share of common stock, which, in the aggregate, totaled $8.4 million, or $0.28 per share of common stock, and which was paid during the twenty-six weeks ended June 26, 2021.Subsequent to the second quarter, on July 27, 2021, the Company’s Board of Directors declared a quarterly dividend of $0.17 per share of common stock for stockholders of record as of August 13, 2021. The regular quarterly dividend is to be paid on September 3, 2021, totaling approximately $5.1 million. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 26, 2021 | |
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 26, 2021 December 26, 2020 Carrying Value Fair Value Carrying Value Fair Value Securitized Financing Facility: 2020-1 Class A-2 Senior Secured Notes (1) Level 2 $ 478,800 $ 488,826 $ 480,000 $ 483,365 (1) The fair value of the 2020-1 Class A-2 Senior Secured Notes was estimated using available market information. The Company also measures certain non-financial assets (primarily long-lived assets, intangible assets, and goodwill) at fair value on a non-recurring basis in connection with its periodic evaluations of such assets for potential impairment. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 26, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Income tax expense and the effective tax rate were $3.9 million and 25.5%, respectively, for the thirteen weeks ended June 26, 2021, and $3.8 million and 24.7%, respectively, for the thirteen weeks ended June 27, 2020. Income tax expense and the effective tax rate were $6.7 million and 21.6%, respectively, for the twenty-six weeks ended June 26, 2021, and $5.0 million and 20.3%, respectively, for the twenty-six weeks ended June 27, 2020. Income tax expense for the thirteen and twenty-six weeks ended June 26, 2021 included $0.1 million and $1.5 million, respectively, in tax benefits resulting from the recognition of excess tax benefits from stock-based compensation, as compared to $0.2 million and $1.5 million in tax benefits for the thirteen and twenty-six weeks ended June 27, 2020, respectively. |
Investments
Investments | 6 Months Ended |
Jun. 26, 2021 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Investments | Investments In the second quarter of 2021, a wholly-owned subsidiary of the Company acquired a 20% non-controlling interest in Wingstop’s United Kingdom master franchisee , Lemon Pepper Holdings Ltd., (“LPH”) for an aggregate amount of $4.2 million. Substantially all of the investment consisted of bonds issued by a subsidiary of LPH, which do not have a readily determinable fair value and are recorded at cost with adjustments for observable changes in prices resulting from orderly transactions for the identical or a similar investment of the same issuer or impairments within long-term other assets in the Company’s consolidated balance sheet. In addition, the Company received 20% of the outstanding stock, which will be accounted for using the equity method of accounting, under which the Company’s share of the income (loss) of the investee will be recorded in our results of operations in “Other operating income, net.” The Company did not record any adjustments to the carrying amount of $4.2 million in the second quarter ended June 26, 2021 |
Debt Obligations
Debt Obligations | 6 Months Ended |
Jun. 26, 2021 | |
Debt Disclosure [Abstract] | |
Debt Obligations | Debt Obligations Long-term debt consisted of the following components (in thousands): June 26, 2021 December 26, 2020 2020-1 Class A-2 Senior Secured Notes $ 478,800 $ 480,000 Debt issuance costs, net of amortization (8,826) (9,467) Total debt 469,974 470,533 Less: current portion of debt (1,200) (3,600) Long-term debt, net $ 468,774 $ 466,933 The Company’s outstanding debt consists of (i) Series 2020-1 2.84% Fixed Rate Senior Secured Notes, Class A-2 (the “2020 Class A-2 Notes”) issued by Wingstop Funding LLC (the “Issuer”), a limited-purpose, bankruptcy-remote, wholly owned indirect subsidiary of Wingstop Inc. and (ii) Series 2020-1 Variable Funding Senior Notes, Class A-1 (the “2020 Variable Funding Notes” and together with the Class A-2 Notes, the “2020 Notes”), which permit borrowings of up to a maximum principal amount of $50 million which may be used to borrow amounts on a revolving basis and to issue letters of credit. As of June 26, 2021 and December 26, 2020, the Company had $478.8 million and $480.0 million of 2020 Class A-2 Notes outstanding, respectively. There were no borrowings outstanding under the 2020 Variable Funding Notes as of June 26, 2021 and December 26, 2020. Further, as of June 26, 2021 and December 26, 2020, $3.5 million and $4.9 million, respectively, of letters of credit were outstanding against the 2020 Variable Funding Notes, which relate primarily to interest reserves required under the base indenture and related supplemental indenture. There were no amounts drawn down on the letters of credit as of June 26, 2021 or December 26, 2020. As of June 26, 2021, the Company’s leverage ratio under the Class A-2 Notes was less than 5.0x. Per the terms of the Company’s debt agreements, principal payments can be suspended at the borrower’s election until the repayment date as long as the Company maintains a leverage ratio of less than 5.0x. Accordingly, the Company expects to suspend payments following the principal payment due in the third quarter, and the remaining outstanding balance of the Class A-2 notes has been classified as long-term debt. The 2020 Notes were issued in a securitization transaction pursuant to which certain of the Company’s domestic and foreign revenue-generating assets, consisting principally of franchise-related agreements and intellectual property, were contributed or otherwise transferred to the Issuer and certain other limited-purpose, bankruptcy-remote, wholly owned indirect subsidiaries of the Company that act as guarantors of the Notes and that have pledged substantially all of their assets. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 26, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and ContingenciesThe 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 such actions is not likely to 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. 26, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation During the twenty-six weeks ended June 26, 2021, the Company granted stock options to purchase 42,703 shares of common stock and 19,967 restricted stock units (“RSUs”) to certain employees. The stock options vest in equal annual amounts over a three-year period subsequent to the grant date, and have a maximum contractual term of ten years. The stock options were granted with a weighted-average exercise price of $129.11 per share and had a weighted-average grant-date fair value of $42.51 per share. The RSUs granted to certain employees generally vest in equal annual amounts over a three-year period, subsequent to the grant date and had a weighted-average grant-date fair value of $130.16 per unit. In addition, the Company granted 31,564 performance stock units (“PSUs”) to certain employees during the twenty-six weeks ended June 26, 2021. Of the total PSUs granted, 25,623 PSUs are subject to a service condition and a performance vesting condition based on return on incremental invested capital (“ROI PSUs”). The ROI PSUs are generally eligible to cliff-vest approximately three years from the grant date, and the maximum vesting percentage that could be realized for each of the ROI PSUs is 250% based on the level of performance achieved for the awards. The remaining 5,941 PSUs granted are subject to a service condition and a performance vesting condition based on the number of net new restaurants opened over the performance period (“NNR PSUs”). The NNR PSUs vest in equal annual amounts over a three-year period, and the maximum vesting percentage that could be realized for each of the NNR PSUs is 100% based on the level of performance achieved for the awards. The PSUs had a weighted-average grant-date fair value of $129.77 per unit. Total compensation cost for the PSUs is determined based on the most likely outcome of the performance condition and the number of awards expected to vest based on the outcome. Total compensation expense related to all share-based awards was $4.8 million and $3.3 million for the twenty-six weeks ended June 26, 2021 and June 27, 2020, respectively, and was included in Selling, general and administrative (“SG&A”) expense in the Consolidated Statements of Comprehensive Income. |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 6 Months Ended |
Jun. 26, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contracts with Customers | Revenue from Contracts with Customers The following table represents a disaggregation of revenue from contracts with customers for the thirteen and twenty-six weeks ended June 26, 2021 and June 27, 2020 (in thousands): Thirteen Weeks Ended Twenty-Six Weeks Ended June 26, 2021 June 27, 2020 June 26, 2021 June 27, 2020 Royalty revenue $ 30,414 $ 25,447 $ 59,223 $ 46,755 Advertising fees and related income 22,577 19,923 44,097 35,937 Franchise fees 864 881 2,060 1,763 |
Acquisitions and Refranchising
Acquisitions and Refranchising of Company-owned Restaurants | 6 Months Ended |
Jun. 26, 2021 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisitions and Refranchising of Company-owned Restaurants | Acquisitions and Refranchising of Company-owned Restaurants During the first fiscal quarter 2021, the Company entered into an arrangement to re-franchise six company-owned restaurants in the Colorado market for a total purchase price of approximately $6.7 million. This transaction is subject to customary closing conditions, and the Company expects the transaction to close in the third fiscal quarter 2021. The assets associated with these restaurants held for sale totaled $4.5 million and were included in Prepaid expenses and other current assets on the Consolidated Balance Sheet as of June 26, 2021. Subsequent to the end of second fiscal quarter 2021, the company acquired two existing restaurants from franchisees. The total purchase price was $3.9 million and was funded by cash flow from operations. The restaurant acquisitions will be accounted for as business combinations. The Company is still determining the estimated fair value of assets acquired and liabilities assumed. The excess of the purchase price over the aggregate fair value of assets acquired will be allocated to goodwill. The results of operations of these locations will be included in our Consolidated Statements of Comprehensive Income as of the respective dates of acquisition. |
Basis of Presentation and Upd_2
Basis of Presentation and Update to Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 26, 2021 | |
Accounting Policies [Abstract] | |
Fiscal Year | Fiscal year. The Company uses a 52/53-week fiscal year that ends on the last Saturday of the calendar year. Fiscal years 2021 and 2020 each have 52 weeks |
Recently Issued Accounting Pronouncements | Recently issued accounting pronouncements. We reviewed all recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact on our consolidated financial statements. |
Basis of Presentation and Upd_3
Basis of Presentation and Update to Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 26, 2021 | |
Accounting Policies [Abstract] | |
Schedule of Cash, Cash Equivalents, and Restricted Cash | Cash, cash equivalents, and restricted cash within the Consolidated Balance Sheets and the Consolidated Statements of Cash Flows as of June 26, 2021 and December 26, 2020 were as follows (in thousands): June 26, 2021 December 26, 2020 Cash and cash equivalents $ 43,504 $ 40,858 Restricted cash 4,657 4,815 Restricted cash, included in Advertising fund assets, restricted 18,494 13,597 Total cash, cash equivalents, and restricted cash $ 66,655 $ 59,270 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 6 Months Ended |
Jun. 26, 2021 | |
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 26, June 27, June 26, June 27, Basic weighted average shares outstanding 29,739 29,588 29,722 29,538 Dilutive shares 134 205 137 213 Diluted weighted average shares outstanding 29,873 29,793 29,859 29,751 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 26, 2021 | |
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 26, 2021 December 26, 2020 Carrying Value Fair Value Carrying Value Fair Value Securitized Financing Facility: 2020-1 Class A-2 Senior Secured Notes (1) Level 2 $ 478,800 $ 488,826 $ 480,000 $ 483,365 (1) The fair value of the 2020-1 Class A-2 Senior Secured Notes was estimated using available market information. |
Debt Obligations (Tables)
Debt Obligations (Tables) | 6 Months Ended |
Jun. 26, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | Long-term debt consisted of the following components (in thousands): June 26, 2021 December 26, 2020 2020-1 Class A-2 Senior Secured Notes $ 478,800 $ 480,000 Debt issuance costs, net of amortization (8,826) (9,467) Total debt 469,974 470,533 Less: current portion of debt (1,200) (3,600) Long-term debt, net $ 468,774 $ 466,933 |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (Tables) | 6 Months Ended |
Jun. 26, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue | The following table represents a disaggregation of revenue from contracts with customers for the thirteen and twenty-six weeks ended June 26, 2021 and June 27, 2020 (in thousands): Thirteen Weeks Ended Twenty-Six Weeks Ended June 26, 2021 June 27, 2020 June 26, 2021 June 27, 2020 Royalty revenue $ 30,414 $ 25,447 $ 59,223 $ 46,755 Advertising fees and related income 22,577 19,923 44,097 35,937 Franchise fees 864 881 2,060 1,763 |
Basis of Presentation and Upd_4
Basis of Presentation and Update to Significant Accounting Policies - Narrative (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 26, 2021USD ($)restaurant | Jun. 27, 2020USD ($) | Jun. 26, 2021USD ($)restaurant | Jun. 27, 2020USD ($) | |
Franchisor Disclosure [Line Items] | ||||
Advertising expenses | $ | $ 23,301 | $ 20,424 | $ 45,328 | $ 37,420 |
Lemmon Pepper Topco Ltd | ||||
Franchisor Disclosure [Line Items] | ||||
Proportionate equity interest (as a percent) | 20.00% | 20.00% | ||
Advertising | ||||
Franchisor Disclosure [Line Items] | ||||
Advertising expenses | $ | $ 1,900 | $ 1,800 | $ 4,000 | $ 3,900 |
Franchised Units | United States | ||||
Franchisor Disclosure [Line Items] | ||||
Number of Restaurants | 1,415 | 1,415 | ||
Franchised Units | Non-US | ||||
Franchisor Disclosure [Line Items] | ||||
Number of Restaurants | 175 | 175 | ||
Entity Operated Units | ||||
Franchisor Disclosure [Line Items] | ||||
Number of Restaurants | 34 | 34 |
Basis of Presentation and Upd_5
Basis of Presentation and Update to Significant Accounting Policies - Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Thousands | Jun. 26, 2021 | Dec. 26, 2020 | Jun. 27, 2020 | Dec. 28, 2019 |
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 43,504 | $ 40,858 | ||
Restricted cash | 4,657 | 4,815 | ||
Restricted cash, included in Advertising fund assets, restricted | 18,494 | 13,597 | ||
Total cash, cash equivalents, and restricted cash | $ 66,655 | $ 59,270 | $ 55,438 | $ 21,175 |
Earnings per Share (Details)
Earnings per Share (Details) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 26, 2021 | Jun. 27, 2020 | Jun. 26, 2021 | Jun. 27, 2020 | |
Earnings Per Share [Abstract] | ||||
Basic weighted average shares outstanding (in shares) | 29,739 | 29,588 | 29,722 | 29,538 |
Dilutive shares (in shares) | 134 | 205 | 137 | 213 |
Diluted weighted average shares outstanding (in shares) | 29,873 | 29,793 | 29,859 | 29,751 |
Equity awards outstanding (in shares) | 8 | 1 | 7 | 1 |
Dividends (Details)
Dividends (Details) - USD ($) $ / shares in Units, $ in Millions | Jul. 27, 2021 | Jun. 26, 2021 | Mar. 27, 2021 | Jun. 27, 2020 | Jun. 26, 2021 | Jun. 27, 2020 |
Dividends Payable [Line Items] | ||||||
Dividends paid per share (in USD per share) | $ 0.14 | $ 0.11 | $ 0.28 | $ 0.22 | ||
Subsequent Event | ||||||
Dividends Payable [Line Items] | ||||||
Dividends payable per share (in USD per share) | $ 0.17 | |||||
Dividends payable | $ 5.1 | |||||
Dividend Paid | ||||||
Dividends Payable [Line Items] | ||||||
Dividends paid per share (in USD per share) | $ 0.14 | $ 0.14 | $ 0.28 | |||
Dividends paid | $ (8.4) |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Level 2 - 2020-1 Class A-2 Senior Secured Notes - Nonrecurring - USD ($) $ in Thousands | Jun. 26, 2021 | Dec. 26, 2020 |
Carrying Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt instrument | $ 478,800 | $ 480,000 |
Fair Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt instrument | $ 488,826 | $ 483,365 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 26, 2021 | Jun. 27, 2020 | Jun. 26, 2021 | Jun. 27, 2020 | |
Income Tax Disclosure [Abstract] | ||||
Income tax expense | $ 3,867 | $ 3,784 | $ 6,728 | $ 5,014 |
Effective tax rate (as a percent) | 25.50% | 24.70% | 21.60% | 20.30% |
Excess tax benefit from stock-based compensation | $ 100 | $ 200 | $ 1,500 | $ 1,500 |
Investments (Details)
Investments (Details) $ in Millions | Jun. 26, 2021USD ($) |
Schedule of Equity Method Investments [Line Items] | |
Carrying amount | $ 4.2 |
Lemmon Pepper Topco Ltd | |
Schedule of Equity Method Investments [Line Items] | |
Proportionate equity interest (as a percent) | 20.00% |
Aggregate amount | $ 4.2 |
Debt Obligations - Components o
Debt Obligations - Components of Long-term Debt (Details) - USD ($) $ in Thousands | Jun. 26, 2021 | Dec. 26, 2020 |
Debt Instrument [Line Items] | ||
Debt issuance costs, net of amortization | $ (8,826) | $ (9,467) |
Total debt | 469,974 | 470,533 |
Less: current portion of debt | (1,200) | (3,600) |
Long-term debt, net | 468,774 | 466,933 |
2020-1 Class A-2 Senior Secured Notes | ||
Debt Instrument [Line Items] | ||
Gross debt | $ 478,800 | $ 480,000 |
Debt Obligations - Narrative (D
Debt Obligations - Narrative (Details) | Jun. 26, 2021USD ($) | Dec. 26, 2020USD ($) | Oct. 31, 2020USD ($) |
Debt Instrument [Line Items] | |||
Maximum borrowing capacity for line of credit | $ 50,000,000 | ||
Amount of debt drawn | $ 0 | $ 0 | |
Letter of Credit | |||
Debt Instrument [Line Items] | |||
Amount of debt drawn | 0 | 0 | |
Interest reserve | 3,500,000 | 4,900,000 | |
2020-1 Class A-2 Senior Secured Notes | |||
Debt Instrument [Line Items] | |||
Senior secured note fixed interest rate (as a percent) | 2.84% | ||
Debt outstanding | $ 478,800,000 | $ 480,000,000 | |
Leverage ratio | 5 |
Stock-Based Compensation - Narr
Stock-Based Compensation - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions | 6 Months Ended | |
Jun. 26, 2021 | Jun. 27, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | $ 4.8 | $ 3.3 |
Employee Stock Option | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Options granted (in shares) | 42,703 | |
Vesting period | 3 years | |
Contractual term | 10 years | |
Weighted average exercise price of options granted (in USD per share) | $ 129.11 | |
Weighted average grant date fair value of options granted (in USD per share) | $ 42.51 | |
Restricted Stock Units (RSUs) | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
RSUs granted (in shares) | 19,967 | |
Vesting period | 3 years | |
Weighted average grant date fair value of RSUs granted (in USD per share) | $ 130.16 | |
Performance Shares | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
RSUs granted (in shares) | 31,564 | |
Performance Shares | Share-based Payment Arrangement, Tranche One | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
RSUs granted (in shares) | 25,623 | |
Performance units, service period (in years) | 3 years | |
Performance Shares | PSUs based on operational targets | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
RSUs granted (in shares) | 5,941 | |
Performance units, service period (in years) | 3 years | |
Performance Shares | PSUs based on operational targets | Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
PSU vesting percentage | 250.00% | |
Performance Shares | Market-based vesting | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Weighted average grant date fair value of RSUs granted (in USD per share) | $ 129.77 | |
Performance Shares | Market-based vesting | Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
PSU vesting percentage | 100.00% |
Revenue from Contracts with C_3
Revenue from Contracts with Customers (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 26, 2021 | Jun. 27, 2020 | Jun. 26, 2021 | Jun. 27, 2020 | Dec. 26, 2020 | |
Disaggregation of Revenue [Line Items] | |||||
Average franchise license term | 10 years | 10 years | |||
Deferred revenue not yet being amortized | $ 9,900 | $ 9,900 | $ 9,800 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-06-27 | |||||
Disaggregation of Revenue [Line Items] | |||||
Remaining amortization period for deferred revenue related to open restaurants | 7 years 2 months 12 days | 7 years 2 months 12 days | |||
Royalty revenue | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue from customers | $ 30,414 | $ 25,447 | $ 59,223 | $ 46,755 | |
Advertising fees and related income | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue from customers | 22,577 | 19,923 | 44,097 | 35,937 | |
Franchise fees | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue from customers | $ 864 | $ 881 | $ 2,060 | $ 1,763 |
Acquisitions and Refranchisin_2
Acquisitions and Refranchising of Company-owned Restaurants - Narrative (Details) $ in Millions | 3 Months Ended | 6 Months Ended | |
Jun. 26, 2021USD ($)restaurant | Mar. 27, 2021USD ($)restaurant | Jun. 26, 2021USD ($) | |
Existing Restaurants from Franchisees | |||
Business Acquisition [Line Items] | |||
Acquisitions of restaurants from franchisees | $ 3.9 | ||
Held-for-sale | Re-Franchised Company Owned Restaurants In Colorado | |||
Business Acquisition [Line Items] | |||
Purchase price of restaurants sold | $ 6.7 | ||
Held-for-sale | Re-Franchised Company Owned Restaurants In Colorado | Prepaid Expenses and Other Current Assets | |||
Business Acquisition [Line Items] | |||
Held for sale assets | $ 4.5 | $ 4.5 | |
Franchised Units | |||
Business Acquisition [Line Items] | |||
Number of restaurants re-franchised | restaurant | 6 | ||
Number of restaurants acquired | restaurant | 2 |