Cover Page
Cover Page - USD ($) $ in Billions | 12 Months Ended | ||
Jan. 02, 2022 | Mar. 04, 2022 | Jul. 04, 2021 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Jan. 2, 2022 | ||
Current Fiscal Year End Date | --01-02 | ||
Document Transition Report | false | ||
Entity File Number | 001-04321 | ||
Entity Registrant Name | Krispy Kreme, Inc. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 37-1701311 | ||
Entity Address, Address Line One | 2116 Hawkins Street | ||
Entity Address, City or Town | Charlotte | ||
Entity Address, State or Province | NC | ||
Entity Address, Postal Zip Code | 28203 | ||
City Area Code | 800 | ||
Local Phone Number | 457-4779 | ||
Title of 12(b) Security | Common stock, $0.01 par value per share | ||
Trading Symbol | DNUT | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 1.8 | ||
Entity Common Stock, Shares Outstanding | 167,250,855 | ||
Documents Incorporated by Reference | Portions of the definitive Proxy Statement for the registrant’s Annual Meeting of Shareholders to be held on May 17, 2022 have been incorporated by reference into Part III of this Annual Report on Form 10-K. | ||
Entity Central Index Key | 0001857154 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2021 | ||
Amendment Flag | false |
Audit Information
Audit Information | 12 Months Ended |
Jan. 02, 2022 | |
Audit Information [Abstract] | |
Auditor Name | GRANT THORNTON LLP |
Auditor Location | Denver, Colorado |
Auditor Firm ID | 248 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 02, 2022 | Jan. 03, 2021 | Dec. 29, 2019 | |
Total net revenues | $ 1,384,391 | $ 1,122,036 | $ 959,408 |
Product and distribution costs | 354,093 | 310,909 | 262,013 |
Operating expenses | 630,239 | 488,061 | 390,849 |
Selling, general and administrative expense | 222,394 | 182,317 | 161,452 |
Marketing expenses | 39,489 | 34,000 | 28,785 |
Pre-opening costs | 5,568 | 11,583 | 7,078 |
Other (income)/expenses, net | (10,102) | 10,488 | 7,465 |
Depreciation and amortization expense | 101,608 | 80,398 | 63,767 |
Operating income | 41,102 | 4,280 | 37,999 |
Interest expense, net | 32,622 | 34,741 | 38,085 |
Interest expense – related party | 10,387 | 22,468 | 21,947 |
Other non-operating expense/(income), net | 2,191 | (1,101) | (609) |
Loss before income taxes | (4,098) | (51,828) | (21,424) |
Income tax expense | 10,745 | 9,112 | 12,577 |
Net loss | (14,843) | (60,940) | (34,001) |
Net income attributable to noncontrolling interest | 9,663 | 3,361 | 3,408 |
Net loss attributable to Krispy Kreme, Inc. | $ (24,506) | $ (64,301) | $ (37,409) |
Net loss per share: | |||
Common stock — Basic (in dollars per share) | $ (0.18) | $ (0.52) | $ (0.30) |
Common stock — Diluted (in dollars per share) | $ (0.18) | $ (0.52) | $ (0.30) |
Weighted average shares outstanding: | |||
Basic (in shares) | 147,654,548 | 124,987,370 | 124,987,370 |
Diluted (in shares) | 147,654,548 | 124,987,370 | 124,987,370 |
Product sales | |||
Total net revenues | $ 1,353,466 | $ 1,085,110 | $ 912,805 |
Royalties and other revenues | |||
Total net revenues | $ 30,925 | $ 36,926 | $ 46,603 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income/(Loss) - USD ($) $ in Thousands | 12 Months Ended | |||
Jan. 02, 2022 | Jan. 03, 2021 | Dec. 29, 2019 | ||
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (14,843) | $ (60,940) | $ (34,001) | |
Other comprehensive (loss)/income: | ||||
Foreign currency translation adjustment, net of income taxes | [1] | (14,955) | 19,426 | 6,940 |
Unrealized income/(loss) on cash flow hedges, net of income taxes | [2] | 13,609 | (14,430) | (6,446) |
Unrealized loss on employee benefit plans | (338) | (106) | 0 | |
Total other comprehensive (loss)/income | (1,684) | 4,890 | 494 | |
Comprehensive loss | (16,527) | (56,050) | (33,507) | |
Net income attributable to noncontrolling interest | 9,663 | 3,361 | 3,408 | |
Foreign currency translation adjustment attributable to noncontrolling interest | (414) | 547 | 0 | |
Total comprehensive income attributable to noncontrolling interest | 9,249 | 3,908 | 3,408 | |
Comprehensive loss attributable to Krispy Kreme, Inc. | $ (25,776) | $ (59,958) | $ (36,915) | |
[1] | Net of income tax expense of $0.0 million, $0.0 million and ($0.8 million) for the fiscal years ended January 2, 2022, January 3, 2021, and December 29, 2019, respectively. | |||
[2] | Net of income tax (expense)/benefit of ($4.5 million), $4.8 million and $2.1 million for the fiscal years ended January 2, 2022, January 3, 2021, and December 29, 2019, respectively. |
Consolidated Statements of Co_2
Consolidated Statements of Comprehensive Income/(Loss) (Parenthetical) - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 02, 2022 | Jan. 03, 2021 | Dec. 29, 2019 | |
Statement of Comprehensive Income [Abstract] | |||
Foreign currency translation adjustment, tax | $ 0 | $ 0 | $ (0.8) |
Unrealized income/(loss) on cash flow hedges, income tax (expense)/benefit | $ (4.5) | $ 4.8 | $ 2.1 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jan. 02, 2022 | Jan. 03, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 38,562 | $ 37,460 |
Marketable securities | 0 | 1,048 |
Restricted cash | 630 | 23 |
Accounts receivable, net | 47,491 | 45,998 |
Inventories | 34,851 | 38,519 |
Taxes receivable | 14,662 | 28,353 |
Prepaid expense and other current assets | 20,701 | 12,692 |
Total current assets | 156,897 | 164,093 |
Property and equipment, net | 438,918 | 395,255 |
Goodwill | 1,105,322 | 1,086,546 |
Other intangible assets, net | 992,520 | 998,014 |
Operating lease right of use asset, net | 435,168 | 399,688 |
Other assets | 16,429 | 17,399 |
Total assets | 3,145,254 | 3,060,995 |
Current liabilities: | ||
Current portion of long-term debt | 36,583 | 41,245 |
Current operating lease liabilities | 50,359 | 45,675 |
Accounts payable | 182,104 | 148,645 |
Accrued liabilities | 140,750 | 124,951 |
Structured payables | 116,361 | 137,319 |
Total current liabilities | 526,157 | 497,835 |
Long-term debt, less current portion | 680,307 | 785,810 |
Related party notes payable | 0 | 344,581 |
Noncurrent operating lease liabilities | 415,208 | 376,099 |
Deferred income taxes, net | 145,418 | 144,866 |
Other long-term obligations and deferred credits | 42,509 | 63,445 |
Total liabilities | 1,809,599 | 2,212,636 |
Commitments and contingencies | ||
Shareholders’ equity: | ||
Common stock, $0.01 par value; 300,000,000 and 174,500,000 shares authorized as of January 2, 2022 and January 3, 2021, respectively; 167,250,855 and 124,987,370 shares issued and outstanding as of January 2, 2022 and January 3, 2021, respectively | 1,673 | 1,250 |
Additional paid-in capital | 1,415,185 | 845,499 |
Shareholder note receivable | (4,382) | (18,660) |
Accumulated other comprehensive loss, net of income tax | (2,478) | (1,208) |
Retained deficit | (178,409) | (142,197) |
Total shareholders’ equity attributable to Krispy Kreme, Inc. | 1,231,589 | 684,684 |
Noncontrolling interest | 104,066 | 163,675 |
Total shareholders’ equity | 1,335,655 | 848,359 |
Total liabilities and shareholders’ equity | $ 3,145,254 | $ 3,060,995 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jan. 02, 2022 | Jan. 03, 2021 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares issued (in shares) | 167,250,855 | 124,987,370 |
Common stock, shares outstanding (in shares) | 167,250,855 | 124,987,370 |
Common stock, shares authorized (in shares) | 300,000,000 | 174,500,000 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Shareholders’ Equity - USD ($) $ in Thousands | Total | Cumulative Effect, Period of Adoption, Adjustment | Common Stock | Additional Paid-in Capital | Shareholder Note Receivable | Foreign Currency Translation Adjustment | Unrealized Loss on Cash Flow Hedges | Unrealized Loss on Employee Benefit Plans | Retained (Deficit) Earnings | Retained (Deficit) EarningsCumulative Effect, Period of Adoption, Adjustment | Noncontrolling Interest | Noncontrolling InterestCumulative Effect, Period of Adoption, Adjustment | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
Change in accounting standard | $ 861,564 | $ 31,478 | $ 1,250 | $ 820,194 | $ (17,491) | $ (2,311) | $ (3,734) | $ 0 | $ (67,609) | $ 29,767 | $ 131,265 | $ 1,711 | |
Beginning balance (in shares) at Dec. 30, 2018 | 124,987,370 | ||||||||||||
Beginning balance at Dec. 30, 2018 | 861,564 | $ 31,478 | $ 1,250 | 820,194 | (17,491) | (2,311) | (3,734) | 0 | (67,609) | $ 29,767 | 131,265 | $ 1,711 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
Net (loss)/income | (34,001) | (37,409) | 3,408 | ||||||||||
Other comprehensive income/(loss), before reclassifications | (1,280) | 6,940 | (8,220) | ||||||||||
Reclassification from AOCI | 1,774 | 1,774 | |||||||||||
Share-based compensation | 10,736 | 10,675 | 61 | ||||||||||
Purchase of shares by noncontrolling interest | 15,621 | (1,646) | 17,267 | ||||||||||
Noncontrolling interest of acquired entity | 16,010 | 16,010 | |||||||||||
Distribution to shareholders | (2,629) | (2,629) | |||||||||||
Distribution to noncontrolling interest | (18,856) | 2,269 | (21,125) | ||||||||||
Non-cash contribution for tax sharing arrangements with related parties | 3,412 | 3,412 | |||||||||||
Other | (412) | (48) | (364) | ||||||||||
Ending balance (in shares) at Dec. 29, 2019 | 124,987,370 | ||||||||||||
Ending balance at Dec. 29, 2019 | 883,417 | $ 1,250 | 834,233 | (17,232) | 4,629 | (10,180) | 0 | (77,880) | 148,597 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
Change in accounting standard | 883,417 | $ 1,250 | 834,233 | (17,232) | 4,629 | (10,180) | 0 | (77,880) | 148,597 | ||||
Net (loss)/income | (60,940) | (64,301) | 3,361 | ||||||||||
Other comprehensive income/(loss), before reclassifications | (2,743) | 18,879 | (22,063) | (106) | 547 | ||||||||
Reclassification from AOCI | 7,633 | 7,633 | |||||||||||
Share-based compensation | 11,601 | 11,601 | |||||||||||
Purchase of shares by noncontrolling interest | 21,386 | (1,467) | 22,853 | ||||||||||
Distribution to shareholders | (42) | (39) | (3) | ||||||||||
Distribution to noncontrolling interest | (11,389) | 294 | (11,683) | ||||||||||
Other | $ (564) | (296) | (255) | (13) | |||||||||
Ending balance (in shares) at Jan. 03, 2021 | 124,987,370 | 124,987,370 | |||||||||||
Ending balance at Jan. 03, 2021 | $ 848,359 | $ 1,250 | 845,499 | (18,660) | 23,508 | (24,610) | (106) | (142,197) | 163,675 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
Change in accounting standard | 848,359 | $ 1,250 | 845,499 | (18,660) | 23,508 | (24,610) | (106) | (142,197) | 163,675 | ||||
Net (loss)/income | (14,843) | (24,506) | 9,663 | ||||||||||
Other comprehensive income/(loss), before reclassifications | (11,975) | (14,541) | 3,318 | (338) | (414) | ||||||||
Reclassification from AOCI | 10,291 | 10,291 | |||||||||||
Share-based compensation | 22,923 | 22,923 | |||||||||||
Purchase of shares by noncontrolling interest | 53,403 | 14,427 | 38,976 | ||||||||||
Noncontrolling interest of acquired entity | 9,822 | 9,822 | |||||||||||
Distribution to shareholders | (42,334) | (42,334) | |||||||||||
Distribution to noncontrolling interest | (23,354) | (13,413) | 363 | (10,304) | |||||||||
Other | (160) | (29) | (129) | (1) | (1) | ||||||||
Capital contribution from shareholders (in shares) | 6,997,450 | ||||||||||||
Capital contribution from shareholders | 120,532 | $ 70 | 120,845 | (383) | |||||||||
Dividends declared on common stock and equivalents | [1] | (11,705) | (11,705) | ||||||||||
Conversion of noncontrolling interest to additional paid-in capital in connection with the Merger (in shares) | 9,370,881 | ||||||||||||
Conversion of noncontrolling interest to additional paid-in capital in connection with the Merger | 0 | $ 93 | 107,258 | (107,351) | |||||||||
Issuance of common stock in connection with initial public offering, net of underwriting discounts and issuance costs (in shares) | 32,911,765 | ||||||||||||
Issuance of common stock in connection with initial public offering, net of underwriting discounts and issuance costs | 514,871 | $ 329 | 514,542 | ||||||||||
Issuance of common stock upon settlement of RSUs, net of shares withheld (in shares) | 1,422,830 | ||||||||||||
Issuance of common stock upon settlement of RSUs, net of shares withheld | (17,169) | $ 15 | (17,184) | ||||||||||
Repurchase of common stock (in shares) | (8,439,441) | ||||||||||||
Repurchase of common stock | $ (123,006) | $ (84) | (122,922) | ||||||||||
Ending balance (in shares) at Jan. 02, 2022 | 167,250,855 | 167,250,855 | |||||||||||
Ending balance at Jan. 02, 2022 | $ 1,335,655 | $ 1,673 | 1,415,185 | (4,382) | 8,967 | (11,001) | (444) | (178,409) | 104,066 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
Change in accounting standard | $ 1,335,655 | $ 1,673 | $ 1,415,185 | $ (4,382) | $ 8,967 | $ (11,001) | $ (444) | $ (178,409) | $ 104,066 | ||||
[1] | Includes a $0.035 cash dividend per common share declared in the fourth quarter of fiscal 2021 and expected to be paid in the first quarter of fiscal 2022. |
Consolidated Statements of Ch_2
Consolidated Statements of Changes in Shareholders’ Equity (Parenthetical) | 12 Months Ended |
Jan. 02, 2022$ / shares | |
Statement of Stockholders' Equity [Abstract] | |
Dividends declared on common stock and equivalents (in dollars per share) | $ 0.035 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 02, 2022 | Jan. 03, 2021 | Dec. 29, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net loss | $ (14,843) | $ (60,940) | $ (34,001) |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||
Depreciation and amortization expense | 101,608 | 80,398 | 63,767 |
Deferred income taxes | (3,496) | (36) | 8,422 |
Loss on extinguishment of debt | 1,700 | 0 | 1,567 |
Impairment and lease termination charges | 3,507 | 4,701 | 3,081 |
Loss on disposal of property and equipment | 458 | 2,771 | 585 |
Gain on sale-leaseback | (8,673) | 0 | 0 |
Share-based compensation | 22,923 | 11,601 | 10,741 |
Change in accounts and notes receivable allowances | 275 | 1,047 | 365 |
Inventory write-off | 4,071 | 726 | 231 |
Gain on contingent consideration related to a business combination | 0 | (1,521) | (499) |
Payment of contingent consideration in excess of acquisition date fair value | 0 | 0 | (4,229) |
Collection of related party income tax receivable | 0 | 0 | 28,593 |
Other | 594 | 410 | 4,703 |
Change in operating assets and liabilities, excluding business acquisitions and foreign currency translation adjustments: | |||
Accounts, notes, and taxes receivable | (3,817) | (11,942) | (1,258) |
Inventories | (301) | (15,353) | (3,217) |
Other current and noncurrent assets | (316) | 434 | (5,603) |
Operating lease assets and liabilities | 7,787 | (1,575) | 3,500 |
Accounts payable and accrued liabilities | 30,240 | 12,906 | (10,153) |
Other long-term obligations and deferred credits | (493) | 5,048 | 14,217 |
Net cash provided by operating activities | 141,224 | 28,675 | 80,812 |
CASH FLOWS USED FOR INVESTING ACTIVITIES: | |||
Purchase of property and equipment | (119,497) | (97,826) | (76,373) |
Proceeds from disposals of assets | 218 | 2,837 | 0 |
Proceeds from sale-leaseback | 11,091 | 0 | 0 |
Acquisition of shops and franchise rights from franchisees, net of cash acquired | (46,330) | (74,890) | (150,373) |
Principal payments received from loans to franchisees | 92 | 684 | 645 |
Purchases of held-to-maturity debt securities | 0 | (57) | (776) |
Maturities of held-to-maturity debt securities | 1,019 | 1,124 | 271 |
Net cash used for investing activities | (153,407) | (168,128) | (226,606) |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Proceeds from the issuance of debt | 695,000 | 288,097 | 804,002 |
Repayment of long-term debt and lease obligations | (1,147,049) | (225,541) | (714,617) |
Payment of financing costs | (1,700) | 0 | (5,665) |
Proceeds from structured payables | 266,851 | 292,756 | 124,666 |
Payments on structured payables | (287,625) | (225,320) | (68,757) |
Payment of contingent consideration related to a business combination | 0 | (506) | (4,646) |
Capital contribution by shareholders | 120,532 | 0 | 0 |
Proceeds from IPO, net of underwriting discounts (excluding unpaid issuance costs) | 527,329 | 0 | 0 |
Proceeds from sale of noncontrolling interest in subsidiary | 53,404 | 21,386 | 15,625 |
Distribution to shareholders | (48,187) | (42) | (2,629) |
Payments for repurchase and retirement of common stock | (139,103) | 0 | 0 |
Distribution to noncontrolling interest | (23,356) | (11,389) | (18,902) |
Net cash provided by financing activities | 16,096 | 139,441 | 129,077 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (2,204) | 2,045 | (941) |
Net increase/(decrease) in cash, cash equivalents and restricted cash | 1,709 | 2,033 | (17,658) |
Cash, cash equivalents and restricted cash at beginning of the fiscal year | 37,483 | 35,450 | 53,108 |
Cash, cash equivalents and restricted cash at end of the fiscal year | 39,192 | 37,483 | 35,450 |
Supplemental schedule of non-cash investing and financing activities: | |||
(Decrease)/increase in accrual for property and equipment, net | (1,159) | 10,182 | 10,489 |
Stock issuance under shareholder notes | 963 | 1,535 | 1,856 |
Accrual for distribution to shareholders | (6,928) | 0 | 0 |
Contingent consideration incurred for acquisition of Krispy Kreme Mexico | 0 | 0 | 14,021 |
Contingent consideration incurred for acquisition of shops and franchise rights from domestic franchisees | 0 | 0 | 506 |
Reconciliation of cash, cash equivalents and restricted cash at end of fiscal year: | |||
Cash and cash equivalents | 38,562 | 37,460 | 35,373 |
Restricted cash | 630 | 23 | 77 |
Total cash, cash equivalents and restricted cash | $ 39,192 | $ 37,483 | $ 35,450 |
Description of Business and Sum
Description of Business and Summary of Significant Accounting Policies | 12 Months Ended |
Jan. 02, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business and Summary of Significant Accounting Policies | Description of Business and Summary of Significant Accounting Policies Description of Business Krispy Kreme, Inc. (“KKI”) and its subsidiaries (collectively, the “Company” or “Krispy Kreme”) operate through an omni-channel business model to provide doughnut experiences and produce doughnuts for Doughnut Shops, Delivered Fresh Daily (“DFD”) outlets, Ecommerce and delivery, and Krispy Kreme branded sweet treats (“Branded Sweet Treat Line”) channels, expanding consumer access to the Krispy Kreme brand. The Company has three reportable operating segments: 1) U.S. and Canada, which includes all Krispy Kreme Company-owned operations in the U.S. and Canada, Insomnia Cookies shops and the Branded Sweet Treat Line; 2) International, which includes all Krispy Kreme Company-owned operations in the U.K., Ireland, Australia, New Zealand and Mexico; and 3) Market Development, which includes franchise operations across the globe, as well as Krispy Kreme Company-owned shops in Japan. Unallocated corporate costs are excluded from the Company’s measurement of segment performance. As of January 2, 2022, the Company had 1,810 Krispy Kreme and Insomnia Cookies branded shops in over 30 countries around the world, of which 971 were controlled and operated by the Company and 839 were franchised. The ownership and location of those shops is as follows: Krispy Kreme U.S. and Canada Krispy Kreme International Insomnia Cookies Total Company-owned shops 307 454 210 971 Franchise shops 66 773 — 839 Total 373 1,227 210 1,810 Initial Public Offering The Company’s registration statement on Form S-1 related to its initial public offering (“IPO”) was declared effective on June 30, 2021 and the Company’s common stock began trading on the Nasdaq Global Select Market on July 1, 2021. On July 1, 2021, the Company completed its IPO, in which the Company sold 29.4 million shares of common stock at a price to the public of $17.00 per share. The Company received aggregate net proceeds of $458.8 million after deducting underwriting discounts and commissions of $28.7 million and offering expenses of $12.5 million. In connection with the IPO, the Company and its affiliates completed the following transactions: • On June 10, 2021, the Company's wholly-owned (excluding certain management equity interests) subsidiary, Krispy Kreme Holdings, Inc. (“KKHI”), entered into a term loan credit agreement, as borrower, which provided for term loans in an initial aggregate principal amount of $500.0 million (the “Term Loan Facility”). On June 17, 2021, KKHI borrowed $500.0 million under the Term Loan Facility, with debt issuance costs of $1.7 million which were included in Interest expense, net on the Consolidated Statements of Operations during the second quarter of fiscal 2021. The borrowings bore an all-in interest rate of 2.68175%. On June 28, 2021, following the Merger (as defined below), KKI assumed all of the obligations of KKHI as borrower under the Term Loan Facility. On July 7, 2021, the Company repaid in full and terminated the Term Loan Facility with a cash outflow of $500.7 million, which included $0.7 million of accrued interest. The Term Loan Facility would have matured on the earlier of (i) June 10, 2022 or (ii) within four business days following the consummation of the IPO. • On June 28, 2021, KKHI merged into KKI (the “Merger”). As a result of the Merger, the Company eliminated $107.4 million of noncontrolling interest at KKHI as of the merger date. The management equity interests at KKHI were exchanged for common shares in KKI. Restricted stock units (“RSUs”) and stock options held at KKHI were exchanged for RSUs and stock options held at KKI at a rate of 317.24 KKI shares to 1 KKHI share. • On June 30, 2021, the Company effected a 1,745-for-1 split of each outstanding share of common stock (the “Stock Split”). All share and per share information has been retroactively adjusted to effect the Stock Split for all periods presented. In connection with the IPO, the Company used the proceeds from the Term Loan Facility for the following: (1) repay the related party notes payable (including accrued interest of $17.8 million) of $355.0 million, (2) redeem certain common stock of $102.7 million held by Krispy Kreme, G.P. (“KK GP”) and (3) pay a pro rata dividend to members of its management who, prior to the Merger, held equity interests in KKHI in an aggregate amount of $42.3 million. Additionally, the Company paid $20.3 million to repurchase approximately 1.3 million shares of common stock from certain of the Company’s executive officers at the price paid by the underwriters and $15.5 million to repurchase approximately 1.0 million shares of common stock from certain of its executive officers for payment of their withholding taxes with respect to the RSUs vesting or for which vesting was accelerated in connection with the offering. On August 2, 2021, the underwriters exercised their over-allotment option and purchased an additional 3.5 million shares of common stock at the IPO price less the underwriting discounts and commissions. The net proceeds received on August 2, 2021 were $56.1 million after deducting underwriting discounts and commissions of $3.4 million. This brought total net IPO proceeds to $514.9 million. Basis of Presentation and Consolidation The Company operates and reports financial information on a 52 or 53-week year with the fiscal year ending on the Sunday closest to December 31. The data periods contained within fiscal years 2021, 2020 and 2019 reflect the results of operations for the 52-week period ended January 2, 2022, the 53-week period ended January 3, 2021, and the 52-week period ended December 29, 2019. The accompanying Consolidated Financial Statements include the accounts of Krispy Kreme and subsidiaries and have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”). All significant intercompany balances and transactions among Krispy Kreme and subsidiaries have been eliminated in consolidation. Investments in entities over which the Company has the ability to exercise significant influence but which it does not control and whose financial statements are not otherwise required to be consolidated, are accounted for using the equity method. Noncontrolling interest in the Company’s Consolidated Financial Statements represents the interest in subsidiaries held by joint venture partners and employee shareholders. The joint venture partners hold noncontrolling interests in the Company’s consolidated subsidiaries Awesome Doughnut, LLC (“Awesome Doughnut”), W.K.S. Krispy Kreme, LLC (“WKS Krispy Kreme”), and Krispy K Canada, Inc. (“KK Canada”). Employee shareholders hold noncontrolling interests in the consolidated subsidiaries Krispy Kreme Holding U.K. Ltd. (“KKUK”), Krispy Kreme Holdings Pty Ltd. (“KK Australia”), Krispy Kreme Mexico S. de R.L. de C.V. (“KK Mexico”) and Insomnia Cookies Holdings, LLC (“Insomnia Cookies”). Since the Company consolidates the financial statements of these subsidiaries, the noncontrolling owners’ share of each subsidiary’s net assets and results of operations are deducted and reported as a noncontrolling interest on the Consolidated Balance Sheets and as net income attributable to noncontrolling interest in the Consolidated Statements of Operations and comprehensive income attributable to noncontrolling interest in the Consolidated Statements of Comprehensive Income/(Loss). Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates under different assumptions or conditions. Revenue Recognition Revenue is recognized in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers . Revenue is recognized when control of promised goods or services is transferred to a customer in an amount that reflects the consideration expected to be received for those goods or services. Product Sales Product sales include revenue derived from (1) the sale of doughnuts, cookies and complementary products to in-shop, Branded Sweet Treat Line and DFD customers and (2) the sale of doughnut mix, other ingredients and supplies and doughnut-making equipment to franchisees. Revenue is recognized at the time of delivery for in-shop sales and sales to franchisees. For Branded Sweet Treat Line and DFD sales, control transfers and revenue is recognized either at the time of delivery, net of provisions for estimated product returns or, with respect to those customers that take title to products purchased from the Company at the time those products are sold by the customer to the end consumers, simultaneously with such consumer purchases. Revenues from Branded Sweet Treat Line customers and from the sale of doughnut mix, other ingredients and supplies and doughnut-making equipment to franchisees include any applicable shipping and handling costs invoiced to the customer and the expense of such shipping and handling costs is included in Operating expenses. The Company recorded shipping revenue of approximately $13.3 million, $15.2 million and $6.5 million in the fiscal years ended January 2, 2022, January 3, 2021, and December 29, 2019, respectively. Franchise Revenue Franchise revenue included in Royalties and other revenues is derived from development and initial franchise fees relating to new shop openings and ongoing royalties charged to franchisees based on their sales. The Company sells individual franchises domestically and internationally, as well as development agreements that grant the right to develop shops in designated areas. Generally, the franchise license granted for each individual shop within an arrangement represents a single performance obligation. The franchise agreements and development agreements typically require the franchisee to pay initial nonrefundable franchise fees (i.e., initial services such as training and assisting with shop set-up) prior to opening. The franchises also pay a royalty on a monthly basis based upon a percentage of franchisee gross sales. Royalties are recognized in income as underlying franchisee sales occur. The initial term of domestic franchise agreements is typically 15 years. The Company recognizes the initial nonrefundable fees over the term of the franchise agreements on an output method based on time elapsed, corresponding with the customer’s right to use the franchise for the term of the agreement. A franchisee may elect to renew the term of a franchise agreement and, if approved, will typically pay a renewal fee upon execution of the renewal term. Franchise-related Advertising Fund Revenue Franchise-related advertising fund revenue included in Royalties and other revenues is derived from domestic and international franchise agreements that typically require the franchisee to pay advertising fees on a continuous monthly basis based on a percentage of franchisee net sales, which are recognized based on fees earned each period. Total advertising fund revenue for the fiscal years ended January 2, 2022, January 3, 2021, and December 29, 2019 is $4.3 million, $8.1 million and $9.3 million, respectively. Gift Card Sales The Company and its franchisees sell gift cards that are redeemable for products in the Company-owned or franchise shops. The Company manages the gift card program and collects all funds from the activation of gift cards and reimburses franchisees for the redemption of gift cards in their shops. Deferred revenue for unredeemed gift cards is included in Accrued liabilities in the Consolidated Balance Sheets. As of January 2, 2022 and January 3, 2021, the gross amount of deferred revenue recognized for unredeemed gift cards was $22.5 million and $18.0 million, respectively. Gift cards sold do not have an expiration date or service fees charged. The likelihood of redemption may be determined to be remote for certain cards due to long periods of inactivity. In these circumstances, the Company recognizes revenue from unredeemed gift cards (“breakage revenue”) within Product sales if they are not subject to unclaimed property laws. The Company estimates breakage for the portfolio of gift cards and recognizes it based on the estimated pattern of gift card use. As of January 2, 2022 and January 3, 2021, deferred revenue, net of breakage revenue recognized, was $11.2 million and $10.4 million, respectively. Gift card costs incurred to fulfill obligations under a contract are capitalized when such costs generate or enhance resources to be used in satisfying future performance obligations and the costs are deemed recoverable. Judgement is used in determining whether certain contract costs can be capitalized. These costs are capitalized and amortized on a systematic basis to match the timing of revenue recognition, depending on when the gift card is used. This amortization expense is recorded in Operating expense in the Company’s Consolidated Statement of Operations. From time to time, management will review the capitalized costs for impairment. As of January 2, 2022 and January 3, 2021, the capitalized gift card costs were $1.7 million and $1.7 million, respectively. Consumer Loyalty Program Consumers can participate in spend-based loyalty programs. Consumers who join the loyalty programs will receive a credit or point for each purchase of eligible product. After accumulating a certain number of credits or points, the consumers can redeem their credits or points for a free product. The Company defers revenue based on an estimated selling price of the free product earned by the consumer and establishes a corresponding liability in deferred revenue. As of January 2, 2022 and January 3, 2021, the deferred revenue related to loyalty programs is $2.3 million and $3.6 million, respectively. Revenue-based Taxes The Company reports revenue net of any revenue-based taxes assessed by governmental authorities that are imposed on and concurrent with specific revenue-producing transactions. The primary revenue-based taxes are sales tax and value-added tax (“VAT”). Operating Expenses Operating expenses consist of expenses primarily related to Company-owned shops including payroll and benefit costs for service employees at Company-operated locations, rent and utilities, expenses associated with Company operations, costs associated with procuring materials from vendors and other shop-level operating costs. Marketing Expenses Costs associated with marketing the products, including advertising and other brand promotional activities, are expensed as incurred, and were approximately $39.5 million, $34.0 million, and $28.8 million in the fiscal years ended January 2, 2022, January 3, 2021, and December 29, 2019, respectively. Cash and Cash Equivalents and Restricted Cash Cash equivalents consist of demand deposits in banks and short-term, highly liquid debt instruments with original maturities of three months or less. All credit and debit card transactions that are processed in less than five days are classified as Cash and cash equivalents. The amounts due from banks for these transactions totaled $8.5 million and $9.6 million as of January 2, 2022 and January 3, 2021, respectively. Restricted cash consists primarily of funds related to employee benefit plans. Marketable Securities Marketable securities consist of debt instruments that are being held to maturity longer than three months but less than one year. Their fair value approximates their carrying value on the Consolidated Balance Sheets. Account Receivable, Net of Allowance for Expected Credit Losses Accounts receivable relate primarily to payments due for sale of products, franchise fees, royalties, advertising fees and licensing fees. The Company maintains allowances for expected credit losses related to its accounts receivable, including receivables from franchisees, in amounts which the Company believes are sufficient to provide for losses estimated to be sustained on realization of these receivables. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of amounts from customers. Such estimates inherently involve uncertainties and assessments of the outcome of future events, and changes in facts and circumstances may result in adjustments to the allowance for expected credit losses. The Company had allowance for expected credit losses of $0.9 million and $1.4 million as of January 2, 2022 and January 3, 2021, respectively. Concentration of Credit Risk Financial instruments that subject the Company to credit risk consist principally of receivables from Branded Sweet Treat Line and DFD customers and franchisees. Branded Sweet Treat Line and DFD receivables are primarily from grocer/mass merchants and convenience stores. For the fiscal years ended January 2, 2022, January 3, 2021, and December 29, 2019, no customer accounted for more than 10% of revenue or a significant amount of receivables that would result in a concentration. Management also evaluates the recoverability of receivables from the franchisees and maintains allowances for expected credit losses. Management believes these allowances are sufficient to provide for realized losses that may be sustained on realization of these receivables. Inventories Inventories, which consist of raw materials, work in progress, finished goods, and purchased merchandise, are recorded at the lower of cost and net realizable value, where cost is determined using the first-in, first-out method. Raw materials inventory also includes doughnut equipment spare parts. Finished goods and purchased merchandise are net of reserves for excess or obsolete finished goods, which totaled $3.7 million and $2.7 million as of January 2, 2022, and January 3, 2021, respectively. Prepaid Expense and Other Current Assets Prepaid expense and other current assets consist primarily of prepaid assets of $19.6 million and $11.3 million, related to service contracts and insurance premiums, as of January 2, 2022 and January 3, 2021, respectively. Property and Equipment, net Property and equipment are recorded at cost. Depreciation of property and equipment is provided using the straight-line method over the estimated useful lives of the respective assets. The lives used in computing depreciation are as follows: Buildings 20 to 35 years Machinery and equipment 3 to 15 years Computer software 2 to 7 years Leasehold improvements are depreciated over the shorter of the estimated useful life of the asset or the lease term. The Company assesses long-lived fixed asset groups for potential impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. If the carrying amount of the assets exceeds the sum of the undiscounted cash flows, the Company records an impairment charge in an amount equal to the excess of the carrying value of the assets over their estimated fair value. Impairment charges related to the Company’s long-lived assets were $2.9 million, $0.3 million, and $0.5 million for the fiscal years ended January 2, 2022, January 3, 2021, and December 29, 2019, respectively. Such charges related to underperforming shops, shops closed or likely to be closed and shops which management believes will not generate sufficient future cash flows to enable the Company to recover the carrying value of the shops’ assets, but which management has not yet decided to close. The impaired shop assets include real properties, the fair values of which were estimated based on independent appraisals or, in the case of any properties which the Company is negotiating to sell, based on its negotiations with unrelated third-party buyers; leasehold improvements, which are typically abandoned when the leased properties revert to the lessor; and doughnut-making and other equipment the fair values of which were estimated based on the replacement cost of the equipment, after considering refurbishment and transportation costs. The impairment charges are primarily attributable to the U.S. and Canada segment and are included within Other operating expenses on the Consolidated Statements of Operations. Leases Effective December 31, 2018, the first day of fiscal year 2019, the Company implemented Accounting Standards Update (“ASU”) 2016-02 (“the new standard”), Leases , which amended authoritative guidance on leases and is codified in ASC 842, Leases . The amended guidance requires lessees to recognize most leases on their balance sheets as right-of-use assets along with corresponding lease liabilities. The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification determines whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. The new standard also requires increased disclosures to help financial statement users better understand the amount, timing and uncertainty of cash flows arising from leases. The Financial Accounting Standards Board (“FASB’s”) authoritative guidance provides companies with the option to apply this ASU to new and existing leases within the scope of the guidance as of the beginning of the period of adoption. The Company elected this transition method of applying the new lease standard and has recognized right-of-use assets, lease liabilities and any cumulative-effect adjustments to the opening balance of retained earnings as of December 31, 2018. Prior period amounts were not adjusted and will continue to be reported under the accounting standards in effect for those periods. The adoption of the new standard had a material impact to the Consolidated Balance Sheets due to the capitalization of right-of-use assets and lease liabilities associated with the current operating leases in which the Company is the lessee. The adoption of the new standard resulted in the recording of additional lease assets and lease liabilities (net of prior period reported capital leases) of $280.0 million and $291.0 million at the date of adoption, respectively. The adoption of the new standard had a material impact on the Consolidated Statements of Changes in Shareholders’ Equity due to the recognition of a deferred gain on a sale-leaseback transaction completed in March 2018 and the recognition of a previously unrecognized portion of an impairment to a right-of-use asset at the date of adoption. There was also a $4.1 million deferred tax benefit in the Consolidated Statements of Changes in Shareholders’ Equity as a result of the adoption. The adoption of the new standard did not have a material impact on the Consolidated Statements of Operations nor the Consolidated Statements of Cash Flows. The cumulative effect of the changes made to the Company’s Consolidated Balance Sheets as of December 31, 2018 for the adoption of ASC 842 was as follows: December 30, ASC 842 Adjustments December 31, Account: Operating lease right of use asset, net $ — $ 270,170 $ 270,170 Property and equipment, net 227,102 10,085 237,187 Other intangible assets, net 920,265 (7,305) 912,960 Current portion of long-term debt 38,126 1,168 39,294 Current operating lease liabilities — 24,088 24,088 Accrued liabilities 82,281 (2,967) 79,314 Noncurrent operating lease liabilities — 258,152 258,152 Long-term debt, less current portion 592,684 7,152 599,836 Other long-term obligations and deferred credits 76,576 (54,378) 22,198 Deferred income taxes, net 128,360 8,257 136,617 Noncontrolling interest 131,265 1,711 132,976 Retained (deficit) earnings $ (67,609) $ 29,767 $ (37,842) Upon the adoption of the new standard on December 31, 2018, the Company elected the package of practical expedients provided under the guidance. The practical expedient package applies to leases commenced prior to the adoption of the new standard and permits companies not to reassess whether existing or expired contracts are or contain a lease, the lease classification and any initial direct costs for any existing leases. The Company has elected to not separate the lease and non-lease components within the contract. Therefore, all fixed payments associated with the lease are included in the right-of-use asset and the lease liability. These costs often relate to the payments for a proportionate share of real estate taxes, insurance, common area maintenance and other operating costs in addition to a base rent. Any variable payments related to the lease are recorded as lease expense when and as incurred. The Company has elected this practical expedient for its real estate, vehicles and equipment leases. The Company did not elect the hindsight practical expedient. The Company has elected the short-term lease expedient. A short-term lease is a lease that, as of the commencement date, has a lease term of 12 months or less and does not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise. For such leases, the Company will not apply the recognition requirements of Topic 842 and instead will recognize the lease payments as lease cost on a straight-line basis over the lease term. Additionally, the Company elected the practical expedient under ASU 2018-01, which allows an entity to not reassess whether any existing land easements are or contain leases. Lease termination costs represent the estimated fair value of liabilities related to unexpired leases, after reduction by the amount of accrued rent expense, if any, related to the leases, and are recorded when the lease contracts are terminated or, if earlier, the date on which the Company ceases use of the leased property. The fair values of these liabilities were estimated as the excess, if any, of the contractual payments required under the unexpired leases over the current market lease rates for the properties, discounted at a credit-adjusted risk-free rate over the remaining term of the leases. The provision for lease termination costs also includes adjustments to liabilities recorded in prior periods arising from changes in estimated sublease rentals and from settlements with landlords. Goodwill and Other Intangible Assets Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in a business combination. For each reporting unit, the Company assesses goodwill for impairment annually at the beginning of the fourth quarter or more frequently when impairment indicators are present. If the carrying value of the reporting unit exceeds its fair value, the Company recognizes an impairment charge for the difference up to the carrying value of the allocated goodwill. The value is estimated under a discounted cash flow approach, which incorporates assumptions regarding future growth rates, terminal values and discount rates. For the fiscal years ended January 2, 2022, January 3, 2021, and December 29, 2019, there were no goodwill impairment charges. Other intangible assets primarily represent the trade names for the Company’s brands, franchise agreements (domestic and international), reacquired franchise rights, and customer relationships. The trade names have been assigned an indefinite useful life and are reviewed annually for impairment. All other intangible assets are amortized on a straight-line basis over their estimated useful lives. Definite-lived intangible assets are assessed for impairment whenever triggering events or indicators of potential impairment occur. The Company did not have any impairment charges of other intangible assets during any of the periods presented. Accrued Liabilities Accrued liabilities include accrued compensation, accrued legal fees, accrued utilities, accrued marketing and other accrued liabilities. As of January 2, 2022 and January 3, 2021, accrued compensation and benefits included in the Accrued liabilities balance was $41.0 million and $34.1 million, respectively. Supply Chain Financing Program The Company has undertaken broad efforts to improve its working capital, in part by negotiating longer payment terms with vendors. The Company has an agreement with a third-party administrator which allows participating vendors to track payments from the Company, and if voluntarily elected by the vendor, to sell payment obligations from the Company to financial institutions (the “Supply Chain Financing Program” or the “SCF Program”). The Company’s typical payment terms for trade payables range up to 180 days outside of the SCF Program, depending on the type of vendors and the nature of the supplies or services. For vendors under the SCF Program, the Company has established payable terms ranging up to, but not exceeding, 360 days. When participating vendors elect to sell one or more of the Company’s payment obligations, the rights and obligations of the Company to settle its payables on their contractual due date are not impacted. The Company has no economic or commercial interest in a vendor’s decision to enter into these agreements and the financial institutions do not provide incentives such as rebates or profit sharing to the Company under the SCF Program. The Company and vendors agree on commercial terms for the goods and services procured, which are consistent with payment terms observed at other peer companies in the industry. The Company’s obligations to its vendors, including amounts due, are not impacted by the SCF Program and thus remain classified as trade payables. Cards Program The Company utilizes various purchase cards issued by financial institutions to facilitate purchases of goods and services. By using the cards, the Company receives rebates and differing levels of discounts based on timing of repayment. The payment obligations under these purchased cards are classified as Structured payables on the Consolidated Balance Sheets and constitute the entire Structured payables balance. The associated cash flows are included in the financing section of the Consolidated Statements of Cash Flows. Share-based Compensation The Company measures and recognizes compensation expense for share-based payment awards based on the fair value of each award at its grant date and recognizes expense over the related service period on a straight-line basis for each tranche of awards. The Company accounts for forfeitures of share-based compensation awards as they occur. Compensation expense is included in Selling, general and administrative expenses in the Consolidated Statements of Operations. Fair Value The accounting standards for fair value measurements define fair value as the price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The accounting standards for fair value measurements establish a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: • Level 1: Quoted prices in active markets that are accessible as of the measurement date for identical assets or liabilities. • Level 2: Observable inputs other than quoted prices included within Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. • Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value measurement of the assets or liabilities. These include certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. The Company’s financial instruments not measured at fair value on a recurring basis include cash and cash equivalents, receivables, accounts payable and accrued liabilities and are reflected in the Consolidated Financial Statements at cost which approximates fair value for these items due to their short-term |
Acquisitions
Acquisitions | 12 Months Ended |
Jan. 02, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisitions | Acquisitions The Company strategically acquires companies in order to increase its footprint and sell products that diversify its existing offerings. These acquisitions are accounted for as business combinations using the acquisition method, whereby the purchase price is allocated to the assets acquired and liabilities assumed, based on their estimated fair values as of the date of the acquisition. Transaction-related expenses as a result of these acquisitions, which exclude costs incurred to integrate the acquired entities, were recorded within Operating income in the Statements of Operations (primarily Selling, general and administrative expenses) during the fiscal year such costs were incurred. Goodwill recognized for these acquisitions represents the intangible assets that do not qualify for separate recognition and primarily includes the acquired customer base, the acquired workforce including shop partners in the region that have strong relationships with these customers and the existing geographic shop and Ecommerce presence. 2021 Acquisitions Acquisition of KK Canada On October 4, 2021, the Company acquired a 60% controlling ownership interest in ten franchise shops in Canada, KK Canada, for total consideration of approximately $14.7 million, consisting of approximately $14.4 million in cash and approximately $0.3 million related to settlement of pre-existing relationships. The settlement of pre-existing relationships included in the purchase consideration includes the disposal of the franchise intangible asset related to the franchisee recorded at time of the acquisition of Krispy Kreme by JAB (“the JAB Merger”). The cumulative net book value of the franchise intangible asset was $0.3 million at the acquisition date. The Company accounted for the transaction as a business combination. Other intangible assets consist of reacquired franchise rights with an estimated useful life equal to the weighted average remaining franchise agreement term. A total of $0.1 million of goodwill and reacquired franchise rights are expected to be deductible as goodwill for income tax purposes. The fair value of the 40% noncontrolling interest in KK Canada was estimated to be $9.8 million. The fair value estimate was based on a total value of the equity in KK Canada derived from the consideration paid by the Company for its equity interests. Acquisition of Other Krispy Kreme Shops in 2021 In the first quarter of fiscal 2021, the Company acquired the business and operating assets of two franchisees, collectively consisting of 17 Krispy Kreme shops in the U.S. The Company paid total consideration of $38.1 million, consisting of $33.9 million of cash, $0.9 million of consideration payable to the sellers within 12 months of the respective acquisition dates, and $3.3 million settlement of amounts related to pre-existing relationships, to acquire substantially all of the shops’ assets. Consideration payable of $0.9 million was withheld to cover indemnification claims that could arise after closing. Absent any claims, these amounts are payable within 12 months of the respective acquisition dates. The settlement of pre-existing relationships included in the purchase consideration includes the write-off of accounts and notes receivable, net of deferred revenue, of $0.6 million. It also includes the disposal of the franchise intangible asset related to the two franchisees recorded at time of the JAB Merger. The cumulative net book value of the franchise intangible assets was $2.7 million at the acquisition dates. The Company accounted for the transactions as business combinations. The following table summarizes the preliminary fair values of assets acquired and liabilities assumed as of the date of acquisition for the acquisitions above. KK Canada KK U.S. Shops Total Purchase Assets acquired: Cash and cash equivalents $ 2,015 $ 40 $ 2,055 Prepaid expense and other current assets 301 474 775 Property and equipment, net 2,365 3,829 6,194 Other intangible assets, net 6,873 23,906 30,779 Operating lease right of use asset, net 2,894 19,292 22,186 Other assets 103 897 1,000 Total identified assets acquired 14,551 48,438 62,989 Liabilities assumed: Accounts payable (1,639) — (1,639) Accrued liabilities (489) (334) (823) Current operating lease liabilities (554) (2,093) (2,647) Noncurrent operating lease liabilities (2,327) (17,199) (19,526) Deferred income taxes, net (2,021) — (2,021) Total liabilities assumed (7,030) (19,626) (26,656) Goodwill 17,036 9,254 26,290 Noncontrolling interest (9,822) — (9,822) Purchase consideration, net $ 14,735 $ 38,066 $ 52,801 Transaction costs in 2021 $ 2,502 $ 1,251 $ 3,753 Transaction costs in 2020 24 184 208 Reportable segment U.S. and Canada U.S. and Canada During the measurement period, the Company will continue to obtain information to assist in determining the fair value of net assets acquired, which may differ materially from these preliminary estimates. Measurement period adjustments, if applicable, will be applied in the reporting period in which the adjustment amounts are determined. The results of operations of the aforementioned acquired shops were consolidated by the Company from the date of acquisition and include $44.1 million of total revenue and $4.3 million of net income attributable to the Company for fiscal year 2021. The amounts do not reflect adjustments for franchise royalties and related expenses that the Company could have generated as revenue and expenses from the acquired franchisees during the fiscal year had the transaction not been completed. 2020 Acquisitions Acquisition of KK Japan On December 8, 2020, the Company acquired all equity interests in Krispy Kreme Doughnut Japan Co., Ltd. (“KK Japan”). KK Japan holds the franchise and development rights of the Krispy Kreme brand for the territory of Japan. At the time of acquisition, KK Japan manufactured and distributed doughnuts through 44 shops and through wholesale channels. Acquisition-date fair value of consideration transferred was $3.8 million, consisting of settlement of pre-existing relationships, including the write-off of deferred revenue of ($0.1 million) and the disposal of the franchise intangible asset related to the KK Japan franchisee recorded by the Company in connection with the JAB Merger. The net book value of the franchise intangible asset was $3.9 million as of the date of the acquisition of KK Japan. The Company calculated an excess of estimated fair values of net assets acquired over the acquisition consideration paid, resulting in a bargain purchase gain of $0.7 million. The bargain purchase gain, which is primarily the result of favorable purchase terms due to KK Japan’s historical net losses from operations, was recorded within Other income in the Statements of Operations for the fiscal year 2020. Acquisition of Other Krispy Kreme Shops in 2020 In 2020, the Company acquired the business and operating assets of an additional eight franchisees, collectively consisting of 51 Krispy Kreme shops in the U.S. The Company paid total consideration of $89.9 million, consisting of $80.4 million cash and $9.5 million settlement of amounts related to pre-existing relationships, to acquire substantially all of the shops’ assets. The settlement of pre-existing relationships included in the purchase consideration includes the write-off of accounts and notes receivable, net of deferred revenue, of $2.6 million. It also includes the disposal of the franchise intangible asset related to the eight franchisees recorded by the Company at the time of the JAB Merger. The net book value of the franchise intangible asset was a cumulative $6.9 million as of the dates of acquisition of the franchisees. Within the measurement period, there was an adjustment to goodwill of $0.1 million related to an adjustment to other assets. The following table summarizes the preliminary fair values of assets acquired and liabilities assumed as of the date of acquisition for the 2020 acquisitions as well as the acquired businesses’ impact on consolidated results in the year of acquisition. KK Japan KK U.S. Shops Total Purchase Assets acquired: Cash and cash equivalents $ 5,340 $ 112 $ 5,452 Accounts receivable, net 3,322 — 3,322 Inventories 354 779 1,133 Prepaid expense and other current assets 469 23 492 Property and equipment, net 1,029 16,585 17,614 Other intangible assets, net — 48,011 48,011 Operating lease right of use asset, net 12,260 38,096 50,356 Other assets 3,975 3,699 7,674 Total identified assets acquired 26,749 107,305 134,054 Liabilities assumed: Accounts payable (2,522) — (2,522) Accrued liabilities (3,049) (1,656) (4,705) Current operating lease liabilities (4,430) (2,968) (7,398) Noncurrent operating lease liabilities (7,861) (35,128) (42,989) Deferred income taxes, net (1,966) — (1,966) Other long-term obligations and deferred credits (2,468) — (2,468) Total liabilities assumed (22,296) (39,752) (62,048) Goodwill — 22,411 22,411 Bargain purchase gain (688) — (688) Purchase consideration, net $ 3,765 $ 89,964 $ 93,729 Transaction costs in 2020 (approx.) $ 3,192 $ 4,636 $ 7,828 Reportable segment(s) Market Development U.S. and Canada The results of operations of the aforementioned acquired shops were consolidated by the Company from the date of acquisition and include $38.5 million of total revenue and $0.3 million of net income attributable to the Company for fiscal year 2020. The amounts do not reflect adjustments for franchise royalties and related expenses that the Company could have generated as revenue and expenses from the acquired franchisees during the fiscal year had the transaction not been completed. 2019 Acquisitions Acquisition of KK Mexico On November 19, 2019, the Company acquired all equity interests in KK Mexico. KK Mexico holds the franchise and development rights of the Krispy Kreme brand for the territory of Mexico. At the time of acquisition, KK Mexico manufactured and distributed doughnuts through 231 shops and through wholesale channels. Acquisition-date fair value of consideration transferred was $76.8 million, consisting of cash of $70.4 million, fair value of contingent consideration of $14.0 million and settlement of pre-existing relationships (net of debt pushed down) of ($7.6 million). The purchase agreement for KK Mexico included potential earnout payments of up to $12.5 million based on EBITDA results for the fiscal year 2019 and up to $12.5 million for revenue results for the fiscal year 2020. The Company included the fair value of these contingent payments in the purchase consideration. Based on the EBITDA results for fiscal year 2019, the Company paid the full $12.5 million of contingent consideration related to the fiscal year 2019, which was included as a cash outflow from investing activities in the Company’s Consolidated Statements of Cash Flows for the fiscal year 2019. Based on the revenue results for the fiscal year 2020, the Company made no earnout payment related to this fiscal year and recognized a gain of $1.5 million in its Consolidated Statements of Operations for the fiscal year 2020. The settlement of pre-existing relationships included in the purchase consideration includes the write-off of deferred revenue of ($0.5 million) and the establishment of push-down debt of ($10.7 million). It also includes the disposal of the franchise intangible asset related to the KK Mexico franchisee recorded by the Company at the time of the JAB Merger. The net book value of the franchise intangible asset was $3.6 million as of the date of the acquisition of KK Mexico. Other intangible assets consist of reacquired franchise rights with an estimated useful life equal to the weighted average remaining franchise agreement term. None of the goodwill nor the reacquired franchise rights are deductible as goodwill for income tax purposes. Within the measurement period, there were cumulative adjustments to goodwill of $1.2 million related to valuation adjustments on accounts receivable, property and equipment, operating lease right of use assets, other assets, accounts payable and deferred income taxes, net. Acquisition of WKS Krispy Kreme On November 18, 2019, the Company entered into a joint venture with W.K.S. Holdings Corporation (“WKS Holdings”) whereby the Company holds a 55% membership interest in WKS Krispy Kreme and WKS Holdings holds the remaining 45% membership interest. The Company paid total consideration of $19.6 million to acquire the interest in the joint venture, consisting of cash of $46.2 million, fair value of contingent consideration of $0.5 million and settlement of pre-existing relationships (net of debt pushed down) of ($27.1 million). WKS Holdings, a Krispy Kreme franchisee formerly operating under the name Hot Glaze Enchantment, contributed the assets of 30 Krispy Kreme shops in various states in the western U.S. to the joint venture. The contingent consideration arrangement required the Company to pay Hot Glaze Enchantment based on the fluctuation in fair value of rental payments associated with a Krispy Kreme shop in Layton, UT whereupon lease renegotiation was ongoing as of the acquisition date. The payment was to be on or before the earlier of (a.) April 30, 2021 or (b.) within 30 days following execution of the new lease agreement. Based on the results of the lease renegotiation a payment of $0.5 million was made to Hot Glaze Enchantment in 2020 to settle the contingent consideration liability. The Company has not recognized any expense associated with this contingent consideration in its Consolidated Statements of Operations for the fiscal year 2020. The settlement of pre-existing relationships included in the purchase consideration includes the write-off of accounts and notes receivable, net of deferred revenue, of ($0.1 million) and the establishment of push-down debt of ($33.0 million). It also includes the disposal of the franchise intangible asset related to the Westward Dough, LLC (which contributed six shops into the WKS Krispy Kreme joint venture) and Hot Glaze Enchantment franchisees recorded by the Company at the time of the JAB Merger. The net book value of the franchise intangible asset was $6.0 million as of the date of acquisition of WKS Krispy Kreme. Other intangible assets consist of reacquired franchise rights with an estimated useful life equal to the weighted average remaining franchise agreement term. A total of $49.2 million of goodwill and reacquired franchise rights are expected to be deductible as goodwill for U.S. income tax purposes. The fair value of the 45% noncontrolling interest in WKS Krispy Kreme was estimated to be $16.0 million. The fair value estimate was based on a total value of the equity in WKS Krispy Kreme derived from the consideration paid by the Company for its equity interests. Within the measurement period, there were cumulative adjustments to goodwill of $1.1 million related to valuation adjustments on property and equipment, other intangible assets and accounts payable. Acquisition of Other Krispy Kreme Shops in 2019 In 2019, the Company acquired the business and operating assets of an additional three franchisees, collectively consisting of 22 Krispy Kreme shops in the U.S. The Company paid total consideration of $26.6 million, consisting of $23.2 million cash and $3.4 million settlement of amounts related to pre-existing relationships, to acquire substantially all of the shops’ assets. The settlement of pre-existing relationships included in the purchase consideration includes the write-off of accounts and notes receivable, net of deferred revenue, of $0.2 million. It also includes the disposal of the franchise intangible asset related to the three franchisees recorded by the Company as of the time of the JAB Merger. The net book value of the franchise intangible asset was a cumulative $3.2 million at the dates of acquisition of the franchisees. Within the measurement period, there was an adjustment to goodwill of $0.1 million related to an adjustment to accrued liabilities. The following table summarizes the fair values of the assets acquired and liabilities assumed as of the date of acquisition for the 2019 acquisitions as well as the acquired businesses’ impact on consolidated results in the year of acquisition. This table incorporates certain measurement period adjustments during the fiscal year 2019. KK Mexico WKS Krispy Kreme Other Total Purchase Assets acquired: Cash and cash equivalents $ 856 $ 2,356 $ 44 $ 3,256 Marketable securities 1 19 — 20 Accounts receivable, net 4,242 115 334 4,691 Inventories 1,470 566 171 2,207 Prepaid expense and other current assets 412 237 83 732 Property and equipment, net 14,383 19,213 5,758 39,354 Other intangible assets, net 52,779 26,400 16,049 95,228 Operating lease right of use asset, net 6,723 42,208 11,397 60,328 Other assets 1,649 51 559 2,259 Total identified assets acquired 82,515 91,165 34,395 208,075 Liabilities assumed: Accounts payable (6,002) (1,702) (565) (8,269) Accrued liabilities (5,564) (6,370) (2,167) (14,101) Notes payable (10,706) (33,000) — (43,706) Noncurrent operating lease liabilities (2,846) (38,121) (9,726) (50,693) Deferred income taxes, net (16,576) — — (16,576) Other long-term obligations and deferred credits (271) — (950) (1,221) Total liabilities assumed (41,965) (79,193) (13,408) (134,566) Goodwill 36,223 23,606 5,625 65,454 Noncontrolling interest — (16,010) — (16,010) Purchase consideration, net $ 76,773 $ 19,568 $ 26,612 $ 122,953 Transaction costs in 2020 (approx.) $ 1,734 $ 540 $ 114 $ 2,388 Transaction costs in 2019 (approx.) 7,447 3,053 2,336 12,836 Reportable segment(s) International U.S. and Canada U.S. and Canada The results of operations of the aforementioned acquired shops were consolidated by the Company from the date of acquisition and include $31.7 million of total revenue and $3.7 million of net income attributable to the Company for fiscal year 2019. The amounts do not reflect adjustments for franchise royalties and related expenses that the Company could have generated as revenue and expenses from the acquired franchisees during the fiscal year had the transaction not been completed. Supplemental unaudited pro forma information The following unaudited pro forma information presents estimated combined results of the Company as if the 2021 acquisitions had occurred on December 30, 2019, the 2020 acquisitions had occurred on December 31, 2018 and the 2019 acquisitions had occurred on January 1, 2018: Fiscal Years Ended January 2, 2022 January 3, 2021 December 29, 2019 Revenue $ 1,384,391 $ 1,151,041 $ 1,083,747 Loss before income taxes (4,098) (48,788) (5,989) The amounts in the supplemental pro forma earnings for the fiscal years presented above reflect adjustments for transaction costs, franchise royalties and related expenses, and amortization that would have been charged assuming the same fair value adjustments to acquired intangibles. The acquisitions of KK Canada and “Other Krispy Kreme Shops” are not material to the Company’s financial statements, and therefore, the supplemental pro forma financial information related to these acquisitions is not included herein. These supplemental pro forma results are unaudited and are not necessarily indicative of results of operations that would have occurred had the acquisitions actually closed in the prior period. The pro forma results are also not indicative of results of operations for any future period. |
Accounts Receivable, net
Accounts Receivable, net | 12 Months Ended |
Jan. 02, 2022 | |
Receivables [Abstract] | |
Accounts Receivable, net | Accounts Receivable, net The components of Accounts receivable, net are as follows: January 2, 2022 January 3, 2021 Trade receivables, net $ 41,132 $ 39,624 Other receivables, net 5,936 5,958 Receivables from related parties, net 423 416 Total accounts receivable, net $ 47,491 $ 45,998 Receivables from related parties, net represents receivables from equity method investees. Refer to Note 15 , Related Party Transactions, to the audited Consolidated Financial Statements for further information. |
Inventories
Inventories | 12 Months Ended |
Jan. 02, 2022 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories The components of Inventories are as follows: January 2, 2022 January 3, 2021 Raw materials $ 15,278 $ 16,263 Work in progress 700 871 Finished goods and purchased merchandise 18,873 21,385 Total inventories $ 34,851 $ 38,519 |
Property and Equipment, net
Property and Equipment, net | 12 Months Ended |
Jan. 02, 2022 | |
Property, Plant and Equipment [Abstract] | |
Property, and Equipment, net | Property and Equipment, net Property and equipment, net consist of the following: January 2, 2022 January 3, 2021 Land $ 12,931 $ 13,187 Buildings 146,923 141,853 Leasehold improvements 195,129 158,145 Machinery and equipment 243,673 217,566 Computer software 43,985 34,580 Construction and projects in progress 60,940 43,769 Property and equipment, gross 703,581 609,100 Less: Accumulated depreciation (264,663) (213,845) Total property and equipment, net $ 438,918 $ 395,255 Computer software includes $4.7 million and $4.2 million of costs to develop, code, test and license software under hosting arrangements as of January 2, 2022 and January 3, 2021, respectively. Software under hosting arrangements consists primarily of solutions that empower the Company’s consumer-facing website and mobile application. Total depreciation expense was $68.6 million, $51.5 million and $40.0 million in the fiscal years ended January 2, 2022, January 3, 2021, and December 29, 2019, respectively. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 12 Months Ended |
Jan. 02, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Other Intangible Assets Goodwill Changes in the carrying amount of goodwill by reportable segment are as follows: U.S. and Canada International Market Development Total Balance as of December 29, 2019 $ 572,786 $ 277,565 $ 199,324 $ 1,049,675 Acquisitions 68,683 — (46,354) 22,329 Measurement period adjustments related to fiscal year 2019 acquisitions 1,235 1,190 — 2,425 Foreign currency impact — 12,117 — 12,117 Balance as of January 3, 2021 642,704 290,872 152,970 1,086,546 Acquisitions 45,328 — (19,038) 26,290 Measurement period adjustments related to fiscal year 2020 acquisitions 82 — — 82 Foreign currency impact (66) (7,530) — (7,596) Balance as of January 2, 2022 $ 688,048 $ 283,342 $ 133,932 $ 1,105,322 Acquisitions of franchises result in a reclassification of goodwill between segments. Other Intangible Assets Other intangible assets consist of the following: January 2, 2022 January 3, 2021 Gross Accumulated Net Gross Accumulated Net Intangible assets with indefinite lives Trade name $ 657,900 $ — $ 657,900 $ 657,900 $ — $ 657,900 Intangible assets with definite lives Franchise agreements 32,545 (8,369) 24,176 36,254 (7,519) 28,735 Customer relationships 15,000 (4,684) 10,316 15,000 (3,819) 11,181 Reacquired franchise rights 384,305 (84,177) 300,128 358,095 (59,432) 298,663 Website development costs 6,500 (6,500) — 6,500 (4,965) 1,535 Total intangible assets with definite lives 438,350 (103,730) 334,620 415,849 (75,735) 340,114 Total intangible assets $ 1,096,250 $ (103,730) $ 992,520 $ 1,073,749 $ (75,735) $ 998,014 Amortization expense related to intangible assets included in Depreciation and amortization expense was $29.8 million, $26.3 million and $21.3 million for the fiscal years ended January 2, 2022, January 3, 2021 and December 29, 2019, respectively. Estimated future amortization expense as of January 2, 2022 is as follows: Fiscal year Estimated 2022 $ 28,726 2023 28,726 2024 28,892 2025 28,726 2026 28,566 Thereafter 190,984 Total $ 334,620 |
Long-Term Debt
Long-Term Debt | 12 Months Ended |
Jan. 02, 2022 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt The Company’s long-term debt obligations consists of the following: Fiscal Years Ended January 2, January 3, 2019 Facility - term loan $ 621,250 $ 656,250 2019 Facility - revolving credit facility 75,000 150,000 Less: Debt issuance costs (3,833) (5,419) Financing obligations 24,473 26,224 Total long-term debt 716,890 827,055 Less: Current portion of long-term debt (36,583) (41,245) Long-term debt, less current portion 680,307 785,810 Related party notes payable (excluding accrued interest) — 337,148 Total debt and related party notes payable $ 680,307 $ 1,122,958 2016 & 2019 Secured Credit Facilities The Company entered into a $500.0 million senior secured credit facility (the “prior facility”) that provided for a term loan with a principal amount of $350.0 million and a $150.0 million senior secured revolving credit facility, which had the following amendments: (1) add $65.0 million in borrowings on the term loan and $15.0 million in borrowing capacity on the revolving credit facility; (2) add $125.0 million in borrowings on the term loan; and (3) add $50.0 million in borrowings on the term loan. In June 2019, the Company refinanced its prior facility. This resulted in the repayment of the outstanding term loan and revolving credit facility. The Company incurred a $1.6 million loss on extinguishment, related primarily to the write-off of debt issuance costs as part of the refinancing of the prior facility, included in Interest expense, net in the Consolidated Statements of Operations. Upon completion of this extinguishment, the Company entered into a $1.0 billion senior secured credit facility that provided for a term loan with a principal amount of $700.0 million and a $300.0 million senior secured revolving credit facility (collectively, the “2019 Facility”). The 2019 Facility is secured by a first priority lien on substantially all of the Company’s personal property assets, certain real properties and all of the Company’s domestic wholly-owned subsidiaries. The Company capitalized $10.9 million of debt issuance costs related to the 2019 Facility, $8.0 million of which is related to the term loan and $2.9 million related to the revolving credit facility. In July 2021, the Company amended the 2019 Facility to allow for financial reporting at the KKI legal entity level and to allow for KKI to be guarantor of the obligations of its subsidiary Krispy Kreme Doughnuts, Inc. under the 2019 Facility. After consideration of outstanding borrowings and letters of credit secured by the 2019 Facility, the Company had $225.0 million and $150.0 million of available borrowing capacity under the revolving credit facility as of January 2, 2022 and January 3, 2021, respectively. The 2019 Facility provides for quarterly scheduled principal payments on the term loan and repayment of all outstanding balances on the term loan and revolving credit facility at maturity, June 13, 2024. Further, the Company may be required to prepay additional amounts annually upon the occurrence of a prepayment event as defined in the 2019 Facility. Because the amounts of any such future repayments are not currently determinable, they are excluded from the long-term debt maturities schedule below. Interest on borrowings under the 2019 Facility is payable either at the London Interbank Offered Rate (“LIBOR”) rounded up to the next 1/16% of 1% or the Alternate Base Rate (which is the greatest of the prime rate, the Federal Funds rate plus 0.50%, or the one-month LIBOR rate plus 1.00%), in each case plus the Applicable Rate. The Applicable Rate for LIBOR loans ranges from 1.75% to 2.25%, and for Base Rate loans ranges from 0.75% to 1.25%, in each case depending on the Company’s leverage ratio. All borrowings outstanding under the 2019 Facility as of January 2, 2022 and January 3, 2021 were LIBOR loans. The Applicable Rate was 2.00% and 2.00% for the fiscal years ended January 2, 2022 and January 3, 2021, respectively, and the LIBOR rate was 0.13% and 0.19% for the fiscal years ended January 2, 2022 and January 3, 2021, respectively, under the 2019 Facility. As of January 2, 2022 and January 3, 2021, $505.0 million out of the $621.3 million term loan balance and $505.0 million out of the $656.3 million term loan balance, respectively, was hedged. The effective interest rate on the term loan was approximately 3.74% and 3.67% for the fiscal years ended January 2, 2022 and January 3, 2021, respectively. Refer to Note 10 , Derivative Instruments, to the audited Consolidated Financial Statements for further discussion of the interest rate swap arrangements. The 2019 Facility allows the Company to obtain letters of credit without applying those amounts against the usage of the senior secured revolving credit facility. The Company is required to pay a fee equal to the Applicable Rate for LIBOR-based loans on the outstanding amount of letters of credit plus a fronting fee to the issuing bank. Commitment fees on the unused portion of the senior secured revolving credit facility range from 0.25% to 0.375%, based on the Company’s leverage ratio. At January 2, 2022, January 3, 2021 and December 29, 2019, the fee on the unused portion of the senior secured revolving credit facility was 0.25%, 0.25% and 0.25%, respectively, included in Interest expense in the Consolidated Statements of Operations. Restrictions and Covenants The 2019 Facility requires the Company to meet a maximum leverage ratio financial test. The leverage ratio was required to be not greater than 6.00 to 1.00 initially, reducing in steps throughout the term of the 2019 Facility ultimately to 5.00 to 1.00. The leverage ratio under the 2019 Facility was required to be below 5.50 to 1.00 as of January 2, 2022, and January 3, 2021 and is calculated using Net Debt and Adjusted EBITDA as defined in the 2019 Facility. The 2019 Facility also contains covenants which, among other things, generally limit (with certain exceptions): mergers, amalgamations or consolidations; the incurrence of additional indebtedness (including guarantees); the incurrence of additional liens; the sale, assignment, lease, conveyance or transfer of assets; certain investments; dividends and stock redemptions or repurchases in excess of certain amounts; transactions with affiliates; engaging in materially different lines of business; and other activities customarily restricted in such agreements. The 2019 Facility also prohibits the transfer of cash or other assets to the parent company, whether by dividend, loan or otherwise, but provides for exceptions to enable the parent company to pay taxes, directors’ fees and operating expenses, as well as exceptions to permit dividends in respect of the Company’s common stock and stock redemptions and repurchases, to the extent permitted by the 2019 Facility. Substantially all of the net assets of the Company’s consolidated subsidiaries were restricted as of January 28, 2022. As of January 2, 2022 and January 3, 2021, the Company was in compliance with the financial and other covenants related to the 2019 Facility. The 2019 Facility also contains customary events of default including, but not limited to, payment defaults, breaches of representations and warranties, covenant defaults, non-loan party indebtedness in excess of $35.0 million, certain events of bankruptcy and insolvency, judgment defaults in excess of $35.0 million and the occurrence of a change of control. Borrowings and issuances of letters of credit under the 2019 Facility are subject to the satisfaction of usual and customary conditions, including the accuracy of representations and warranties and the absence of defaults. The aggregate maturities of the 2019 Facility for each of the following five years by fiscal year are as follows: Fiscal year Principal Amount 2022 $ 35,000 2023 35,000 2024 626,250 2025 — 2026 — Term Loan Facility On June 10, 2021, the Company entered into the Term Loan Facility. On June 17, 2021, the Company borrowed $500.0 million under the Term Loan Facility. The borrowings under the Term Loan Facility bore an all-in interest rate of 2.68175%. As of January 2, 2022, there was no outstanding principal amount under the Term Loan Facility, as it was paid off in full and terminated on July 7, 2021, primarily using the net IPO proceeds with the difference being partially funded by a drawdown of $100.0 million on the 2019 Facility’s revolving credit facility. The Term Loan Facility would have matured on the earlier of (i) June 10, 2022 and (ii) within four business days following consummation of the IPO. The interest expense was $2.4 million for the fiscal year ended January 2, 2022, which included $1.7 million of debt issuance costs incurred and recognized as expenses. Cash Payments of Interest Interest paid, inclusive of debt issuance costs, totaled $44.3 million, $33.5 million and $40.1 million in the fiscal years ended January 2, 2022, January 3, 2021, and December 29, 2019, respectively. Financing Obligations The Company has long-term financing obligations primarily in the form of lease obligations (related to both Company-owned and franchised restaurants). Refer to Note 8 |
Leases
Leases | 12 Months Ended |
Jan. 02, 2022 | |
Leases [Abstract] | |
Leases | Leases The Company has various lease agreements related to real estate, vehicles and equipment. Its operating leases include real estate (buildings and ground), vehicles and equipment. Operating lease right-of-use assets and operating lease liabilities are recognized based on the present value of the future lease payments over the term. The operating lease right-of-use asset also includes accrued lease expense resulting from the straight-line accounting under prior accounting methods, which is now being amortized over the remaining life of the lease. The Company is the lessee on a number of ground leases and multiple building leases, which were classified as operating leases under ASC 840. As the Company elected the package of practical expedients, the Company was not required to reassess the classification of these existing leases and as such, these leases continue to be accounted for as operating leases. In the event the Company modifies the existing leases or enters into new ground or building leases in the future, such leases may be classified as finance leases. The Company’s finance leases relate primarily to vehicles and equipment. The lease payments are largely fixed in nature. The Company is generally obligated for the cost of property taxes, insurance and common area maintenance relating to its leases, which are variable in nature. The Company determines the variable payments based on invoiced amounts from lessors. The Company has elected to not apply the recognition requirements to leases of 12 months or less. These leases will be expensed on a straight-line basis, and no operating lease liability will be recorded. The Company included the following amounts related to operating and finance lease assets and liabilities within the Consolidated Balance Sheets: As of January 2, 2022 January 3, 2021 Assets Classification Operating lease Operating lease right of use asset, net $ 435,168 $ 399,688 Finance lease Property and equipment, net 19,298 23,556 Total leased assets $ 454,466 $ 423,244 Liabilities Current Operating lease Current operating lease liabilities $ 50,359 $ 45,675 Finance lease Current portion of long-term debt 1,583 6,245 Noncurrent Operating lease Noncurrent operating lease liabilities 415,208 376,099 Finance lease Long-term debt, less current portion 22,890 19,979 Total leased liabilities $ 490,040 $ 447,998 The Company has long-term contractual obligations primarily in the form of lease obligations related to Company-operated restaurants and franchised restaurants. Interest expense associated with the finance lease obligations is computed using the incremental borrowing rate at the time the lease is entered into and is based on the amount of the outstanding lease obligation. The weighted-average remaining lease term and weighted-average discount rate for operating and finance leases were as follows: As of January 2, 2022 January 3, 2021 Weighted average remaining lease term: Operating lease 11.6 years 11.1 years Finance lease 13.8 years 12.0 years Weighted average discount rate: Operating lease 6.65 % 6.94 % Finance lease 7.13 % 7.13 % Lease costs were as follows: Fiscal Years Ended January 2, 2022 January 3, 2021 December 29, 2019 Lease cost Classification Operating lease cost Selling, general and administrative expense $ 2,481 $ 3,127 $ 2,816 Operating lease cost Operating expenses 85,429 70,855 45,732 Short-term lease cost Operating expenses 2,513 2,867 1,850 Variable lease costs Operating expenses 16,414 9,195 13,161 Sublease income Royalties and other revenues (386) (506) (480) Finance lease cost: Amortization of right-of-use assets Depreciation and amortization expense $ 3,217 $ 2,587 $ 2,469 Interest on lease liabilities Interest expense, net 2,002 2,040 1,915 Supplemental disclosures of cash flow information related to leases were as follows: Fiscal Years Ended January 2, 2022 January 3, 2021 December 29, 2019 Other information Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 91,967 $ 78,465 $ 59,227 Operating cash flows for finance leases 1,916 1,781 1,914 Financing cash flows for finance leases 4,901 3,694 1,290 Right-of-use assets obtained in exchange for new lease liabilities: Operating leases $ 95,284 $ 74,979 $ 135,163 Finance leases 2,328 7,500 5,062 A majority of the leases include options to extend the lease. If the Company is reasonably certain to exercise an option to extend a lease, the extension period is included as part of the right-of-use asset and the lease liability. Some of the leases include an option to early terminate the lease. Leases with an early termination option generally involve a termination payment. For the fiscal years ending January 2, 2022, January 3, 2021, and December 29, 2019 the Company recorded lease termination costs of $0.6 million, $4.4 million and $2.6 million, respectively. Correspondingly, the right-of-use assets were reduced by $0.6 million, $4.4 million and $2.6 million, respectively. The Company’s leases do not contain restrictions or covenants that restrict the Company from incurring other financial obligations. The Company also does not provide any residual value guarantees for the leases or have any significant leases that have yet to be commenced. At the inception of the contract, management determines if the contract is or contains a lease. A contract is or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The incremental borrowing rate (“IBR”) reflects a fully secured rate based on the credit rating taking into consideration the repayment timing of the lease and any impacts due to the economic environment in which the lease operates. The estimate of the incremental borrowing rate reflects considerations such as market rates for the outstanding debt, interpolations of rates for leases with terms that differ from the outstanding debt, and market rates for debt of companies with similar credit ratings. Future lease commitments to be paid by the Company as of January 2, 2022 were as follows: Fiscal year Operating Leases Finance Leases 2022 $ 80,268 $ 3,275 2023 67,952 2,728 2024 63,907 2,588 2025 58,440 2,605 2026 56,505 2,824 Thereafter 395,510 25,846 Total lease payments 722,582 39,866 Less: interest (257,015) (15,393) Present value of lease liabilities $ 465,567 $ 24,473 In December 2021, the Company completed a sale-leaseback transaction whereby it disposed of the land at four real estate properties for proceeds of $11.1 million. The Company subsequently leased back the properties, which are accounted for as operating leases. The Company recognized a gain on sale of $8.7 million, which is included in Other (income)/expenses, net on the Consolidated Statement of Operations. |
Leases | Leases The Company has various lease agreements related to real estate, vehicles and equipment. Its operating leases include real estate (buildings and ground), vehicles and equipment. Operating lease right-of-use assets and operating lease liabilities are recognized based on the present value of the future lease payments over the term. The operating lease right-of-use asset also includes accrued lease expense resulting from the straight-line accounting under prior accounting methods, which is now being amortized over the remaining life of the lease. The Company is the lessee on a number of ground leases and multiple building leases, which were classified as operating leases under ASC 840. As the Company elected the package of practical expedients, the Company was not required to reassess the classification of these existing leases and as such, these leases continue to be accounted for as operating leases. In the event the Company modifies the existing leases or enters into new ground or building leases in the future, such leases may be classified as finance leases. The Company’s finance leases relate primarily to vehicles and equipment. The lease payments are largely fixed in nature. The Company is generally obligated for the cost of property taxes, insurance and common area maintenance relating to its leases, which are variable in nature. The Company determines the variable payments based on invoiced amounts from lessors. The Company has elected to not apply the recognition requirements to leases of 12 months or less. These leases will be expensed on a straight-line basis, and no operating lease liability will be recorded. The Company included the following amounts related to operating and finance lease assets and liabilities within the Consolidated Balance Sheets: As of January 2, 2022 January 3, 2021 Assets Classification Operating lease Operating lease right of use asset, net $ 435,168 $ 399,688 Finance lease Property and equipment, net 19,298 23,556 Total leased assets $ 454,466 $ 423,244 Liabilities Current Operating lease Current operating lease liabilities $ 50,359 $ 45,675 Finance lease Current portion of long-term debt 1,583 6,245 Noncurrent Operating lease Noncurrent operating lease liabilities 415,208 376,099 Finance lease Long-term debt, less current portion 22,890 19,979 Total leased liabilities $ 490,040 $ 447,998 The Company has long-term contractual obligations primarily in the form of lease obligations related to Company-operated restaurants and franchised restaurants. Interest expense associated with the finance lease obligations is computed using the incremental borrowing rate at the time the lease is entered into and is based on the amount of the outstanding lease obligation. The weighted-average remaining lease term and weighted-average discount rate for operating and finance leases were as follows: As of January 2, 2022 January 3, 2021 Weighted average remaining lease term: Operating lease 11.6 years 11.1 years Finance lease 13.8 years 12.0 years Weighted average discount rate: Operating lease 6.65 % 6.94 % Finance lease 7.13 % 7.13 % Lease costs were as follows: Fiscal Years Ended January 2, 2022 January 3, 2021 December 29, 2019 Lease cost Classification Operating lease cost Selling, general and administrative expense $ 2,481 $ 3,127 $ 2,816 Operating lease cost Operating expenses 85,429 70,855 45,732 Short-term lease cost Operating expenses 2,513 2,867 1,850 Variable lease costs Operating expenses 16,414 9,195 13,161 Sublease income Royalties and other revenues (386) (506) (480) Finance lease cost: Amortization of right-of-use assets Depreciation and amortization expense $ 3,217 $ 2,587 $ 2,469 Interest on lease liabilities Interest expense, net 2,002 2,040 1,915 Supplemental disclosures of cash flow information related to leases were as follows: Fiscal Years Ended January 2, 2022 January 3, 2021 December 29, 2019 Other information Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 91,967 $ 78,465 $ 59,227 Operating cash flows for finance leases 1,916 1,781 1,914 Financing cash flows for finance leases 4,901 3,694 1,290 Right-of-use assets obtained in exchange for new lease liabilities: Operating leases $ 95,284 $ 74,979 $ 135,163 Finance leases 2,328 7,500 5,062 A majority of the leases include options to extend the lease. If the Company is reasonably certain to exercise an option to extend a lease, the extension period is included as part of the right-of-use asset and the lease liability. Some of the leases include an option to early terminate the lease. Leases with an early termination option generally involve a termination payment. For the fiscal years ending January 2, 2022, January 3, 2021, and December 29, 2019 the Company recorded lease termination costs of $0.6 million, $4.4 million and $2.6 million, respectively. Correspondingly, the right-of-use assets were reduced by $0.6 million, $4.4 million and $2.6 million, respectively. The Company’s leases do not contain restrictions or covenants that restrict the Company from incurring other financial obligations. The Company also does not provide any residual value guarantees for the leases or have any significant leases that have yet to be commenced. At the inception of the contract, management determines if the contract is or contains a lease. A contract is or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The incremental borrowing rate (“IBR”) reflects a fully secured rate based on the credit rating taking into consideration the repayment timing of the lease and any impacts due to the economic environment in which the lease operates. The estimate of the incremental borrowing rate reflects considerations such as market rates for the outstanding debt, interpolations of rates for leases with terms that differ from the outstanding debt, and market rates for debt of companies with similar credit ratings. Future lease commitments to be paid by the Company as of January 2, 2022 were as follows: Fiscal year Operating Leases Finance Leases 2022 $ 80,268 $ 3,275 2023 67,952 2,728 2024 63,907 2,588 2025 58,440 2,605 2026 56,505 2,824 Thereafter 395,510 25,846 Total lease payments 722,582 39,866 Less: interest (257,015) (15,393) Present value of lease liabilities $ 465,567 $ 24,473 In December 2021, the Company completed a sale-leaseback transaction whereby it disposed of the land at four real estate properties for proceeds of $11.1 million. The Company subsequently leased back the properties, which are accounted for as operating leases. The Company recognized a gain on sale of $8.7 million, which is included in Other (income)/expenses, net on the Consolidated Statement of Operations. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Jan. 02, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The following table presents assets and liabilities that are measured at fair value on a recurring basis as of January 2, 2022 and January 3, 2021: January 2, 2022 Level 1 Level 2 Level 3 Assets: 401(k) mirror plan assets $ 111 $ — $ — Commodity derivatives — 1,486 — Total Assets $ 111 $ 1,486 $ — Liabilities: Foreign currency derivative — 80 — Interest rate derivative — 14,667 — Total Liabilities $ — $ 14,747 $ — January 3, 2021 Level 1 Level 2 Level 3 Assets: 401(k) mirror plan assets $ 237 $ — $ — Foreign currency derivative — 131 — Commodity derivatives — 420 — Total Assets $ 237 $ 551 $ — Liabilities: Interest rate derivative — 32,813 — Total Liabilities $ — $ 32,813 $ — |
Derivative Instruments
Derivative Instruments | 12 Months Ended |
Jan. 02, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | Derivative Instruments The Company is exposed to certain risks relating to its ongoing business operations. Management evaluates various strategies in managing its exposure to market-based risks, such as entering into transactions to manage its exposure to commodity price risk and floating interest rates. The Company does not hold or issue derivative instruments for trading purposes. The Company is exposed to credit-related losses in the event of non-performance by the counterparties to its derivative instruments. The Company mitigates this risk of nonperformance by dealing with highly rated counterparties. Commodity Price Risk The Company uses forward contracts to protect against the effects of commodity price fluctuations in the cost of ingredients of its products, of which flour, sugar and shortening are the most significant, and the cost of gasoline used by its delivery vehicles. Management has not designated these forward contracts as hedges. As of January 2, 2022 and January 3, 2021 the total notional amount of commodity derivatives was 1.9 million and 3.0 million gallons of gasoline, respectively. They were scheduled to mature between January 3, 2022 and March 31, 2023 and January 4, 2021 and December 1, 2022, respectively. As of January 2, 2022 and January 3, 2021, the Company has recorded an asset of $1.5 million and $0.4 million, respectively, related to the fair market values of its commodity derivatives. The settlement of commodity derivative contracts is reported in the Consolidated Statements of Cash Flows as a cash flow from operating activities. Interest Rate Risk The Company is exposed to market risk from increases in interest rates on any borrowings outstanding under its Debt Facility. In November 2016, the Company entered into various interest rate swap agreements (“original interest rate swap”) with a notional amount totaling $300.0 million that would have matured in July 2021. Under the original interest rate swap agreements, the Company made payments based on a fixed rate of 1.18% and in exchange received payments at a variable rate based on the one-month LIBOR. In April 2018, the Company novated these interest swap agreements. In May 2018, following the novation of its original interest rate swap, the Company entered into a new interest rate swap (“May 2018 swap agreement”). The May 2018 interest rate swap agreements had a notional amount of $300.0 million and were to mature in July 2021. Under the novated swap agreements, the Company had fixed the variable portion of the interest rate on a portion of the Debt Facility and was required to make payments based on a fixed rate of 2.70% and in exchange would receive payments at a variable rate based on the one-month LIBOR. In November 2018, the Company entered into a new interest swap agreement with an aggregate notional amount of $155.0 million (“November 2018 swap agreements”). Under the November 2018 swap agreements, the Company made payments based on a fixed rate of 2.92% and in exchange received payments at a variable rate based on the one month LIBOR. The November 2018 swap agreements were to mature in November 2023, corresponding with an expected extension of the Debt Facility. In June 2019, following its debt modification (modification to the “2019 Debt Facility”), the Company effectively cancelled its swap agreements on $300.0 million of the $455.0 million hedged notional and entered into new agreements with the same counterparties (the “June 2019 swap agreement”). The only differences between these new agreements and the prior versions included an extension of the maturity term of the swaps from 2023 to 2024, and the locking in of a new payment rate on the fixed leg of the swaps (1.99%), through the 2024 maturity. In February 2020, the Company effectively cancelled its swap agreements on the other $155.0 million hedged notional and entered into new agreements with the same counterparties (the “February 2020 swap agreement”). The only differences between these new agreements and the prior versions included an extension of the maturity term of the swaps from 2023 to 2024, and the locking in of a new payment rate on the fixed leg of the swaps (2.72%), through the 2024 maturity. At the same time, the Company also entered into a new interest rate swap agreement with a notional amount of $50.0 million and a maturity date in June 2024. Under this swap agreement, the Company had fixed the variable portion of the interest rate on a portion of the Debt Facility and was required to make payments based on a fixed rate of 0.95% and in exchange would receive payments at a variable rate based on the one-month LIBOR The net effect of the interest rate swap arrangements will be to fix the interest rate on the term loan under the 2019 Debt Facility up to the notional amount outstanding at the rates payable under the swap agreements plus the Applicable Rate (as defined by the 2019 Debt Facility). Management has designated the 2018, the June 2019 and the February 2020 swap agreements as cash flow hedges and recognized the changes in the fair value of these swaps in other comprehensive income. As of January 2, 2022 and January 3, 2021, the Company has recorded liabilities of $14.7 million and $32.8 million, respectively, related to the fair market values of its interest rate derivatives. The cash flows associated with the interest rate swaps are reflected in the operating activities in the Consolidated Statements of Cash Flows, which is consistent with the classification as operating activities of the interest payments on the term loan. All of the interest rate swap derivatives have certain early termination triggers caused by an event of default or termination. The events of default include failure to make payments when due, failure to give notice of a termination event, failure to comply with or perform obligations under the agreements, bankruptcy or insolvency and defaults under other agreements (cross-default provisions). Foreign Currency Exchange Rate Risk The Company is exposed to foreign currency risk primarily from its investments in consolidated subsidiaries that operate in Canada, the U.K., Ireland, Australia, New Zealand, Mexico and Japan. In order to mitigate foreign exchange fluctuations, the Company enters into foreign exchange forward contracts. Management has not designated these forward contracts as hedges. As of January 2, 2022 and January 3, 2021, the total notional amount of foreign exchange derivatives was $51.8 million and $26.7 million, respectively. They were scheduled to mature between January 2022 and February 2022, and in January 2021, respectively. As of January 2, 2022 and January 3, 2021, the Company has recorded a liability of $0.1 million and an asset of $0.1 million, respectively, related to the fair market values of its foreign exchange derivatives. Quantitative Summary of Derivative Positions and Their Effect on Results of Operations The following tables present the fair values of derivative instruments included in the Consolidated Balance Sheets as of January 2, 2022 and January 3, 2021 for derivatives not designated as hedging instruments and derivatives designed as hedging instruments, respectively. The Company only has cash flow hedges that are designated as hedging instruments. Derivatives Fair Value Derivatives Not Designated as Hedging January 2, 2022 January 3, 2021 Balance Sheet Location Foreign currency derivatives $ — $ 131 Prepaid expense and other current assets Commodity derivatives 1,486 420 Prepaid expense and other current assets $ 1,486 $ 551 Foreign currency derivatives 80 — Accrued liabilities $ 80 $ — Derivatives Fair Value Derivatives Designated as Hedging January 2, 2022 January 3, 2021 Balance Sheet Location Interest rate derivatives $ 8,535 $ 10,235 Accrued liabilities Interest rate derivatives 6,132 22,578 Other long-term obligations and deferred credits $ 14,667 $ 32,813 The effect of derivative instruments on the Consolidated Statements of Operations for the fiscal years ended January 2, 2022, January 3, 2021, and December 29, 2019: Derivative Gain/(Loss) Recognized in Income in Fiscal Years Ended Derivatives Designated as Hedging Instruments January 2, 2022 January 3, 2021 December 29, 2019 Location of Derivative Gain/(Loss) Recognized in Income Loss on interest rate derivatives $ (10,291) $ (7,633) $ (1,774) Interest expense, net $ (10,291) $ (7,633) $ (1,774) Derivative Gain/(Loss) Recognized in Income in Fiscal Years Ended Derivatives Not Designated as Hedging Instruments January 2, 2022 January 3, 2021 December 29, 2019 Location of Derivative Gain/(Loss) Recognized in Income Loss on foreign currency $ (62) $ (21) $ (248) Other non-operating expense/(income), net Gain on commodity derivatives 1,066 267 153 Other non-operating expense/(income), net $ 1,004 $ 246 $ (95) |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Jan. 02, 2022 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plans | Employee Benefit Plans Defined Contribution Plans The Company has a 401(k) savings plan (the “401(k) Plan”) to which eligible employees may contribute up to 100% of their salary and bonus on a tax deferred basis, subject to statutory limitations. The Company currently matches 100% of the first 3% and 50% of the next 2% of compensation contributed by each employee to the 401(k) Plan. The Company operates defined contribution plans in the U.K. and Ireland (“KKUK and Ireland Contribution Plans”), to which eligible employees may contribute up to 100% of their salary, subject to statutory limitations. The Company currently matches contributions at a rate of 3% of pensionable earnings. The KKUK and Ireland Contribution Plans are pension plans under which the Company pays fixed contributions into a separate entity. The Company has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. The Company has no further payment obligations once the contributions have been paid. The contributions are recognized as employee benefit expense when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in the future payments is available. The Company’s Insomnia Cookies subsidiary sponsors a 401(k) plan (the “Insomnia Cookies Contribution Plan”) which allows all its eligible employees to elect to defer up to 100% of their annual compensation not to exceed statutory limits. The Insomnia Cookies Contribution Plan provides for discretionary matching contributions, which may not exceed 2% of the employee’s overall compensation. KK Australia operates a defined contribution retirement benefit plan for its employees in Australia (the “Australia Plan”) and in New Zealand (the “New Zealand Plan”). The Company contributes 9.5% of employee compensation to the Australia Plan and matches employee contributions of up to 3% of compensation to the New Zealand Plan. KK Canada operates a Registered Retirement Savings Plan (“RRSP”) for its employees in Canada (the “Canada Plan”) which allows eligible employees to contribute. For certain salaried employees, the Company will match eligible employee contributions up to 2.5% of their annual base salary. Total contribution plan expense for defined contribution plans is $6.6 million, $4.9 million and $4.6 million for the fiscal years ended January 2, 2022, January 3, 2021, and December 29, 2019, respectively. Other Employee Benefit Plans The Company has a Nonqualified Deferred Compensation Plan (the “401(k) Mirror Plan”) designed to enable officers of the Company whose contributions to the 401(k) Plan are limited by certain statutory limitations to have the same opportunity to defer compensation as is available to other employees of the Company under the qualified 401(k) savings plan. The investments are not a legally separate fund of assets and are subject to the claims of the Company’s general creditors. Such investments are included in Other assets in the Consolidated Balance Sheets. The corresponding liability to participants is included in Other long-term obligations and deferred credits in the Consolidated Balance Sheets. The balance in the asset and corresponding liability account was $0.1 million and $0.2 million as of January 2, 2022 and January 3, 2021, respectively. |
Share-based Compensation
Share-based Compensation | 12 Months Ended |
Jan. 02, 2022 | |
Share-based Payment Arrangement [Abstract] | |
Share-based Compensation | Share-based Compensation Restricted Stock Units (“RSUs”) The Company and certain of its subsidiaries issue time-vested restricted stock units (“RSUs”) under their respective executive ownership plans and long-term incentive plans. The time-vested RSUs are awarded to eligible employees and non-employee directors and entitle the grantee to receive shares of common stock at the end of a vesting period. The majority of RSUs vest in 54 months from the date of grant and include a minimum holding period of six months before the shareholder may redeem the shares. Certain RSUs vest over a 60-month period subsequent to the grant date (with 60% vesting during the third year following the grant date, 20% vesting during the fourth year, and 20% vesting at the end of the 60-month term). Throughout the vesting period and the holding period, shareholders are subject to the market risk on the value of their shares. RSUs held by KKI are granted to U.S. employees and directors as well as certain employees of the Company’s subsidiaries. The U.K. employees receive RSUs held by KKUK. The Insomnia Cookies employees receive RSUs held by Insomnia Cookies. The Australia employees receive RSUs held by KK Australia. The Mexico employees receive RSUs held by KK Mexico. RSU activity under the various plans during the fiscal years presented is as follows: Non-vested shares outstanding at December 29, 2019 Granted Vested Forfeited Non-vested shares outstanding at January 3, 2021 Granted RSU Dividend Equivalents (1) Vested Forfeited Non-vested shares outstanding at January 2, 2022 KKI RSUs 4,108,726 696,371 2,283 153,263 4,649,551 3,339,608 1,018,629 2,585,390 556,291 5,866,107 Weighted Average Grant Date Fair Value $ 10.43 16.90 10.35 11.43 $ 11.37 17.95 — 9.29 14.32 $ 13.78 KKUK RSUs 416,068 — — 11,500 404,568 6,785 — 351,500 — 59,853 Weighted Average Grant Date Fair Value $ 12.44 — — 12.22 $ 12.45 29.80 — 12.22 — $ 15.77 Insomnia Cookies RSUs 30,959 13,688 810 14,558 29,279 15,173 — 809 10,147 33,496 Weighted Average Grant Date Fair Value $ 67.82 66.71 74.12 64.30 $ 68.87 97.77 — 74.12 75.68 $ 79.66 KK Australia RSUs 1,880,941 63,560 — 100,260 1,844,241 78,534 — — 26,042 1,896,733 Weighted Average Grant Date Fair Value $ 1.47 1.67 — 1.36 $ 1.48 1.45 — — 1.36 $ 1.48 KK Mexico RSUs — 25,055 — — 25,055 32,963 — — — 58,018 Weighted Average Grant Date Fair Value $ — 29.21 — — $ 29.21 35.64 — — — $ 32.86 1. For KKI RSU holders that did not vest upon IPO, dividend equivalent shares were granted after the IPO at a weighted average grant date fair value of zero. The vesting terms for the dividend equivalent shares are the same as the underlying RSUs. The KKI shares presented have been retroactively adjusted to give effect to the Stock Split and the Merger. The Company recorded total non-cash compensation expense related to the RSUs under the plans of $19.6 million, $11.6 million and $10.7 million for fiscal years ended January 2, 2022, January 3, 2021, and December 29, 2019, respectively. The net deferred tax (expense)/benefits recognized were ($4.9 million), $2.7 million and $2.6 million for fiscal years ended January 2, 2022, January 3, 2021, and December 29, 2019, respectively. The unrecognized compensation cost related to the unvested RSUs and the weighted-average period over which such cost is expected to be recognized are as follows: As of January 2, 2022 Unrecognized Recognized Over a Weighted- KKI $ 57,087 3.1 years KKUK 434 2.0 years Insomnia Cookies 1,837 3.0 years KK Australia 607 1.0 year KK Mexico $ 1,661 3.9 years The estimated fair value of restricted stock is calculated using a market approach (i.e., market multiple is used for the KKI, KKUK and Insomnia Cookies’ plans and an agreed-upon EBITDA buyout multiple is used for KK Australia and KK Mexico plans). The total grant date fair values of shares vested under the KKI plan were $24.0 million, $0.0 million and $1.7 million for fiscal years ended January 2, 2022, January 3, 2021, and December 29, 2019, respectively. The total grant date fair value of shares vested under the KKUK plan were $4.3 million for fiscal year ended January 2, 2022; no shares vested for the fiscal years ended January 3, 2021 and December 29, 2019. The total fair values of shares vested under the Insomnia Cookies’ plan were $0.1 million, $0.1 million, and $0.1 million for fiscal years ended January 2, 2022, January 3, 2021, and December 29, 2019, respectively. No shares under the KK Australia and KK Mexico vested during the three fiscal years presented. Time-Vested Stock Options KKI issues time-vested stock options under its Omnibus Incentive Plan. The stock options are awarded to eligible employees and entitle the grantee to purchase shares of common stock at the respective exercise price at the end of a vesting period. Stock options vest over a 60-month period subsequent to the grant date (with 60% vesting during the third year following the grant date, 20% vesting during the fourth year, and 20% vesting at the end of the 60-month term), and as such are subject to a service condition. The maximum contractual term of the stock options is 10 years. The fair value of time-vested stock options was estimated on the date of grant using the Black-Scholes option pricing model. This model is impacted by the Company’s stock price and certain assumptions related to the Company’s stock and employees’ exercise behavior. The expected term for stock options granted during fiscal year 2021 was estimated utilizing the simplified method. Management utilized the simplified method because the Company did not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. The risk-free interest rate assumption was based on yields of U.S. Treasury securities in effect at the date of grant with terms similar to the expected term. Expected volatility was estimated based on the Company’s historical volatility, and also considering historical volatility of peer companies over a period equivalent to the expected term. Additionally, the dividend yield was estimated based on dividends currently being paid on the underlying common stock at the date of grant. Estimated and actual forfeitures have not had a material impact on share-based compensation expense. The following weighted-average assumptions were utilized in determining the fair value of the time-vested stock options granted during fiscal year 2021: Fiscal Years Ended January 2, January 3, KKI Risk-free interest rate 1.3 % — % Expected volatility 34.4 % — % Dividend yield 1.0 % — % Expected term (years) 6.8 years — A summary of the status of the time-vested stock options as of January 2, 2022 and changes during fiscal year 2021 is presented below: Share options outstanding at Share options outstanding at January 3, Granted Exercised Forfeited or expired January 2, KKI Options — 2,817,398 — — 2,817,398 Weighted Average Grant Date Fair Value $ — 6.10 — — $ 6.10 Weighted Average Exercise Price $ — 14.61 — — $ 14.61 Weighted Average Remaining Contractual Term (years) — 9.3 years Aggregate Intrinsic Value (in thousands) $ — $ 12,151 The Company recorded total non-cash compensation expense related to the time-vested stock options of $3.3 million for the fiscal year ended January 2, 2022. No non-cash compensation expense related to time-vested stock option was recorded for the fiscal years ended January 3, 2021 and December 29, 2019. The unrecognized compensation cost related to the unvested stock options and the weighted-average period over which such cost is expected to be recognized are as follows: As of January 2, 2022 Unrecognized Recognized Over a Weighted- KKI $ 13,830 3.2 years |
Income Taxes
Income Taxes | 12 Months Ended |
Jan. 02, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Income (loss) before income taxes consisted of: Fiscal Years Ended January 2, 2022 January 3, 2021 December 29, 2019 Domestic $ (49,348) $ (47,080) $ (34,836) Foreign 45,250 (4,748) 13,412 Loss before income taxes $ (4,098) $ (51,828) $ (21,424) Domestic income (loss) before income taxes includes unallocated corporate costs, which include general corporate expenses. The components of the provision for income taxes are as follows: Fiscal Years Ended January 2, 2022 January 3, 2021 December 29, 2019 Current: Federal $ — $ — $ 2,209 State 347 156 (396) International 13,894 8,992 2,342 Total current 14,241 9,148 4,155 Deferred: Federal 4,310 (8,844) 10,117 State (5,739) 13,472 (743) International (2,067) (4,664) (952) Total deferred (3,496) (36) 8,422 Income tax expense $ 10,745 $ 9,112 $ 12,577 A reconciliation of the statutory U.S. federal income tax rate and the Company’s effective tax rate is as follows: Fiscal Years Ended January 2, January 3, December 29, Statutory federal rate 21.0 % 21.0 % 21.0 % State income taxes, net of federal benefit (2.8) 4.1 0.8 Foreign operations (12.9) (10.7) 6.0 Credit for foreign income taxes — — 6.3 Change in valuation allowance 14.3 (34.9) (31.0) Noncontrolling interest 46.8 2.6 (3.3) Impact of uncertain tax positions 9.1 (1.3) (55.8) Other permanent differences (14.2) 1.3 3.0 Transaction costs (5.1) (0.8) (10.0) Deferred adjustments (96.1) (0.9) (10.2) Stock compensation (217.4) — — Other (4.9) 2.0 14.5 Effective tax rate (262.2) % (17.6) % (58.7) % The Company establishes valuation allowances for deferred income tax assets in accordance with GAAP, which provides that such valuation allowances shall be established unless realization of the income tax benefits is more likely than not. The Company recognizes deferred income tax assets and liabilities based upon its expectation of the future tax consequences of temporary differences between the income tax and financial reporting bases of assets and liabilities. Deferred tax liabilities generally represent tax expense recognized for which payment has been deferred, or expenses which have been deducted in the Company’s tax returns, but which have not yet been recognized as an expense in the financial statements. Deferred tax assets generally represent tax deductions or credits that will be reflected in future tax returns for which the Company has already recorded a tax benefit in the Consolidated Financial Statements. The Company continues to assert permanent reinvestment with respect to its initial basis differences of international affiliates but does not assert indefinite reinvestment on the earnings of the foreign subsidiaries with the exception of its subsidiaries in Canada. Accordingly, no deferred taxes have been provided for with regard to the Company’s initial basis difference in international affiliates. Due to the complexities of tax law in the respective jurisdictions, it is not practical to estimate the tax liability that might be incurred if such earnings were remitted to the U.S. The Company has not established a deferred tax liability for the earnings of the foreign subsidiaries as any distributions made from those jurisdictions are expected to be made in a tax neutral manner. The tax effects of temporary differences are as follows: As of January 2, January 3, Deferred income tax assets: Intangible assets $ 1,665 $ 1,884 Accrued compensation 4,330 3,302 Insurance accruals 1,934 2,040 Share-based compensation 2,786 7,676 Deferred revenue 1,735 1,903 Transaction costs 1,397 1,091 Disallowed interest expense 10,527 9,660 Lease liabilities 101,629 91,828 Foreign net operating loss carryforward 2,565 574 Foreign capital loss carryforward — 23,067 Federal net operating loss carryforward 22,493 22,976 Federal tax credits 13,913 12,320 State net operating loss and credit carryforwards 11,169 9,082 Unrealized loss on foreign currency 3,667 8,203 Other 9,567 11,243 Gross deferred income tax assets 189,377 206,849 Valuation allowance (29,972) (40,502) Deferred income tax assets, net of valuation allowance $ 159,405 $ 166,347 Deferred income tax liabilities: Intangible assets (147,621) (150,818) Subsidiary investments (8,038) (5,359) Property and equipment (14,254) (19,104) Foreign reacquired franchise rights (37,600) (44,236) Lease right of use assets (93,250) (85,764) Other (3,683) (5,840) Gross deferred income tax liabilities (304,446) (311,121) Net deferred income tax liabilities $ (145,041) $ (144,774) The presentation of deferred income taxes on the Consolidated Balance Sheets is as follows: As of January 2, January 3, Included in: Other assets $ 377 $ 92 Deferred income taxes, net (145,418) (144,866) Net deferred income tax liabilities $ (145,041) $ (144,774) As of January 2, 2022, the Company had Net Operating Loss (“NOL”) carryforwards of approximately $327.5 million for U.S. state tax purposes and $107.1 million for U.S. federal tax purposes. As of January 3, 2021, the Company had NOL carryforwards of approximately $243.0 million for U.S. state tax purposes and $109.4 million for U.S. federal tax purposes. U.S. federal NOL carryforwards are eligible to be carried forward indefinitely. A portion of the Company’s U.S. state tax carryforwards will begin to expire in the current year. As of January 2, 2022 and January 3, 2021 the Company had foreign NOL carryforwards of approximately $8.5 million and $2.4 million, respectively. As of January 2, 2022, $8.3 million of NOL carryforwards have a 10-year carryover period and the remaining $0.2 million have either a 20-year carryover period or no expiration. As of January 2, 2022, the Company had no foreign capital loss carryforwards. As of January 2, 2022, the Company had various tax credit carryforwards of $13.9 million for U.S. federal purposes and zero for U.S. state purposes. As of January 3, 2021, the Company had various tax credit carryforwards of $12.0 million for U.S. federal purposes and zero for U.S. state purposes. If not utilized, the credits can be carried forward between 10 and 20 years. If certain substantial changes in the entity’s ownership occur, there would be an annual limitation on the amount of the NOLs and credits that can be utilized. The valuation allowances of $30.0 million and $40.5 million as of January 2, 2022 and January 3, 2021 respectively, represent the portion of its deferred tax assets the Company estimated would not be realized in the future. Of the $30.0 million as of January 2, 2022, $2.5 million is for KK Mexico loss carryforwards, $13.2 million is for U.S. state tax carryforwards, and $14.2 million is for U.S. foreign tax credits and other business credits, for which sufficient taxable income is not expected to be generated. The change in valuation allowance is primarily attributable to the write-off of a KK Mexico capital loss carryforward with a corresponding offset to the valuation allowance. Of the $40.5 million as of January 3, 2021, $16.7 million is for KK Mexico losses and capital loss carryforwards, $11.8 million is for U.S. state tax carryforwards, and $12.0 million is for U.S. foreign tax credits and other business credits, for which sufficient taxable income is not expected to be generated. Realization of net deferred tax assets generally is dependent on generation of taxable income in future periods. While the Company believes its forecast of future taxable income is reasonable, actual results will inevitably vary from management’s forecasts. Such variances could result in adjustments to the valuation allowance on deferred tax assets in future periods, and such adjustments could be material to the financial statements. On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was enacted to provide economic relief to those impacted by the COVID-19 pandemic. The CARES Act made various tax law changes including among other things (i) modifications to the federal NOL carryback rules, (ii) increased the limitation under IRC Section 163(j) for 2019 and 2020 to permit additional expensing of interest, and (iii) enacted a technical correction so that qualified improvement property can be immediately expensed under IRC Section 168(k). The Company was able to take additional deductions as a result of the CARES Act, resulting in additional NOLs for the fiscal years ended January 2, 2022 and January 3, 2021. The Company was able to defer $7.3 million of social security taxes to future years during the fiscal year ended January 3, 2021. During the fiscal year ended January 2, 2022, the Company repaid half of the deferred social security taxes and will pay the remaining deferred taxes during the fiscal year ending January 1, 2023. The Company files income tax returns in the U.S. federal jurisdiction and various U.S. state and foreign jurisdictions. For U.S. federal tax purposes, tax years prior to the year ended December 31, 2017 are closed for assessment purposes; however, tax years in which an NOL was generated will remain open for examination until the statute of limitations will close on tax years utilizing NOL carryforwards to reduce the tax due. Generally, the statute of limitations will close on tax years utilizing NOL carryforwards three years subsequent to the utilization of NOLs. For state purposes, the statute of limitations remains open in a similar manner for states where the Company generated NOLs. Income tax payments, net of refunds, were $13.6 million, $9.3 million, and $9.3 million in the fiscal years ended January 2, 2022, January 3, 2021, and December 29, 2019, respectively. The following table presents a reconciliation of the beginning and ending amounts of unrecognized tax benefits: As of January 2, January 3, Unrecognized tax benefits at beginning of year $ 17,341 $ 17,342 Increases related to positions taken in the current year 1,383 18 Increases (decreases) related to positions taken in prior years (246) (19) Unrecognized tax benefits at end of year $ 18,478 $ 17,341 Approximately all of the aggregate $18.5 million and $17.3 million of unrecognized income tax benefits as of January 2, 2022 and January 3, 2021, respectively, would, if recognized, impact the annual effective tax rate. The Company does not believe that changes in its uncertain tax benefits will result in a material impact during the next twelve months. The Company’s policy is to recognize interest and penalties related to income tax issues as components of income tax expense. The Company’s Consolidated Balance Sheets reflect approximately $1.9 million and $1.9 million of accrued interest and penalties as of January 2, 2022 and January 3, 2021, respectively. Interest and penalties were not material during the years presented in the Company’s Consolidated Statements of Operations. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Jan. 02, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Except as disclosed below, the Company currently is not a party to any material legal proceedings. Pending Litigation K 2 Asia litigation On April 7, 2009, a Cayman Islands corporation, K 2 Asia Ventures and its owners filed a lawsuit in Forsyth County, North Carolina Superior Court against the Company, the Company’s franchisee in the Philippines and other persons associated with the franchisee. The suit alleges that the Company and the other defendants conspired to deprive the plaintiffs of claimed “exclusive rights” to negotiate franchise and development agreements with prospective franchisees in the Philippines and sought at least $3.0 million. The case was dismissed by the North Carolina Superior Court on November 9, 2018. As of August 10, 2021, all levels of appellate review were exhausted and denied. No loss has been incurred with respect to this matter, and accordingly no liability related to it has been reflected in the accompanying Consolidated Financial Statements. Insomnia Cookies litigation related to employee wages Insomnia Cookies is currently a party to a class action lawsuit alleging violations of unfair competition, unpaid minimum wages, unpaid overtime, meal and rest period violations and unpaid premiums, failure to reimburse for business expenses, untimely paid wages, and violation of the California Private Attorneys General Act. Insomnia Cookies vigorously disputes these claims. On March 11, 2021, the parties participated in a mediation and reached a class wide settlement and release of claims in principle for $0.4 million. The parties have executed a memorandum of understanding memorializing the key settlement terms and are in the process of finalizing long form settlement documents and seeking preliminary court approval of the settlement. TSW Foods, LLC litigation On November 13, 2020, TSW Foods, LLC (“TSW”), a reseller of certain Krispy Kreme packaged products, filed a demand for arbitration and statement of claim alleging Anticipatory Repudiation of the Master Reseller Agreement, Breach of the Master Reseller Agreement, and Breach of the Implied Covenant of Good Faith and Fair Dealing. The Company intends to vigorously defend against TSW’s claims and prosecute its counterclaims. The parties held a voluntary, non-binding mediation on November 11, 2021. The case is expected to proceed through arbitration pursuant to an existing arbitration agreement. At this time the Company is unable to predict the outcome of this matter, the potential loss or range of loss, if any, associated with the resolution of this matter or any potential effect it may have on the Company or its operations. Other Legal Matters The Company also is engaged in various legal proceedings arising in the normal course of business. The Company maintains insurance policies against certain kinds of such claims and suits, including insurance policies for workers’ compensation and personal injury, all of which are subject to deductibles. While the ultimate outcome of these matters could differ from management’s expectations, management currently does not believe their resolution will have a material adverse effect on the Company’s Consolidated Financial Statements except as noted above. Purchase Commitments The Company is exposed to the effects of commodity price fluctuations on the cost of ingredients for its products, of which flour, shortening and sugar are the most significant. In order to secure adequate supplies of products and bring greater stability to the cost of ingredients, the Company routinely enters into forward purchase contracts with vendors under which it commits to purchase agreed-upon quantities of ingredients at agreed-upon prices at specified future dates. Typically, the aggregate outstanding purchase commitment at any point in time will range from one month to several years of anticipated ingredients purchases, depending on the ingredient. In addition, from time to time the Company enters into contracts for the future delivery of equipment purchased for resale and components of doughnut-making equipment manufactured by the Company. As of January 2, 2022 and January 3, 2021, the Company had approximately $132.4 million and $48.3 million, respectively, of commitments under ingredient and other forward purchase contracts. These ingredient and other forward purchase contracts are for physical delivery in quantities expected to be used over a reasonable period in the normal course of business. These agreements often meet the definition of a derivative. However, the Company does not measure its forward purchase commitments at fair value as the amounts under contract meet the physical delivery criteria in the normal purchase exception under ASC 815. While the Company has multiple vendors for most of the ingredients, the termination of the Company’s relationships with vendors with whom it has forward purchase agreements or those vendors’ inability to honor the purchase commitments, could adversely affect the Company’s results of operations and cash flows. Other Commitments and Contingencies |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Jan. 02, 2022 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions As of January 2, 2022 and January 3, 2021, the Company had an equity ownership in two franchisees, KremeWorks USA, LLC (25% ownership) and KremeWorks Canada, L.P. (25% ownership), with an aggregate carrying value of $1.1 million and $0.9 million as of January 2, 2022 and January 3, 2021, respectively. Revenues from sales of ingredients and equipment to these franchisees were $7.4 million, $6.6 million and $5.2 million for the fiscal years ended January 2, 2022, January 3, 2021, and December 29, 2019, respectively. Royalty revenues from these franchisees were $1.3 million, $1.2 million and $1.2 million in each of the fiscal years ended January 2, 2022, January 3, 2021, and December 29, 2019, respectively. Trade receivables from these franchisees are included in Accounts receivable, net on the balance sheet. These transactions were conducted pursuant to franchise agreements, the terms of which are substantially the same as the agreements with unaffiliated franchisees. Refer to Note 3 , Accounts Receivable, net, to the audited Consolidated Financial Statements for more information. Keurig Dr Pepper Inc. (“KDP”), an affiliated company of JAB, licenses the Krispy Kreme trademark for the Company in the manufacturing of portion packs for the Keurig brewing system. KDP also sells beverage concentrates and packaged beverages to Krispy Kreme for resale through Krispy Kreme’s shops. Licensing revenues from KDP were $1.9 million, $1.9 million and $2.4 million for the fiscal years ended January 2, 2022, January 3, 2021, and December 29, 2019, respectively. The Company had service agreements with BDT Capital Partners, LLC (“BDT”), a minority investor in KKI, to provide advisory services to the Company, including valuation services related to certain acquisitions. The Company recognized expenses of $1.0 million, $1.8 million and $0.1 million related to the service agreements with BDT for the fiscal year ended January 2, 2022, January 3, 2021, and December 29, 2019, respectively. In connection with valuation assistance provided by BDT in preparation for the IPO, the Company incurred costs of $6.3 million that are capitalized in Additional paid-in capital for the fiscal year ended January 2, 2022. No related costs were incurred for the fiscal years ended January 3, 2021 nor December 29, 2019. In connection with tax sharing arrangements with JAB and other JAB portfolio companies, the Company had a $7.4 million related party receivable from JAB and a $15.3 million related party payable to the other JAB portfolio companies offset by a $15.3 million income tax receivable due from taxing authorities as of January 3, 2021. No related party receivable nor related party payable was due to JAB or other JAB portfolio companies as of January 2, 2022. The related party receivable amounts were presented within Taxes receivable on the Consolidated Balance Sheet as of January 3, 2021. The Company was party to a senior unsecured note agreement (“the original agreement”) with KK GP for an aggregate principal amount of $283.1 million. In April 2019, the Company entered into an additional unsecured note with KK GP for $54.0 million (such notes together, the “Related Party Notes”). As of January 3, 2021, the outstanding amount of principal and interest was $344.6 million. The Related Party Notes were paid off in full during the second quarter of fiscal 2021. The interest expense for the fiscal years ended January 2, 2022, January 3, 2021, and December 29, 2019 was $10.4 million, $22.5 million and $21.9 million, respectively. |
Revenue Recognition
Revenue Recognition | 12 Months Ended |
Jan. 02, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition Disaggregation of Revenues Revenues are disaggregated as follows: Fiscal Years Ended January 2, January 3, December 29, Company Shops, DFD and Branded Sweet Treat Line $ 1,305,597 $ 1,014,790 $ 788,607 Mix and equipment revenue from franchisees 47,869 70,320 124,198 Franchise royalties and other 30,925 36,926 46,603 Total net revenues $ 1,384,391 $ 1,122,036 $ 959,408 Other revenues include advertising fund contributions, rental income, development and franchise fees and licensing royalties from Keurig related to Krispy Kreme brands coffee sales. Contract Balances Deferred revenue subject to ASC 606 and related receivables are as follows: January 2, January 3, Balance Sheet Location Trade receivables, net of allowances of $896 and $1,437, respectively $ 41,132 $ 39,624 Accounts receivables, net Deferred revenue Current 17,458 16,045 Accrued liabilities Noncurrent 2,981 2,838 Other long-term obligations and deferred credits $ 20,439 $ 18,883 Trade receivables at the end of each fiscal year relate primarily to payments due for royalties, franchise fees, advertising fees, sale of products and licensing fees. Deferred revenue primarily represents the Company’s remaining performance obligations under gift cards and franchise and development agreements for which consideration has been received or is receivable and is generally recognized on a straight-line basis over the remaining term of the related agreement. The noncurrent portion of deferred revenue primarily relates to the remaining performance obligations in the franchise and development agreements. Of the deferred revenue balances as of January 3, 2021, $8.4 million was recognized as revenue in the fiscal year ended January 2, 2022. Of the deferred revenue balance as of December 29, 2019, $7.8 million was recognized as revenue in fiscal the year ended January 3, 2021. Transaction Price Allocated to Remaining Performance Obligations Estimated revenue expected to be recognized in the future related to performance obligations that are either unsatisfied or partially satisfied as of January 2, 2022 is as follows: Fiscal year 2022 $ 12,869 2023 2,654 2024 1,080 2025 1,218 2026 526 Thereafter 2,092 $ 20,439 The estimated revenue in the table above relates to gift cards, consumer loyalty programs and franchise fees paid upfront which are recognized over the life of the franchise agreement. The estimated revenue does not contemplate future issuances of gift |
Net Loss per Share
Net Loss per Share | 12 Months Ended |
Jan. 02, 2022 | |
Earnings Per Share [Abstract] | |
Net Loss per Share | Net Loss per Share The following table presents the calculations of basic and diluted EPS: Fiscal Years Ended (in thousands, except share and per share amounts) January 2, January 3, December 29, Net loss attributable to Krispy Kreme, Inc. $ (24,506) $ (64,301) $ (37,409) Adjustment to net loss attributable to common shareholders (1,468) (477) 278 Net loss attributable to common shareholders — Basic $ (25,974) $ (64,778) $ (37,131) Additional income attributed to noncontrolling interest due to subsidiary potential common shares (122) (10) (64) Net loss attributable to common shareholders — Diluted $ (26,096) $ (64,788) $ (37,195) Basic weighted average common shares outstanding 147,654,548 124,987,370 124,987,370 Dilutive effect of outstanding common stock options and RSUs — — — Diluted weighted average common shares outstanding 147,654,548 124,987,370 124,987,370 Loss per share attributable to common shareholders: Basic $ (0.18) $ (0.52) $ (0.30) Diluted $ (0.18) $ (0.52) $ (0.30) Potential dilutive shares consist of unvested RSUs, calculated using the treasury stock method. The calculation of dilutive shares outstanding excludes certain unvested RSUs granted under certain subsidiaries’ executive ownership plans and long-term incentive plans, because their inclusion would have been antidilutive. Refer to Note 12 , Share-based Compensation, to the audited Consolidated Financial Statements for further information about the plans. The following table summarizes the gross number of potential dilutive unvested RSUs excluded due to antidilution (unadjusted for the treasury stock method): Fiscal Years Ended January 2, January 3, December 29, KKI 5,866,107 4,649,551 4,108,726 KKUK — 404,568 416,068 Insomnia Cookies — — 809 KK Australia — — — KK Mexico — — — The 2,817,398 KKI time-vested stock options were also excluded from the computations for the fiscal year ended January 2, 2022 due to antidilution. |
Segment Reporting
Segment Reporting | 12 Months Ended |
Jan. 02, 2022 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment Reporting The Company conducts business through the following three reportable segments: • U.S. and Canada: Includes all Company-owned operations in the U.S. and Canada, including Krispy Kreme and Insomnia Cookies-branded shops, DFD, and the Branded Sweet Treat Line; • International: Includes all Krispy Kreme’s Company-owned operations in the U.K., Ireland, Australia, New Zealand and Mexico; and • Market Development: Includes franchise operations across the globe, as well as the Company-owned operations in Japan. Unallocated corporate costs are excluded from the Company’s measurement of segment performance. These costs include general corporate expenses. Segment information is identified and prepared on the same basis that the CEO, the Company’s Chief Operating Decision Maker (“CODM”), evaluates financial results, allocates resources and makes key operating decisions. The CODM allocates resources and assesses performance based on geography and line of business, which represents the Company’s operating segments. The operating segments within the U.S. and Canada and International reportable segments have been evaluated and combined into reportable segments because they have met the similar economic characteristics and qualitative aggregation criteria set forth in the relevant accounting guidance. The primary financial measures used by the CODM to evaluate the performance of its operating segments are net revenues and segment Adjusted EBITDA. The following tables reconcile segment results to consolidated results reported in accordance with GAAP. The accounting policies used for internal management reporting at the operating segments are consistent with those described in Note 1 , Description of Business and Summary of Significant Accounting Policies, to the audited Consolidated Financial Statements. The Company manages its assets on a total company basis and the CODM does not review asset information by segment when assessing performance or allocating resources. Consequently, the Company does not report total assets by reportable segment. The reportable segment results are as follows: Fiscal Years Ended January 2, 2022 January 3, 2021 December 29, 2019 Net revenues: U.S. and Canada $ 928,413 $ 782,717 $ 587,522 International 332,995 230,185 223,115 Market Development 122,983 109,134 148,771 Total net revenues $ 1,384,391 $ 1,122,036 $ 959,408 Fiscal Years Ended January 2, 2022 January 3, 2021 December 29, 2019 Depreciation and amortization: U.S. and Canada $ 55,447 $ 43,056 $ 30,610 International 36,139 30,438 25,188 Market Development 2,042 2,304 3,464 Corporate 7,980 4,600 4,505 Total depreciation and amortization $ 101,608 $ 80,398 $ 63,767 Fiscal Years Ended January 2, January 3, December 29, Segment Adjusted EBITDA: U.S. and Canada $ 107,571 $ 91,574 $ 71,620 International 81,422 44,554 53,252 Market Development 40,824 39,060 51,574 Corporate (41,872) (29,754) (30,062) 187,945 145,434 146,384 Interest expense, net 32,622 34,741 38,085 Interest expense — related party (1) 10,387 22,468 21,947 Income tax expense 10,745 9,112 12,577 Depreciation and amortization expense 101,608 80,398 63,767 Share-based compensation 22,923 11,601 10,741 Employer payroll taxes related to share-based compensation 2,044 — — Other non-operating expense/(income), net (2) 2,191 (1,101) (609) New York City flagship Hot Light Theater Shop opening (3) — 6,513 3,784 Strategic initiatives (4) — 20,517 4,059 Acquisition and integration expenses (5) 5,255 12,679 20,433 Shop closure expenses (6) 2,766 6,269 629 Restructuring and severance expenses (7) 1,733 — 583 IPO-related expenses (8) 14,534 3,184 — Gain on sale-leaseback (8,673) — — Other (9) 4,653 (7) 4,389 Net Loss $ (14,843) $ (60,940) $ (34,001) 1. Consists of interest expense related to the Related Party Notes which were paid off in full during the second quarter of fiscal 2021. 2. Primarily foreign translation gains and losses in each period. 3. Consists of pre-opening costs related to the Company’s New York City flagship Hot Light Theater Shop opening, including shop design, rent, and additional consulting and training costs incurred and reflected in Selling, general and administrative expenses. 4. Consists mainly of consulting and advisory fees, personnel transition costs, and network conversion and set-up costs related to the evolution of the Company’s legacy wholesale business in the U.S. 5. Consists of acquisition and integration-related costs in connection with the Company’s business and franchise acquisitions, including legal, due diligence, consulting and advisory fees incurred in connection with acquisition-related activities for the applicable period. 6. Includes lease termination costs, impairment charges, and loss on disposal of property, plant and equipment. 7. Fiscal 2021 consists of severance and related benefits costs associated with the Company’s realignment of the Company Shop organizational structure to better support the DFD and Branded Sweet Treat Line businesses. Fiscal 2019 consists of severance and related benefits costs associated with the Company’s hiring of a new global management team. 8. Includes consulting and advisory fees incurred in connection with preparation for and execution of the Company’s IPO. 9. Fiscal 2021 consists primarily of legal expenses incurred outside the ordinary course of business on matters described in Note 14 , Commitments and Contingencies, to the Company’s audited Consolidated Financial Statements. Fiscal 2020 consists primarily of fixed asset and impairment expenses, net of a gain on the sale of land, as well as $1.2 million of management fees paid to JAB. Fiscal 2019 includes $3.1 million lease impairment expenses related to the Company’s Winston-Salem office location incurred in connection with the Company’s corporate headquarters relocation to Charlotte, North Carolina. Geographical information related to consolidated revenues and long-lived assets is as follows: Fiscal Years Ended January 2, 2022 January 3, 2021 December 29, 2019 Net revenues: United States $ 955,384 $ 854,097 $ 696,841 United Kingdom 147,233 93,121 120,009 Australia / New Zealand 99,582 78,677 86,734 Mexico 77,831 53,085 8,991 All other 104,361 43,056 46,833 Total net revenues $ 1,384,391 $ 1,122,036 $ 959,408 Fiscal Years Ended January 2, January 3, December 29, Long-lived assets: United States $ 684,790 $ 625,928 $ 565,933 United Kingdom 69,112 68,500 63,543 Australia / New Zealand 61,155 59,656 54,003 Mexico 30,944 23,094 20,965 All other 28,085 17,765 4,290 Total long-lived assets $ 874,086 $ 794,943 $ 708,734 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Jan. 02, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events The Company evaluated subsequent events and transactions for potential recognition or disclosure in the Consolidated Financial Statements through March 11, 2022, the date the Consolidated Financial Statements were available to be issued. All subsequent events requiring recognition and disclosure have been incorporated into these Consolidated Financial Statements. On February 9, 2022 the Company’s Board of Directors declared a $0.035 per share cash dividend payable on May 11, 2022, to shareholders of record on April 27, 2022. |
Description of Business and S_2
Description of Business and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Jan. 02, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | The Company operates and reports financial information on a 52 or 53-week year with the fiscal year ending on the Sunday closest to December 31. The data periods contained within fiscal years 2021, 2020 and 2019 reflect the results of operations for the 52-week period ended January 2, 2022, the 53-week period ended January 3, 2021, and the 52-week period ended December 29, 2019. The accompanying Consolidated Financial Statements include the accounts of Krispy Kreme and subsidiaries and have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”). All significant intercompany balances and transactions among Krispy Kreme and subsidiaries have been eliminated in consolidation. Investments in entities over which the Company has the ability to exercise significant influence but which it does not control and whose financial statements are not otherwise required to be consolidated, are accounted for using the equity method. |
Consolidation | Noncontrolling interest in the Company’s Consolidated Financial Statements represents the interest in subsidiaries held by joint venture partners and employee shareholders. The joint venture partners hold noncontrolling interests in the Company’s consolidated subsidiaries Awesome Doughnut, LLC (“Awesome Doughnut”), W.K.S. Krispy Kreme, LLC (“WKS Krispy Kreme”), and Krispy K Canada, Inc. (“KK Canada”). Employee shareholders hold noncontrolling interests in the consolidated subsidiaries Krispy Kreme Holding U.K. Ltd. (“KKUK”), Krispy Kreme Holdings Pty Ltd. (“KK Australia”), Krispy Kreme Mexico S. de R.L. de C.V. (“KK Mexico”) and Insomnia Cookies Holdings, LLC (“Insomnia Cookies”). Since the Company consolidates the financial statements of these subsidiaries, the noncontrolling owners’ share of each subsidiary’s net assets and results of operations are deducted and reported as a noncontrolling interest on the Consolidated Balance Sheets and as net income attributable to noncontrolling interest in the Consolidated Statements of Operations and comprehensive income attributable to noncontrolling interest in the Consolidated Statements of Comprehensive Income/(Loss). |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates under different assumptions or conditions. |
Revenue Recognition | Revenue Recognition Revenue is recognized in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers . Revenue is recognized when control of promised goods or services is transferred to a customer in an amount that reflects the consideration expected to be received for those goods or services. Product Sales Product sales include revenue derived from (1) the sale of doughnuts, cookies and complementary products to in-shop, Branded Sweet Treat Line and DFD customers and (2) the sale of doughnut mix, other ingredients and supplies and doughnut-making equipment to franchisees. Revenue is recognized at the time of delivery for in-shop sales and sales to franchisees. For Branded Sweet Treat Line and DFD sales, control transfers and revenue is recognized either at the time of delivery, net of provisions for estimated product returns or, with respect to those customers that take title to products purchased from the Company at the time those products are sold by the customer to the end consumers, simultaneously with such consumer purchases. Revenues from Branded Sweet Treat Line customers and from the sale of doughnut mix, other ingredients and supplies and doughnut-making equipment to franchisees include any applicable shipping and handling costs invoiced to the customer and the expense of such shipping and handling costs is included in Operating expenses. The Company recorded shipping revenue of approximately $13.3 million, $15.2 million and $6.5 million in the fiscal years ended January 2, 2022, January 3, 2021, and December 29, 2019, respectively. Franchise Revenue Franchise revenue included in Royalties and other revenues is derived from development and initial franchise fees relating to new shop openings and ongoing royalties charged to franchisees based on their sales. The Company sells individual franchises domestically and internationally, as well as development agreements that grant the right to develop shops in designated areas. Generally, the franchise license granted for each individual shop within an arrangement represents a single performance obligation. The franchise agreements and development agreements typically require the franchisee to pay initial nonrefundable franchise fees (i.e., initial services such as training and assisting with shop set-up) prior to opening. The franchises also pay a royalty on a monthly basis based upon a percentage of franchisee gross sales. Royalties are recognized in income as underlying franchisee sales occur. The initial term of domestic franchise agreements is typically 15 years. The Company recognizes the initial nonrefundable fees over the term of the franchise agreements on an output method based on time elapsed, corresponding with the customer’s right to use the franchise for the term of the agreement. A franchisee may elect to renew the term of a franchise agreement and, if approved, will typically pay a renewal fee upon execution of the renewal term. Franchise-related Advertising Fund Revenue Franchise-related advertising fund revenue included in Royalties and other revenues is derived from domestic and international franchise agreements that typically require the franchisee to pay advertising fees on a continuous monthly basis based on a percentage of franchisee net sales, which are recognized based on fees earned each period. Total advertising fund revenue for the fiscal years ended January 2, 2022, January 3, 2021, and December 29, 2019 is $4.3 million, $8.1 million and $9.3 million, respectively. Gift Card Sales The Company and its franchisees sell gift cards that are redeemable for products in the Company-owned or franchise shops. The Company manages the gift card program and collects all funds from the activation of gift cards and reimburses franchisees for the redemption of gift cards in their shops. Deferred revenue for unredeemed gift cards is included in Accrued liabilities in the Consolidated Balance Sheets. As of January 2, 2022 and January 3, 2021, the gross amount of deferred revenue recognized for unredeemed gift cards was $22.5 million and $18.0 million, respectively. Gift cards sold do not have an expiration date or service fees charged. The likelihood of redemption may be determined to be remote for certain cards due to long periods of inactivity. In these circumstances, the Company recognizes revenue from unredeemed gift cards (“breakage revenue”) within Product sales if they are not subject to unclaimed property laws. The Company estimates breakage for the portfolio of gift cards and recognizes it based on the estimated pattern of gift card use. As of January 2, 2022 and January 3, 2021, deferred revenue, net of breakage revenue recognized, was $11.2 million and $10.4 million, respectively. Gift card costs incurred to fulfill obligations under a contract are capitalized when such costs generate or enhance resources to be used in satisfying future performance obligations and the costs are deemed recoverable. Judgement is used in determining whether certain contract costs can be capitalized. These costs are capitalized and amortized on a systematic basis to match the timing of revenue recognition, depending on when the gift card is used. This amortization expense is recorded in Operating expense in the Company’s Consolidated Statement of Operations. From time to time, management will review the capitalized costs for impairment. As of January 2, 2022 and January 3, 2021, the capitalized gift card costs were $1.7 million and $1.7 million, respectively. Consumer Loyalty Program Consumers can participate in spend-based loyalty programs. Consumers who join the loyalty programs will receive a credit or point for each purchase of eligible product. After accumulating a certain number of credits or points, the consumers can redeem their credits or points for a free product. The Company defers revenue based on an estimated selling price of the free product earned by the consumer and establishes a corresponding liability in deferred revenue. As of January 2, 2022 and January 3, 2021, the deferred revenue related to loyalty programs is $2.3 million and $3.6 million, respectively. Revenue-based Taxes The Company reports revenue net of any revenue-based taxes assessed by governmental authorities that are imposed on and concurrent with specific revenue-producing transactions. The primary revenue-based taxes are sales tax and value-added tax (“VAT”). |
Marketing Expenses | Marketing Expenses Costs associated with marketing the products, including advertising and other brand promotional activities, are expensed as incurred, and were approximately $39.5 million, $34.0 million, and $28.8 million in the fiscal years ended January 2, 2022, January 3, 2021, and December 29, 2019, respectively. |
Cash and Cash Equivalents and Restricted Cash | Cash and Cash Equivalents and Restricted Cash Cash equivalents consist of demand deposits in banks and short-term, highly liquid debt instruments with original maturities of three months or less. All credit and debit card transactions that are processed in less than five days are classified as Cash and cash equivalents. The amounts due from banks for these transactions totaled $8.5 million and $9.6 million as of January 2, 2022 and January 3, 2021, respectively. Restricted cash consists primarily of funds related to employee benefit plans. |
Marketable Securities | Marketable Securities Marketable securities consist of debt instruments that are being held to maturity longer than three months but less than one year. Their fair value approximates their carrying value on the Consolidated Balance Sheets. |
Account Receivable, Net of Allowance for Expected Credit Losses | Account Receivable, Net of Allowance for Expected Credit Losses Accounts receivable relate primarily to payments due for sale of products, franchise fees, royalties, advertising fees and licensing fees. The Company maintains allowances for expected credit losses related to its accounts receivable, including receivables from franchisees, in amounts which the Company believes are sufficient to provide for losses estimated to be sustained on realization of these receivables. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of amounts from customers. Such estimates inherently involve uncertainties and assessments of the outcome of future events, and changes in facts and circumstances may result in adjustments to the allowance for expected credit losses. The Company had allowance for expected credit losses of $0.9 million and $1.4 million as of January 2, 2022 and January 3, 2021, respectively. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that subject the Company to credit risk consist principally of receivables from Branded Sweet Treat Line and DFD customers and franchisees. Branded Sweet Treat Line and DFD receivables are primarily from grocer/mass merchants and convenience stores. For the fiscal years ended January 2, 2022, January 3, 2021, and December 29, 2019, no customer accounted for more than 10% of revenue or a significant amount of receivables that would result in a concentration. |
Inventories | InventoriesInventories, which consist of raw materials, work in progress, finished goods, and purchased merchandise, are recorded at the lower of cost and net realizable value, where cost is determined using the first-in, first-out method. Raw materials inventory also includes doughnut equipment spare parts. |
Property and Equipment, net | Property and Equipment, net Property and equipment are recorded at cost. Depreciation of property and equipment is provided using the straight-line method over the estimated useful lives of the respective assets. The lives used in computing depreciation are as follows: Buildings 20 to 35 years Machinery and equipment 3 to 15 years Computer software 2 to 7 years Leasehold improvements are depreciated over the shorter of the estimated useful life of the asset or the lease term. The Company assesses long-lived fixed asset groups for potential impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. If the carrying amount of the assets exceeds the sum of the undiscounted cash flows, the Company records an impairment charge in an amount equal to the excess of the carrying value of the assets over their estimated fair value. Impairment charges related to the Company’s long-lived assets were $2.9 million, $0.3 million, and $0.5 million for the fiscal years ended January 2, 2022, January 3, 2021, and December 29, 2019, respectively. Such charges related to underperforming shops, shops closed or likely to be closed and shops which management believes will not generate sufficient future cash flows to enable the Company to recover the carrying value of the shops’ assets, but which management has not yet decided to close. The impaired shop assets include real properties, the fair values of which were estimated based on independent appraisals or, in the case of any properties which the Company is negotiating to sell, based on its negotiations with unrelated third-party buyers; leasehold improvements, which are typically abandoned when the leased properties revert to the lessor; and doughnut-making and other equipment the fair values of which were estimated based on the replacement cost of the equipment, after considering refurbishment and transportation costs. The impairment charges are primarily attributable to the U.S. and Canada segment and are included within Other operating expenses on the Consolidated Statements of Operations. |
Leases | Leases Effective December 31, 2018, the first day of fiscal year 2019, the Company implemented Accounting Standards Update (“ASU”) 2016-02 (“the new standard”), Leases , which amended authoritative guidance on leases and is codified in ASC 842, Leases . The amended guidance requires lessees to recognize most leases on their balance sheets as right-of-use assets along with corresponding lease liabilities. The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification determines whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. The new standard also requires increased disclosures to help financial statement users better understand the amount, timing and uncertainty of cash flows arising from leases. The Financial Accounting Standards Board (“FASB’s”) authoritative guidance provides companies with the option to apply this ASU to new and existing leases within the scope of the guidance as of the beginning of the period of adoption. The Company elected this transition method of applying the new lease standard and has recognized right-of-use assets, lease liabilities and any cumulative-effect adjustments to the opening balance of retained earnings as of December 31, 2018. Prior period amounts were not adjusted and will continue to be reported under the accounting standards in effect for those periods. The adoption of the new standard had a material impact to the Consolidated Balance Sheets due to the capitalization of right-of-use assets and lease liabilities associated with the current operating leases in which the Company is the lessee. The adoption of the new standard resulted in the recording of additional lease assets and lease liabilities (net of prior period reported capital leases) of $280.0 million and $291.0 million at the date of adoption, respectively. The adoption of the new standard had a material impact on the Consolidated Statements of Changes in Shareholders’ Equity due to the recognition of a deferred gain on a sale-leaseback transaction completed in March 2018 and the recognition of a previously unrecognized portion of an impairment to a right-of-use asset at the date of adoption. There was also a $4.1 million deferred tax benefit in the Consolidated Statements of Changes in Shareholders’ Equity as a result of the adoption. The adoption of the new standard did not have a material impact on the Consolidated Statements of Operations nor the Consolidated Statements of Cash Flows. The cumulative effect of the changes made to the Company’s Consolidated Balance Sheets as of December 31, 2018 for the adoption of ASC 842 was as follows: December 30, ASC 842 Adjustments December 31, Account: Operating lease right of use asset, net $ — $ 270,170 $ 270,170 Property and equipment, net 227,102 10,085 237,187 Other intangible assets, net 920,265 (7,305) 912,960 Current portion of long-term debt 38,126 1,168 39,294 Current operating lease liabilities — 24,088 24,088 Accrued liabilities 82,281 (2,967) 79,314 Noncurrent operating lease liabilities — 258,152 258,152 Long-term debt, less current portion 592,684 7,152 599,836 Other long-term obligations and deferred credits 76,576 (54,378) 22,198 Deferred income taxes, net 128,360 8,257 136,617 Noncontrolling interest 131,265 1,711 132,976 Retained (deficit) earnings $ (67,609) $ 29,767 $ (37,842) Upon the adoption of the new standard on December 31, 2018, the Company elected the package of practical expedients provided under the guidance. The practical expedient package applies to leases commenced prior to the adoption of the new standard and permits companies not to reassess whether existing or expired contracts are or contain a lease, the lease classification and any initial direct costs for any existing leases. The Company has elected to not separate the lease and non-lease components within the contract. Therefore, all fixed payments associated with the lease are included in the right-of-use asset and the lease liability. These costs often relate to the payments for a proportionate share of real estate taxes, insurance, common area maintenance and other operating costs in addition to a base rent. Any variable payments related to the lease are recorded as lease expense when and as incurred. The Company has elected this practical expedient for its real estate, vehicles and equipment leases. The Company did not elect the hindsight practical expedient. The Company has elected the short-term lease expedient. A short-term lease is a lease that, as of the commencement date, has a lease term of 12 months or less and does not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise. For such leases, the Company will not apply the recognition requirements of Topic 842 and instead will recognize the lease payments as lease cost on a straight-line basis over the lease term. Additionally, the Company elected the practical expedient under ASU 2018-01, which allows an entity to not reassess whether any existing land easements are or contain leases. Lease termination costs represent the estimated fair value of liabilities related to unexpired leases, after reduction by the amount of accrued rent expense, if any, related to the leases, and are recorded when the lease contracts are terminated or, if earlier, the date on which the Company ceases use of the leased property. The fair values of these liabilities were estimated as the excess, if any, of the contractual payments required under the unexpired leases over the current market lease rates for the properties, discounted at a credit-adjusted risk-free rate over the remaining term of the leases. The provision for lease termination costs also includes adjustments to liabilities recorded in prior periods arising from changes in estimated sublease rentals and from settlements with landlords. |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in a business combination. For each reporting unit, the Company assesses goodwill for impairment annually at the beginning of the fourth quarter or more frequently when impairment indicators are present. If the carrying value of the reporting unit exceeds its fair value, the Company recognizes an impairment charge for the difference up to the carrying value of the allocated goodwill. The value is estimated under a discounted cash flow approach, which incorporates assumptions regarding future growth rates, terminal values and discount rates. For the fiscal years ended January 2, 2022, January 3, 2021, and December 29, 2019, there were no goodwill impairment charges. Other intangible assets primarily represent the trade names for the Company’s brands, franchise agreements (domestic and international), reacquired franchise rights, and customer relationships. The trade names have been assigned an indefinite useful life and are reviewed annually for impairment. All other intangible assets are amortized on a straight-line basis over their estimated useful lives. Definite-lived intangible assets are assessed for impairment whenever triggering events or indicators of potential impairment occur. The Company did not have any impairment charges of other intangible assets during any of the periods presented. |
Share-based Compensation | Share-based Compensation The Company measures and recognizes compensation expense for share-based payment awards based on the fair value of each award at its grant date and recognizes expense over the related service period on a straight-line basis for each tranche of awards. The Company accounts for forfeitures of share-based compensation awards as they occur. Compensation expense is included in Selling, general and administrative expenses in the Consolidated Statements of Operations. |
Fair Value | Fair Value The accounting standards for fair value measurements define fair value as the price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The accounting standards for fair value measurements establish a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: • Level 1: Quoted prices in active markets that are accessible as of the measurement date for identical assets or liabilities. • Level 2: Observable inputs other than quoted prices included within Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. • Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value measurement of the assets or liabilities. These include certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. The Company’s financial instruments not measured at fair value on a recurring basis include cash and cash equivalents, receivables, accounts payable and accrued liabilities and are reflected in the Consolidated Financial Statements at cost which approximates fair value for these items due to their short-term nature. Management believes the fair value determination of these short-term financial instruments is a Level 1 measure. The Company’s other assets and liabilities measured at fair value on a non-recurring basis include long-lived assets, lease right-of-use assets, goodwill, and other indefinite-live intangible assets, if determined to be impaired. Refer to the Property and Equipment, net policy section in Note 1 , Description of Business and Summary of Significant Accounting Policies, to the audited Consolidated Financial Statements, for information about impairment charges on long-lived assets. The fair values of assets evaluated for impairment were determined using an income-based approach and are classified as Level 3 measures within the fair value hierarchy. |
Derivative Financial Instruments and Derivative Commodity Instruments | Derivative Financial Instruments Management reflects derivative financial instruments, which typically consist of interest rate derivatives, foreign currency derivatives and fuel commodity derivatives in the Consolidated Balance Sheets at their fair value. For interest rate derivatives, changes in fair value are reflected in other comprehensive income as the Company applies cash flow hedge accounting. Consistent with the classification of interest paid, cash flows from interest rate derivatives are classified as operating on the Consolidated Statements of Cash Flows. The changes in the fair values of the foreign currency and fuel commodity derivatives are reflected in income as the Company does not apply hedge accounting to those derivatives. |
Self-Insurance Risks and Receivables from Insurers | Self-Insurance Risks and Receivables from InsurersThe Company is subject to workers’ compensation, vehicle, and general liability claims. The Company is self-insured for the cost of workers’ compensation, vehicle, and general liability claims up to the amount of stop-loss insurance coverage purchased by the Company from commercial insurance carriers. The Company maintains accruals for the estimated cost of claims, without regard to the effects of stop-loss coverage, using actuarial methods which evaluate known open and incurred but not reported claims and consider historical loss development experience. As of January 2, 2022 and January 3, 2021, the Company had approximately $14.7 million and $14.4 million, respectively, reserved for such programs. The liability recorded for assessments has not been discounted. In addition, the Company records receivables from the insurance carriers for claims amounts estimated to be recovered under the stop-loss insurance policies when these amounts are estimable and probable of collection. The Company estimates such stop-loss receivables using the same actuarial methods used to establish the related claims accruals and considering the amount of risk transferred to the carriers under the stop-loss policies. The stop-loss policies provide coverage for claims in excess of retained self-insurance risks, which are determined on a claim-by-claim basis. |
Earnings (Loss) per Share (EPS) | Earnings (Loss) per Share (EPS) The Company discloses two calculations of earnings (loss) per share (“EPS”): basic EPS and diluted EPS. The numerator in calculating common stock basic and diluted EPS is net income (loss) attributable to the Company. The denominator in calculating common stock basic EPS is the weighted average shares outstanding. The denominator in calculating common stock diluted EPS includes the additional dilutive effect of unvested restricted stock units (“RSUs”) and time-vested stock options when the effect is not antidilutive. Refer to Note 17 , Net Loss per Share, to the audited Consolidated Financial Statements for further discussion. |
Reclassifications | Reclassifications On the Consolidated Statements of Operations, Marketing expenses have been reclassified (formerly presented within Selling, general and administrative expense) to be consistent with the current year presentation. This reclassification does not have a significant impact on the reported financial position and does not impact the results of operations or cash flows. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Adopted Accounting Standards Adopted at the Beginning of Fiscal Year 2021 In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes . ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions in Topic 740 and clarifying and amending existing guidance. It is effective for annual and interim periods beginning after December 15, 2020, and interim periods within those fiscal years. There are several adoption methods for different amendments in this ASU, including retrospective method for amendments related to separate financial statements of legal entities that are not subject to tax, modified retrospective method for amendments related to changes in ownership of foreign equity method investments or subsidiaries, either retrospective or modified retrospective method for amendments related to franchise taxes that are partially based on income and prospective method for all other amendments. The adoption of this standard did not materially impact the financial statements presented herein. Accounting Standards Adopted at the Beginning of Fiscal Year 2020 In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . This ASU enables financial statement users to obtain more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity as of each reporting date. This ASU replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. It is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The adoption of this standards did not materially impact the financial statements presented herein. Accounting Standards Adopted at the Beginning of Fiscal Year 2019 In February 2018, the FASB issued ASU 2018-02 , Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income . The guidance permits entities to reclassify the stranded income tax effects resulting from the Tax Cuts and Jobs Act, enacted in December 2017, (“Tax Act”) from accumulated other comprehensive income to retained earnings. The guidance is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. The guidance may be applied in the period of adoption or retrospectively to each period in which the effect of the change related to the Tax Act was recognized. The adoption of this standard did not have a material impact on the Company’s financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment . ASU 2017-04 simplifies the measurement of goodwill by eliminating the requirement to calculate the implied fair value of goodwill (step 2 of the current impairment test) to measure the goodwill impairment charge. Instead, entities will record impairment charges based on the excess of a reporting unit’s carrying amount over its fair value. It is effective for annual and interim periods beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment test performed with a measurement date after January 1, 2017. The adoption of this standard did not have a material impact on the Company’s financial statements. In February 2016, the FASB issued ASU 2016-02, Leases ( Topic 842 ), which supersedes the existing lease guidance under current GAAP. ASU 2016-02 is based on the principle that entities should recognize assets and liabilities arising from leases. Under the new standard, a lessee will recognize on its balance sheet a lease liability and a right-of-use (“ROU”) asset for all leases, including operating leases, with a term greater than 12 months. The new standard will also distinguish leases as either finance leases or operating leases. This distinction will affect how leases are measured and presented in the income statement and statement of cash flows. The new standard is effective for fiscal years beginning after December 15, 2018, and interim periods within those annual periods. Early adoption is permitted. Upon adoption, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. Refer to the Leases policy section in Note 1 , Description of Business and Summary of Significant Accounting Policies, to the audited Consolidated Financial Statements for more information about the Company’s adoption of this standard. Not Yet Adopted In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting , which provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. It is effective for all entities as of March 12, 2020 through December 31, 2022. A company may elect to apply the amendments for contract modifications by as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. The Company is currently evaluating the effect of the new guidance on its Consolidated Financial Statements and related disclosures. In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , which prescribes the measurement of acquired contract assets and contract liabilities arising from revenue contracts with customers recognized in a business combination. It is effective for public business entities for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The amendments in this update should be applied prospectively to business combinations occurring on or after the effective date of the amendments. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the effect of the new guidance on its Consolidated Financial Statements and related disclosures. In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance , which requires certain disclosures to be made when an entity receives government assistance, including the types of assistance, an entity’s accounting for the assistance, and the effect of the assistance on an entity’s financial statements. It is effective for all entities for financial statements issued for annual periods beginning after December 15, 2021. Early application of the amendments is permitted. The Company is currently evaluating the effect of the new guidance on its annual disclosures. There are other new accounting pronouncements issued by the FASB that the Company has adopted or will adopt, as applicable, and the Company does not believe any of these accounting pronouncements have had, or will have, a material impact on its Consolidated Financial Statements or disclosures. |
Description of Business and S_3
Description of Business and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Jan. 02, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Ownership and Location of Shops | The ownership and location of those shops is as follows: Krispy Kreme U.S. and Canada Krispy Kreme International Insomnia Cookies Total Company-owned shops 307 454 210 971 Franchise shops 66 773 — 839 Total 373 1,227 210 1,810 |
Property and Equipment | The lives used in computing depreciation are as follows: Buildings 20 to 35 years Machinery and equipment 3 to 15 years Computer software 2 to 7 years Property and equipment, net consist of the following: January 2, 2022 January 3, 2021 Land $ 12,931 $ 13,187 Buildings 146,923 141,853 Leasehold improvements 195,129 158,145 Machinery and equipment 243,673 217,566 Computer software 43,985 34,580 Construction and projects in progress 60,940 43,769 Property and equipment, gross 703,581 609,100 Less: Accumulated depreciation (264,663) (213,845) Total property and equipment, net $ 438,918 $ 395,255 |
Accounting Standards Update and Change in Accounting Principle | The cumulative effect of the changes made to the Company’s Consolidated Balance Sheets as of December 31, 2018 for the adoption of ASC 842 was as follows: December 30, ASC 842 Adjustments December 31, Account: Operating lease right of use asset, net $ — $ 270,170 $ 270,170 Property and equipment, net 227,102 10,085 237,187 Other intangible assets, net 920,265 (7,305) 912,960 Current portion of long-term debt 38,126 1,168 39,294 Current operating lease liabilities — 24,088 24,088 Accrued liabilities 82,281 (2,967) 79,314 Noncurrent operating lease liabilities — 258,152 258,152 Long-term debt, less current portion 592,684 7,152 599,836 Other long-term obligations and deferred credits 76,576 (54,378) 22,198 Deferred income taxes, net 128,360 8,257 136,617 Noncontrolling interest 131,265 1,711 132,976 Retained (deficit) earnings $ (67,609) $ 29,767 $ (37,842) |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Jan. 02, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Business Acquisitions, by Acquisition | The following table summarizes the preliminary fair values of assets acquired and liabilities assumed as of the date of acquisition for the acquisitions above. KK Canada KK U.S. Shops Total Purchase Assets acquired: Cash and cash equivalents $ 2,015 $ 40 $ 2,055 Prepaid expense and other current assets 301 474 775 Property and equipment, net 2,365 3,829 6,194 Other intangible assets, net 6,873 23,906 30,779 Operating lease right of use asset, net 2,894 19,292 22,186 Other assets 103 897 1,000 Total identified assets acquired 14,551 48,438 62,989 Liabilities assumed: Accounts payable (1,639) — (1,639) Accrued liabilities (489) (334) (823) Current operating lease liabilities (554) (2,093) (2,647) Noncurrent operating lease liabilities (2,327) (17,199) (19,526) Deferred income taxes, net (2,021) — (2,021) Total liabilities assumed (7,030) (19,626) (26,656) Goodwill 17,036 9,254 26,290 Noncontrolling interest (9,822) — (9,822) Purchase consideration, net $ 14,735 $ 38,066 $ 52,801 Transaction costs in 2021 $ 2,502 $ 1,251 $ 3,753 Transaction costs in 2020 24 184 208 Reportable segment U.S. and Canada U.S. and Canada The following table summarizes the preliminary fair values of assets acquired and liabilities assumed as of the date of acquisition for the 2020 acquisitions as well as the acquired businesses’ impact on consolidated results in the year of acquisition. KK Japan KK U.S. Shops Total Purchase Assets acquired: Cash and cash equivalents $ 5,340 $ 112 $ 5,452 Accounts receivable, net 3,322 — 3,322 Inventories 354 779 1,133 Prepaid expense and other current assets 469 23 492 Property and equipment, net 1,029 16,585 17,614 Other intangible assets, net — 48,011 48,011 Operating lease right of use asset, net 12,260 38,096 50,356 Other assets 3,975 3,699 7,674 Total identified assets acquired 26,749 107,305 134,054 Liabilities assumed: Accounts payable (2,522) — (2,522) Accrued liabilities (3,049) (1,656) (4,705) Current operating lease liabilities (4,430) (2,968) (7,398) Noncurrent operating lease liabilities (7,861) (35,128) (42,989) Deferred income taxes, net (1,966) — (1,966) Other long-term obligations and deferred credits (2,468) — (2,468) Total liabilities assumed (22,296) (39,752) (62,048) Goodwill — 22,411 22,411 Bargain purchase gain (688) — (688) Purchase consideration, net $ 3,765 $ 89,964 $ 93,729 Transaction costs in 2020 (approx.) $ 3,192 $ 4,636 $ 7,828 Reportable segment(s) Market Development U.S. and Canada The following table summarizes the fair values of the assets acquired and liabilities assumed as of the date of acquisition for the 2019 acquisitions as well as the acquired businesses’ impact on consolidated results in the year of acquisition. This table incorporates certain measurement period adjustments during the fiscal year 2019. KK Mexico WKS Krispy Kreme Other Total Purchase Assets acquired: Cash and cash equivalents $ 856 $ 2,356 $ 44 $ 3,256 Marketable securities 1 19 — 20 Accounts receivable, net 4,242 115 334 4,691 Inventories 1,470 566 171 2,207 Prepaid expense and other current assets 412 237 83 732 Property and equipment, net 14,383 19,213 5,758 39,354 Other intangible assets, net 52,779 26,400 16,049 95,228 Operating lease right of use asset, net 6,723 42,208 11,397 60,328 Other assets 1,649 51 559 2,259 Total identified assets acquired 82,515 91,165 34,395 208,075 Liabilities assumed: Accounts payable (6,002) (1,702) (565) (8,269) Accrued liabilities (5,564) (6,370) (2,167) (14,101) Notes payable (10,706) (33,000) — (43,706) Noncurrent operating lease liabilities (2,846) (38,121) (9,726) (50,693) Deferred income taxes, net (16,576) — — (16,576) Other long-term obligations and deferred credits (271) — (950) (1,221) Total liabilities assumed (41,965) (79,193) (13,408) (134,566) Goodwill 36,223 23,606 5,625 65,454 Noncontrolling interest — (16,010) — (16,010) Purchase consideration, net $ 76,773 $ 19,568 $ 26,612 $ 122,953 Transaction costs in 2020 (approx.) $ 1,734 $ 540 $ 114 $ 2,388 Transaction costs in 2019 (approx.) 7,447 3,053 2,336 12,836 Reportable segment(s) International U.S. and Canada U.S. and Canada |
Business Acquisition, Pro Forma Information | The following unaudited pro forma information presents estimated combined results of the Company as if the 2021 acquisitions had occurred on December 30, 2019, the 2020 acquisitions had occurred on December 31, 2018 and the 2019 acquisitions had occurred on January 1, 2018: Fiscal Years Ended January 2, 2022 January 3, 2021 December 29, 2019 Revenue $ 1,384,391 $ 1,151,041 $ 1,083,747 Loss before income taxes (4,098) (48,788) (5,989) |
Accounts Receivable, net (Table
Accounts Receivable, net (Tables) | 12 Months Ended |
Jan. 02, 2022 | |
Receivables [Abstract] | |
Schedule of Components of Accounts Receivable, Net | The components of Accounts receivable, net are as follows: January 2, 2022 January 3, 2021 Trade receivables, net $ 41,132 $ 39,624 Other receivables, net 5,936 5,958 Receivables from related parties, net 423 416 Total accounts receivable, net $ 47,491 $ 45,998 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Jan. 02, 2022 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | The components of Inventories are as follows: January 2, 2022 January 3, 2021 Raw materials $ 15,278 $ 16,263 Work in progress 700 871 Finished goods and purchased merchandise 18,873 21,385 Total inventories $ 34,851 $ 38,519 |
Property and Equipment, net (Ta
Property and Equipment, net (Tables) | 12 Months Ended |
Jan. 02, 2022 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | The lives used in computing depreciation are as follows: Buildings 20 to 35 years Machinery and equipment 3 to 15 years Computer software 2 to 7 years Property and equipment, net consist of the following: January 2, 2022 January 3, 2021 Land $ 12,931 $ 13,187 Buildings 146,923 141,853 Leasehold improvements 195,129 158,145 Machinery and equipment 243,673 217,566 Computer software 43,985 34,580 Construction and projects in progress 60,940 43,769 Property and equipment, gross 703,581 609,100 Less: Accumulated depreciation (264,663) (213,845) Total property and equipment, net $ 438,918 $ 395,255 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 12 Months Ended |
Jan. 02, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill by Reportable Segment | Changes in the carrying amount of goodwill by reportable segment are as follows: U.S. and Canada International Market Development Total Balance as of December 29, 2019 $ 572,786 $ 277,565 $ 199,324 $ 1,049,675 Acquisitions 68,683 — (46,354) 22,329 Measurement period adjustments related to fiscal year 2019 acquisitions 1,235 1,190 — 2,425 Foreign currency impact — 12,117 — 12,117 Balance as of January 3, 2021 642,704 290,872 152,970 1,086,546 Acquisitions 45,328 — (19,038) 26,290 Measurement period adjustments related to fiscal year 2020 acquisitions 82 — — 82 Foreign currency impact (66) (7,530) — (7,596) Balance as of January 2, 2022 $ 688,048 $ 283,342 $ 133,932 $ 1,105,322 |
Schedule of Indefinite-Lived Intangible Assets | Other intangible assets consist of the following: January 2, 2022 January 3, 2021 Gross Accumulated Net Gross Accumulated Net Intangible assets with indefinite lives Trade name $ 657,900 $ — $ 657,900 $ 657,900 $ — $ 657,900 Intangible assets with definite lives Franchise agreements 32,545 (8,369) 24,176 36,254 (7,519) 28,735 Customer relationships 15,000 (4,684) 10,316 15,000 (3,819) 11,181 Reacquired franchise rights 384,305 (84,177) 300,128 358,095 (59,432) 298,663 Website development costs 6,500 (6,500) — 6,500 (4,965) 1,535 Total intangible assets with definite lives 438,350 (103,730) 334,620 415,849 (75,735) 340,114 Total intangible assets $ 1,096,250 $ (103,730) $ 992,520 $ 1,073,749 $ (75,735) $ 998,014 |
Schedule of Finite-Lived Intangible Assets | Other intangible assets consist of the following: January 2, 2022 January 3, 2021 Gross Accumulated Net Gross Accumulated Net Intangible assets with indefinite lives Trade name $ 657,900 $ — $ 657,900 $ 657,900 $ — $ 657,900 Intangible assets with definite lives Franchise agreements 32,545 (8,369) 24,176 36,254 (7,519) 28,735 Customer relationships 15,000 (4,684) 10,316 15,000 (3,819) 11,181 Reacquired franchise rights 384,305 (84,177) 300,128 358,095 (59,432) 298,663 Website development costs 6,500 (6,500) — 6,500 (4,965) 1,535 Total intangible assets with definite lives 438,350 (103,730) 334,620 415,849 (75,735) 340,114 Total intangible assets $ 1,096,250 $ (103,730) $ 992,520 $ 1,073,749 $ (75,735) $ 998,014 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | Estimated future amortization expense as of January 2, 2022 is as follows: Fiscal year Estimated 2022 $ 28,726 2023 28,726 2024 28,892 2025 28,726 2026 28,566 Thereafter 190,984 Total $ 334,620 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 12 Months Ended |
Jan. 02, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Long-Term Debt | The Company’s long-term debt obligations consists of the following: Fiscal Years Ended January 2, January 3, 2019 Facility - term loan $ 621,250 $ 656,250 2019 Facility - revolving credit facility 75,000 150,000 Less: Debt issuance costs (3,833) (5,419) Financing obligations 24,473 26,224 Total long-term debt 716,890 827,055 Less: Current portion of long-term debt (36,583) (41,245) Long-term debt, less current portion 680,307 785,810 Related party notes payable (excluding accrued interest) — 337,148 Total debt and related party notes payable $ 680,307 $ 1,122,958 |
Schedule of Maturities of Long-term Debt | The aggregate maturities of the 2019 Facility for each of the following five years by fiscal year are as follows: Fiscal year Principal Amount 2022 $ 35,000 2023 35,000 2024 626,250 2025 — 2026 — |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Jan. 02, 2022 | |
Leases [Abstract] | |
Schedule of Supplemental Balance Sheet Information Related to Leases | The Company included the following amounts related to operating and finance lease assets and liabilities within the Consolidated Balance Sheets: As of January 2, 2022 January 3, 2021 Assets Classification Operating lease Operating lease right of use asset, net $ 435,168 $ 399,688 Finance lease Property and equipment, net 19,298 23,556 Total leased assets $ 454,466 $ 423,244 Liabilities Current Operating lease Current operating lease liabilities $ 50,359 $ 45,675 Finance lease Current portion of long-term debt 1,583 6,245 Noncurrent Operating lease Noncurrent operating lease liabilities 415,208 376,099 Finance lease Long-term debt, less current portion 22,890 19,979 Total leased liabilities $ 490,040 $ 447,998 The weighted-average remaining lease term and weighted-average discount rate for operating and finance leases were as follows: As of January 2, 2022 January 3, 2021 Weighted average remaining lease term: Operating lease 11.6 years 11.1 years Finance lease 13.8 years 12.0 years Weighted average discount rate: Operating lease 6.65 % 6.94 % Finance lease 7.13 % 7.13 % |
Schedule of Lease Costs and Supplemental Cash Flow Information Related to Leases | Lease costs were as follows: Fiscal Years Ended January 2, 2022 January 3, 2021 December 29, 2019 Lease cost Classification Operating lease cost Selling, general and administrative expense $ 2,481 $ 3,127 $ 2,816 Operating lease cost Operating expenses 85,429 70,855 45,732 Short-term lease cost Operating expenses 2,513 2,867 1,850 Variable lease costs Operating expenses 16,414 9,195 13,161 Sublease income Royalties and other revenues (386) (506) (480) Finance lease cost: Amortization of right-of-use assets Depreciation and amortization expense $ 3,217 $ 2,587 $ 2,469 Interest on lease liabilities Interest expense, net 2,002 2,040 1,915 Supplemental disclosures of cash flow information related to leases were as follows: Fiscal Years Ended January 2, 2022 January 3, 2021 December 29, 2019 Other information Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 91,967 $ 78,465 $ 59,227 Operating cash flows for finance leases 1,916 1,781 1,914 Financing cash flows for finance leases 4,901 3,694 1,290 Right-of-use assets obtained in exchange for new lease liabilities: Operating leases $ 95,284 $ 74,979 $ 135,163 Finance leases 2,328 7,500 5,062 |
Lessee, Operating Lease, Liability, Maturity | Future lease commitments to be paid by the Company as of January 2, 2022 were as follows: Fiscal year Operating Leases Finance Leases 2022 $ 80,268 $ 3,275 2023 67,952 2,728 2024 63,907 2,588 2025 58,440 2,605 2026 56,505 2,824 Thereafter 395,510 25,846 Total lease payments 722,582 39,866 Less: interest (257,015) (15,393) Present value of lease liabilities $ 465,567 $ 24,473 |
Finance Lease, Liability, Fiscal Year Maturity | Future lease commitments to be paid by the Company as of January 2, 2022 were as follows: Fiscal year Operating Leases Finance Leases 2022 $ 80,268 $ 3,275 2023 67,952 2,728 2024 63,907 2,588 2025 58,440 2,605 2026 56,505 2,824 Thereafter 395,510 25,846 Total lease payments 722,582 39,866 Less: interest (257,015) (15,393) Present value of lease liabilities $ 465,567 $ 24,473 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Jan. 02, 2022 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The following table presents assets and liabilities that are measured at fair value on a recurring basis as of January 2, 2022 and January 3, 2021: January 2, 2022 Level 1 Level 2 Level 3 Assets: 401(k) mirror plan assets $ 111 $ — $ — Commodity derivatives — 1,486 — Total Assets $ 111 $ 1,486 $ — Liabilities: Foreign currency derivative — 80 — Interest rate derivative — 14,667 — Total Liabilities $ — $ 14,747 $ — January 3, 2021 Level 1 Level 2 Level 3 Assets: 401(k) mirror plan assets $ 237 $ — $ — Foreign currency derivative — 131 — Commodity derivatives — 420 — Total Assets $ 237 $ 551 $ — Liabilities: Interest rate derivative — 32,813 — Total Liabilities $ — $ 32,813 $ — |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 12 Months Ended |
Jan. 02, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments in Condensed Consolidated Balance Sheets, Fair Value | The following tables present the fair values of derivative instruments included in the Consolidated Balance Sheets as of January 2, 2022 and January 3, 2021 for derivatives not designated as hedging instruments and derivatives designed as hedging instruments, respectively. The Company only has cash flow hedges that are designated as hedging instruments. Derivatives Fair Value Derivatives Not Designated as Hedging January 2, 2022 January 3, 2021 Balance Sheet Location Foreign currency derivatives $ — $ 131 Prepaid expense and other current assets Commodity derivatives 1,486 420 Prepaid expense and other current assets $ 1,486 $ 551 Foreign currency derivatives 80 — Accrued liabilities $ 80 $ — Derivatives Fair Value Derivatives Designated as Hedging January 2, 2022 January 3, 2021 Balance Sheet Location Interest rate derivatives $ 8,535 $ 10,235 Accrued liabilities Interest rate derivatives 6,132 22,578 Other long-term obligations and deferred credits $ 14,667 $ 32,813 |
Schedule of Derivative Instruments in Condensed Consolidated Statements of Operations, Gain (Loss) | The effect of derivative instruments on the Consolidated Statements of Operations for the fiscal years ended January 2, 2022, January 3, 2021, and December 29, 2019: Derivative Gain/(Loss) Recognized in Income in Fiscal Years Ended Derivatives Designated as Hedging Instruments January 2, 2022 January 3, 2021 December 29, 2019 Location of Derivative Gain/(Loss) Recognized in Income Loss on interest rate derivatives $ (10,291) $ (7,633) $ (1,774) Interest expense, net $ (10,291) $ (7,633) $ (1,774) Derivative Gain/(Loss) Recognized in Income in Fiscal Years Ended Derivatives Not Designated as Hedging Instruments January 2, 2022 January 3, 2021 December 29, 2019 Location of Derivative Gain/(Loss) Recognized in Income Loss on foreign currency $ (62) $ (21) $ (248) Other non-operating expense/(income), net Gain on commodity derivatives 1,066 267 153 Other non-operating expense/(income), net $ 1,004 $ 246 $ (95) |
Share-based Compensation (Table
Share-based Compensation (Tables) | 12 Months Ended |
Jan. 02, 2022 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Nonvested Restricted Stock Units Activity | RSU activity under the various plans during the fiscal years presented is as follows: Non-vested shares outstanding at December 29, 2019 Granted Vested Forfeited Non-vested shares outstanding at January 3, 2021 Granted RSU Dividend Equivalents (1) Vested Forfeited Non-vested shares outstanding at January 2, 2022 KKI RSUs 4,108,726 696,371 2,283 153,263 4,649,551 3,339,608 1,018,629 2,585,390 556,291 5,866,107 Weighted Average Grant Date Fair Value $ 10.43 16.90 10.35 11.43 $ 11.37 17.95 — 9.29 14.32 $ 13.78 KKUK RSUs 416,068 — — 11,500 404,568 6,785 — 351,500 — 59,853 Weighted Average Grant Date Fair Value $ 12.44 — — 12.22 $ 12.45 29.80 — 12.22 — $ 15.77 Insomnia Cookies RSUs 30,959 13,688 810 14,558 29,279 15,173 — 809 10,147 33,496 Weighted Average Grant Date Fair Value $ 67.82 66.71 74.12 64.30 $ 68.87 97.77 — 74.12 75.68 $ 79.66 KK Australia RSUs 1,880,941 63,560 — 100,260 1,844,241 78,534 — — 26,042 1,896,733 Weighted Average Grant Date Fair Value $ 1.47 1.67 — 1.36 $ 1.48 1.45 — — 1.36 $ 1.48 KK Mexico RSUs — 25,055 — — 25,055 32,963 — — — 58,018 Weighted Average Grant Date Fair Value $ — 29.21 — — $ 29.21 35.64 — — — $ 32.86 1. For KKI RSU holders that did not vest upon IPO, dividend equivalent shares were granted after the IPO at a weighted average grant date fair value of zero. The vesting terms for the dividend equivalent shares are the same as the underlying RSUs. The KKI shares presented have been retroactively adjusted to give effect to the Stock Split and the Merger. |
Share-based Payment Arrangement, Nonvested Award, Cost | The unrecognized compensation cost related to the unvested RSUs and the weighted-average period over which such cost is expected to be recognized are as follows: As of January 2, 2022 Unrecognized Recognized Over a Weighted- KKI $ 57,087 3.1 years KKUK 434 2.0 years Insomnia Cookies 1,837 3.0 years KK Australia 607 1.0 year KK Mexico $ 1,661 3.9 years The unrecognized compensation cost related to the unvested stock options and the weighted-average period over which such cost is expected to be recognized are as follows: As of January 2, 2022 Unrecognized Recognized Over a Weighted- KKI $ 13,830 3.2 years |
Schedule of Weighted-Average Assumptions, Stock Options | The following weighted-average assumptions were utilized in determining the fair value of the time-vested stock options granted during fiscal year 2021: Fiscal Years Ended January 2, January 3, KKI Risk-free interest rate 1.3 % — % Expected volatility 34.4 % — % Dividend yield 1.0 % — % Expected term (years) 6.8 years — |
Summary of Stock Option Activity | A summary of the status of the time-vested stock options as of January 2, 2022 and changes during fiscal year 2021 is presented below: Share options outstanding at Share options outstanding at January 3, Granted Exercised Forfeited or expired January 2, KKI Options — 2,817,398 — — 2,817,398 Weighted Average Grant Date Fair Value $ — 6.10 — — $ 6.10 Weighted Average Exercise Price $ — 14.61 — — $ 14.61 Weighted Average Remaining Contractual Term (years) — 9.3 years Aggregate Intrinsic Value (in thousands) $ — $ 12,151 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Jan. 02, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income (Loss) Before Income Taxes | Income (loss) before income taxes consisted of: Fiscal Years Ended January 2, 2022 January 3, 2021 December 29, 2019 Domestic $ (49,348) $ (47,080) $ (34,836) Foreign 45,250 (4,748) 13,412 Loss before income taxes $ (4,098) $ (51,828) $ (21,424) |
Schedule of Components of Income Tax Expense (Benefit) | The components of the provision for income taxes are as follows: Fiscal Years Ended January 2, 2022 January 3, 2021 December 29, 2019 Current: Federal $ — $ — $ 2,209 State 347 156 (396) International 13,894 8,992 2,342 Total current 14,241 9,148 4,155 Deferred: Federal 4,310 (8,844) 10,117 State (5,739) 13,472 (743) International (2,067) (4,664) (952) Total deferred (3,496) (36) 8,422 Income tax expense $ 10,745 $ 9,112 $ 12,577 |
Schedule of Effective Income Tax Rate Reconciliation | A reconciliation of the statutory U.S. federal income tax rate and the Company’s effective tax rate is as follows: Fiscal Years Ended January 2, January 3, December 29, Statutory federal rate 21.0 % 21.0 % 21.0 % State income taxes, net of federal benefit (2.8) 4.1 0.8 Foreign operations (12.9) (10.7) 6.0 Credit for foreign income taxes — — 6.3 Change in valuation allowance 14.3 (34.9) (31.0) Noncontrolling interest 46.8 2.6 (3.3) Impact of uncertain tax positions 9.1 (1.3) (55.8) Other permanent differences (14.2) 1.3 3.0 Transaction costs (5.1) (0.8) (10.0) Deferred adjustments (96.1) (0.9) (10.2) Stock compensation (217.4) — — Other (4.9) 2.0 14.5 Effective tax rate (262.2) % (17.6) % (58.7) % |
Schedule of Deferred Tax Assets and Liabilities | The tax effects of temporary differences are as follows: As of January 2, January 3, Deferred income tax assets: Intangible assets $ 1,665 $ 1,884 Accrued compensation 4,330 3,302 Insurance accruals 1,934 2,040 Share-based compensation 2,786 7,676 Deferred revenue 1,735 1,903 Transaction costs 1,397 1,091 Disallowed interest expense 10,527 9,660 Lease liabilities 101,629 91,828 Foreign net operating loss carryforward 2,565 574 Foreign capital loss carryforward — 23,067 Federal net operating loss carryforward 22,493 22,976 Federal tax credits 13,913 12,320 State net operating loss and credit carryforwards 11,169 9,082 Unrealized loss on foreign currency 3,667 8,203 Other 9,567 11,243 Gross deferred income tax assets 189,377 206,849 Valuation allowance (29,972) (40,502) Deferred income tax assets, net of valuation allowance $ 159,405 $ 166,347 Deferred income tax liabilities: Intangible assets (147,621) (150,818) Subsidiary investments (8,038) (5,359) Property and equipment (14,254) (19,104) Foreign reacquired franchise rights (37,600) (44,236) Lease right of use assets (93,250) (85,764) Other (3,683) (5,840) Gross deferred income tax liabilities (304,446) (311,121) Net deferred income tax liabilities $ (145,041) $ (144,774) The presentation of deferred income taxes on the Consolidated Balance Sheets is as follows: As of January 2, January 3, Included in: Other assets $ 377 $ 92 Deferred income taxes, net (145,418) (144,866) Net deferred income tax liabilities $ (145,041) $ (144,774) |
Schedule of Unrecognized Tax Benefits | The following table presents a reconciliation of the beginning and ending amounts of unrecognized tax benefits: As of January 2, January 3, Unrecognized tax benefits at beginning of year $ 17,341 $ 17,342 Increases related to positions taken in the current year 1,383 18 Increases (decreases) related to positions taken in prior years (246) (19) Unrecognized tax benefits at end of year $ 18,478 $ 17,341 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 12 Months Ended |
Jan. 02, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | Revenues are disaggregated as follows: Fiscal Years Ended January 2, January 3, December 29, Company Shops, DFD and Branded Sweet Treat Line $ 1,305,597 $ 1,014,790 $ 788,607 Mix and equipment revenue from franchisees 47,869 70,320 124,198 Franchise royalties and other 30,925 36,926 46,603 Total net revenues $ 1,384,391 $ 1,122,036 $ 959,408 |
Summary of Contract Balances with Customers | Deferred revenue subject to ASC 606 and related receivables are as follows: January 2, January 3, Balance Sheet Location Trade receivables, net of allowances of $896 and $1,437, respectively $ 41,132 $ 39,624 Accounts receivables, net Deferred revenue Current 17,458 16,045 Accrued liabilities Noncurrent 2,981 2,838 Other long-term obligations and deferred credits $ 20,439 $ 18,883 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction | Estimated revenue expected to be recognized in the future related to performance obligations that are either unsatisfied or partially satisfied as of January 2, 2022 is as follows: Fiscal year 2022 $ 12,869 2023 2,654 2024 1,080 2025 1,218 2026 526 Thereafter 2,092 $ 20,439 |
Net Loss per Share (Tables)
Net Loss per Share (Tables) | 12 Months Ended |
Jan. 02, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of Net Loss Per Share, Basic and Diluted | The following table presents the calculations of basic and diluted EPS: Fiscal Years Ended (in thousands, except share and per share amounts) January 2, January 3, December 29, Net loss attributable to Krispy Kreme, Inc. $ (24,506) $ (64,301) $ (37,409) Adjustment to net loss attributable to common shareholders (1,468) (477) 278 Net loss attributable to common shareholders — Basic $ (25,974) $ (64,778) $ (37,131) Additional income attributed to noncontrolling interest due to subsidiary potential common shares (122) (10) (64) Net loss attributable to common shareholders — Diluted $ (26,096) $ (64,788) $ (37,195) Basic weighted average common shares outstanding 147,654,548 124,987,370 124,987,370 Dilutive effect of outstanding common stock options and RSUs — — — Diluted weighted average common shares outstanding 147,654,548 124,987,370 124,987,370 Loss per share attributable to common shareholders: Basic $ (0.18) $ (0.52) $ (0.30) Diluted $ (0.18) $ (0.52) $ (0.30) |
Schedule of Antidilutive Unvested RSUs Excluded from Computation of Net Loss per Share | The following table summarizes the gross number of potential dilutive unvested RSUs excluded due to antidilution (unadjusted for the treasury stock method): Fiscal Years Ended January 2, January 3, December 29, KKI 5,866,107 4,649,551 4,108,726 KKUK — 404,568 416,068 Insomnia Cookies — — 809 KK Australia — — — KK Mexico — — — |
Segment Reporting (Tables)
Segment Reporting (Tables) | 12 Months Ended |
Jan. 02, 2022 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | The reportable segment results are as follows: Fiscal Years Ended January 2, 2022 January 3, 2021 December 29, 2019 Net revenues: U.S. and Canada $ 928,413 $ 782,717 $ 587,522 International 332,995 230,185 223,115 Market Development 122,983 109,134 148,771 Total net revenues $ 1,384,391 $ 1,122,036 $ 959,408 Fiscal Years Ended January 2, 2022 January 3, 2021 December 29, 2019 Depreciation and amortization: U.S. and Canada $ 55,447 $ 43,056 $ 30,610 International 36,139 30,438 25,188 Market Development 2,042 2,304 3,464 Corporate 7,980 4,600 4,505 Total depreciation and amortization $ 101,608 $ 80,398 $ 63,767 Fiscal Years Ended January 2, January 3, December 29, Segment Adjusted EBITDA: U.S. and Canada $ 107,571 $ 91,574 $ 71,620 International 81,422 44,554 53,252 Market Development 40,824 39,060 51,574 Corporate (41,872) (29,754) (30,062) 187,945 145,434 146,384 Interest expense, net 32,622 34,741 38,085 Interest expense — related party (1) 10,387 22,468 21,947 Income tax expense 10,745 9,112 12,577 Depreciation and amortization expense 101,608 80,398 63,767 Share-based compensation 22,923 11,601 10,741 Employer payroll taxes related to share-based compensation 2,044 — — Other non-operating expense/(income), net (2) 2,191 (1,101) (609) New York City flagship Hot Light Theater Shop opening (3) — 6,513 3,784 Strategic initiatives (4) — 20,517 4,059 Acquisition and integration expenses (5) 5,255 12,679 20,433 Shop closure expenses (6) 2,766 6,269 629 Restructuring and severance expenses (7) 1,733 — 583 IPO-related expenses (8) 14,534 3,184 — Gain on sale-leaseback (8,673) — — Other (9) 4,653 (7) 4,389 Net Loss $ (14,843) $ (60,940) $ (34,001) 1. Consists of interest expense related to the Related Party Notes which were paid off in full during the second quarter of fiscal 2021. 2. Primarily foreign translation gains and losses in each period. 3. Consists of pre-opening costs related to the Company’s New York City flagship Hot Light Theater Shop opening, including shop design, rent, and additional consulting and training costs incurred and reflected in Selling, general and administrative expenses. 4. Consists mainly of consulting and advisory fees, personnel transition costs, and network conversion and set-up costs related to the evolution of the Company’s legacy wholesale business in the U.S. 5. Consists of acquisition and integration-related costs in connection with the Company’s business and franchise acquisitions, including legal, due diligence, consulting and advisory fees incurred in connection with acquisition-related activities for the applicable period. 6. Includes lease termination costs, impairment charges, and loss on disposal of property, plant and equipment. 7. Fiscal 2021 consists of severance and related benefits costs associated with the Company’s realignment of the Company Shop organizational structure to better support the DFD and Branded Sweet Treat Line businesses. Fiscal 2019 consists of severance and related benefits costs associated with the Company’s hiring of a new global management team. 8. Includes consulting and advisory fees incurred in connection with preparation for and execution of the Company’s IPO. 9. Fiscal 2021 consists primarily of legal expenses incurred outside the ordinary course of business on matters described in Note 14 , Commitments and Contingencies, to the Company’s audited Consolidated Financial Statements. Fiscal 2020 consists primarily of fixed asset and impairment expenses, net of a gain on the sale of land, as well as $1.2 million of management fees paid to JAB. Fiscal 2019 includes $3.1 million lease impairment expenses related to the Company’s Winston-Salem office location incurred in connection with the Company’s corporate headquarters relocation to Charlotte, North Carolina. |
Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas | Geographical information related to consolidated revenues and long-lived assets is as follows: Fiscal Years Ended January 2, 2022 January 3, 2021 December 29, 2019 Net revenues: United States $ 955,384 $ 854,097 $ 696,841 United Kingdom 147,233 93,121 120,009 Australia / New Zealand 99,582 78,677 86,734 Mexico 77,831 53,085 8,991 All other 104,361 43,056 46,833 Total net revenues $ 1,384,391 $ 1,122,036 $ 959,408 Fiscal Years Ended January 2, January 3, December 29, Long-lived assets: United States $ 684,790 $ 625,928 $ 565,933 United Kingdom 69,112 68,500 63,543 Australia / New Zealand 61,155 59,656 54,003 Mexico 30,944 23,094 20,965 All other 28,085 17,765 4,290 Total long-lived assets $ 874,086 $ 794,943 $ 708,734 |
Description of Business and S_4
Description of Business and Summary of Significant Accounting Policies - Ownership and Location of Shops (Details) | Jan. 02, 2022storecountry |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Number of shops | 1,810 |
Number of countries operated in | country | 30 |
Company-owned shops | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Number of shops | 971 |
Franchise shops | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Number of shops | 839 |
Krispy Kreme U.S. and Canada | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Number of shops | 373 |
Krispy Kreme U.S. and Canada | Company-owned shops | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Number of shops | 307 |
Krispy Kreme U.S. and Canada | Franchise shops | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Number of shops | 66 |
Krispy Kreme International | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Number of shops | 1,227 |
Krispy Kreme International | Company-owned shops | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Number of shops | 454 |
Krispy Kreme International | Franchise shops | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Number of shops | 773 |
Insomnia Cookies | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Number of shops | 210 |
Insomnia Cookies | Company-owned shops | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Number of shops | 210 |
Description of Business and S_5
Description of Business and Summary of Significant Accounting Policies - Initial Public Offering (Details) $ / shares in Units, $ in Thousands | Aug. 02, 2021USD ($)shares | Jul. 07, 2021USD ($) | Jul. 01, 2021USD ($)$ / sharesshares | Jun. 30, 2021 | Jun. 28, 2021USD ($)shares | Jun. 17, 2021USD ($) | Aug. 17, 2021USD ($)shares | Aug. 02, 2021USD ($) | Jul. 04, 2021USD ($) | Jan. 02, 2022USD ($)segment | Jan. 03, 2021USD ($) | Dec. 29, 2019USD ($) | Jun. 10, 2021USD ($) |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||
Number of reportable segments | segment | 3 | ||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||||
Proceeds from the issuance of debt | $ 695,000 | $ 288,097 | $ 804,002 | ||||||||||
Debt issuance costs, net | 3,833 | 5,419 | |||||||||||
Conversion of noncontrolling interest to additional paid-in capital in connection with the Merger | 0 | ||||||||||||
Awards conversion ratio upon Merger (in shares) | shares | 317.24 | ||||||||||||
Stock split, conversion ratio | 1,745 | ||||||||||||
Payments for repurchase and retirement of common stock | $ 102,700 | 139,103 | 0 | 0 | |||||||||
Accrual for distribution to shareholders | 42,300 | 42,334 | 42 | 2,629 | |||||||||
Payments of dividends | 48,187 | 42 | 2,629 | ||||||||||
Proceeds from IPO, net of underwriting discounts (excluding unpaid issuance costs) | $ 514,900 | 527,329 | $ 0 | $ 0 | |||||||||
Executive Officers, Shares Repurchased at Price Paid by Underwriters | |||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||||
Payments for repurchase and retirement of common stock | $ 20,300 | ||||||||||||
Shares repurchased during period (in shares) | shares | 1,300,000 | ||||||||||||
Executive Officers, Share Repurchased for Payment of Withholding Taxes | |||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||||
Payments for repurchase and retirement of common stock | $ 15,500 | ||||||||||||
Shares repurchased during period (in shares) | shares | 1,000,000 | ||||||||||||
Noncontrolling Interest | |||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||||
Conversion of noncontrolling interest to additional paid-in capital in connection with the Merger | $ 107,400 | $ 107,351 | |||||||||||
Notes Payable, Related Party | |||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||||
Accrued interest | 17,800 | ||||||||||||
Repayments of related party debt | $ 355,000 | ||||||||||||
Term Loan Facility | Secured Debt | |||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||||
Repayments of debt | $ 500,700 | ||||||||||||
Accrued interest | $ 700 | ||||||||||||
Term Loan Facility | Secured Debt | Krispy Kreme Holdings, Inc. (“KKHI”) | |||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||||
Debt instrument, face amount | $ 500,000 | ||||||||||||
Proceeds from the issuance of debt | $ 500,000 | ||||||||||||
Debt issuance costs, net | $ 1,700 | ||||||||||||
Debt, weighted average interest rate | 2.68175% | ||||||||||||
IPO | |||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||||
Sale of stock, number of shares issued in transaction | shares | 29,400,000 | ||||||||||||
Sale of stock, consideration received on transaction | $ 458,800 | ||||||||||||
Payments for underwriting discounts and commissions | 28,700 | ||||||||||||
Payments of offering expenses | $ 12,500 | ||||||||||||
IPO | Common Stock | |||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||||
Sale of stock, price per share (in dollars per share) | $ / shares | $ 17 | ||||||||||||
Over-Allotment Option | |||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||||
Sale of stock, number of shares issued in transaction | shares | 3,500,000 | ||||||||||||
Sale of stock, consideration received on transaction | $ 56,100 | ||||||||||||
Payments of stock issuance costs | $ 3,400 |
Description of Business and S_6
Description of Business and Summary of Significant Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 02, 2022 | Jan. 03, 2021 | Dec. 29, 2019 | |
Disaggregation of Revenue [Line Items] | |||
Revenues | $ 1,384,391 | $ 1,122,036 | $ 959,408 |
Deferred revenue | 20,439 | 18,883 | |
Shipping and Handling | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | $ 13,300 | 15,200 | 6,500 |
Franchise | |||
Disaggregation of Revenue [Line Items] | |||
Domestic franchise agreement term | 15 years | ||
Advertising | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | $ 4,300 | 8,100 | $ 9,300 |
Gift Cards | |||
Disaggregation of Revenue [Line Items] | |||
Deferred revenue | 22,500 | 18,000 | |
Capitalized gift card costs | 1,700 | 1,700 | |
Breakage Revenue | |||
Disaggregation of Revenue [Line Items] | |||
Deferred revenue | 11,200 | 10,400 | |
Customer Loyalty Program | |||
Disaggregation of Revenue [Line Items] | |||
Deferred revenue | $ 2,300 | $ 3,600 |
Description of Business and S_7
Description of Business and Summary of Significant Accounting Policies - Additional Information (Details) - USD ($) | Dec. 31, 2018 | Jan. 02, 2022 | Jan. 03, 2021 | Dec. 29, 2019 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Marketing expenses | $ 39,489,000 | $ 34,000,000 | $ 28,785,000 | |
Amounts due from banks | 8,500,000 | 9,600,000 | ||
Allowance for expected credit losses | 900,000 | 1,400,000 | ||
Inventory reserves | 3,700,000 | 2,700,000 | ||
Prepaid service contracts and insurance premiums | 19,600,000 | 11,300,000 | ||
Operating lease right of use asset, net | $ 270,170,000 | 435,168,000 | 399,688,000 | |
Operating lease liabilities | 465,567,000 | |||
Deferred income taxes | 3,496,000 | 36,000 | (8,422,000) | |
Goodwill impairment charges | 0 | $ 0 | ||
Accrued compensation and benefits | $ 41,000,000 | 34,100,000 | ||
Payment term outside of SCF Program | 180 days | |||
Payment term under SCF Program | 360 days | |||
Self insurance reserve | $ 14,700,000 | 14,400,000 | ||
Limited liability balance | $ 7,500,000 | $ 7,700,000 | ||
Preferred stock, shares authorized (in shares) | 50,000,000 | |||
Preferred stock, par value (in dollars per share) | $ 0.01 | |||
Preferred stock, shares outstanding (in shares) | 0 | 0 | ||
Accounting Standards Update 2016-02 | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Operating lease right of use asset, net | 270,170,000 | |||
Accounting Standards Update 2016-02 | Cumulative Effect, Period of Adoption, Adjustment | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Operating lease right of use asset, net | 280,000,000 | |||
Operating lease liabilities | 291,000,000 | |||
Deferred income taxes | $ 4,100,000 |
Description of Business and S_8
Description of Business and Summary of Significant Accounting Policies - Property and Equipment (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 02, 2022 | Jan. 03, 2021 | Dec. 29, 2019 | |
Property, Plant and Equipment [Line Items] | |||
Impairment charges of long-lived assets | $ 2.9 | $ 0.3 | $ 0.5 |
Minimum | Buildings | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, useful life | 20 years | ||
Minimum | Machinery and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, useful life | 3 years | ||
Minimum | Computer software | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, useful life | 2 years | ||
Maximum | Buildings | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, useful life | 35 years | ||
Maximum | Machinery and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, useful life | 15 years | ||
Maximum | Computer software | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, useful life | 7 years |
Description of Business and S_9
Description of Business and Summary of Significant Accounting Policies - Accounting Standards Update and Change in Accounting Principle (Details) - USD ($) $ in Thousands | Jan. 02, 2022 | Jan. 03, 2021 | Dec. 31, 2018 | Dec. 30, 2018 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Operating lease right of use asset, net | $ 435,168 | $ 399,688 | $ 270,170 | |
Property and equipment, net | $ 227,102 | |||
Property and equipment, net | 438,918 | 395,255 | 237,187 | |
Other intangible assets, net | 992,520 | 998,014 | 912,960 | 920,265 |
Current portion of long-term debt | 39,294 | 38,126 | ||
Current operating lease liabilities | 50,359 | 45,675 | 24,088 | |
Accrued liabilities | 140,750 | 124,951 | 79,314 | 82,281 |
Noncurrent operating lease liabilities | 415,208 | 376,099 | 258,152 | |
Long-term debt, less current portion | 599,836 | 592,684 | ||
Other long-term obligations and deferred credits | 42,509 | 63,445 | 22,198 | 76,576 |
Deferred income taxes, net | 145,418 | 144,866 | 136,617 | 128,360 |
Noncontrolling interest | 104,066 | 163,675 | 132,976 | 131,265 |
Retained (deficit) earnings | $ (178,409) | $ (142,197) | (37,842) | $ (67,609) |
Accounting Standards Update 2016-02 | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Operating lease right of use asset, net | 270,170 | |||
Property and equipment, net | 10,085 | |||
Other intangible assets, net | (7,305) | |||
Current portion of long-term debt | 1,168 | |||
Current operating lease liabilities | 24,088 | |||
Accrued liabilities | (2,967) | |||
Noncurrent operating lease liabilities | 258,152 | |||
Long-term debt, less current portion | 7,152 | |||
Other long-term obligations and deferred credits | (54,378) | |||
Deferred income taxes, net | 8,257 | |||
Noncontrolling interest | 1,711 | |||
Retained (deficit) earnings | $ 29,767 |
Acquisitions - Narrative (Detai
Acquisitions - Narrative (Details) $ in Thousands | Oct. 04, 2021USD ($)store | Dec. 08, 2020USD ($) | Nov. 19, 2019USD ($)store | Nov. 18, 2019USD ($)store | Apr. 04, 2021USD ($)acquiredBusinessstore | Jan. 02, 2022USD ($)store | Jan. 03, 2021USD ($)acquiredBusinessstore | Dec. 29, 2019USD ($)acquiredBusinessstore |
Business Acquisition [Line Items] | ||||||||
Number of shops | store | 1,810 | |||||||
Total net revenues | $ 1,384,391 | $ 1,122,036 | $ 959,408 | |||||
Net loss attributable to Krispy Kreme, Inc. | (24,506) | (64,301) | (37,409) | |||||
Goodwill adjustments | 82 | 2,425 | ||||||
Payment of contingent consideration related to a business combination | 0 | 506 | 4,646 | |||||
KK Canada | ||||||||
Business Acquisition [Line Items] | ||||||||
Ownership percentage by noncontrolling owners | 40.00% | |||||||
WKS Krispy Kreme | ||||||||
Business Acquisition [Line Items] | ||||||||
Ownership percentage | 55.00% | |||||||
WKS | ||||||||
Business Acquisition [Line Items] | ||||||||
Number of shops | store | 30 | |||||||
WKS | WKS Krispy Kreme | ||||||||
Business Acquisition [Line Items] | ||||||||
Ownership percentage | 45.00% | |||||||
Westward Dough, LLC | WKS Krispy Kreme | ||||||||
Business Acquisition [Line Items] | ||||||||
Number of shops | store | 6 | |||||||
KK Canada 2021 | ||||||||
Business Acquisition [Line Items] | ||||||||
Percentage of interests acquired | 60.00% | |||||||
Number of shops | store | 10 | |||||||
Purchase consideration, net | $ 14,700 | |||||||
Consideration transferred, cash | 14,400 | |||||||
Consideration transferred, settlement for pre-existing relationships | 300 | |||||||
Disposal of acquiree intangible assets, cumulative net book value | 300 | |||||||
Goodwill and franchise rights deductible amount to reduce income tax expense | 100 | |||||||
Fair value of equity interest | $ 9,800 | |||||||
KK U.S. Shops 2021 | ||||||||
Business Acquisition [Line Items] | ||||||||
Number of shops | store | 17 | |||||||
Purchase consideration, net | $ 38,100 | |||||||
Consideration transferred, cash | 33,900 | |||||||
Consideration transferred, settlement for pre-existing relationships | 3,300 | |||||||
Disposal of acquiree intangible assets, cumulative net book value | $ 2,700 | |||||||
Number of businesses acquired | acquiredBusiness | 2 | |||||||
Consideration transferred, amount withheld to cover indemnification claims | $ 900 | |||||||
Consideration payable, payment period | 12 months | |||||||
Consideration transferred, accounts and financing receivable, net of deferred revenue, write-off | $ 600 | |||||||
KK U.S. and Canada 2021 | ||||||||
Business Acquisition [Line Items] | ||||||||
Fair value of equity interest | 9,822 | |||||||
Total revenue | 44,100 | |||||||
Net income | $ 4,300 | |||||||
Intangible assets | $ 30,779 | |||||||
KK Japan | ||||||||
Business Acquisition [Line Items] | ||||||||
Number of shops | store | 44 | |||||||
Purchase consideration, net | $ 3,800 | |||||||
Disposal of acquiree intangible assets, cumulative net book value | 3,900 | |||||||
Consideration transferred, accounts and financing receivable, net of deferred revenue, write-off | $ (100) | |||||||
Bargain purchase gain | $ 700 | |||||||
KK U.S. Shops 2020 | ||||||||
Business Acquisition [Line Items] | ||||||||
Number of shops | store | 51 | |||||||
Purchase consideration, net | $ 89,900 | |||||||
Consideration transferred, cash | 80,400 | |||||||
Consideration transferred, settlement for pre-existing relationships | 9,500 | |||||||
Disposal of acquiree intangible assets, cumulative net book value | $ 6,900 | |||||||
Number of businesses acquired | acquiredBusiness | 8 | |||||||
Consideration transferred, accounts and financing receivable, net of deferred revenue, write-off | $ 2,600 | |||||||
Goodwill adjustments | 100 | |||||||
KK Japan and KK U.S. Shops | ||||||||
Business Acquisition [Line Items] | ||||||||
Total net revenues | 38,500 | |||||||
Net loss attributable to Krispy Kreme, Inc. | 300 | |||||||
Intangible assets | 48,011 | |||||||
KK Mexico | ||||||||
Business Acquisition [Line Items] | ||||||||
Number of shops | store | 231 | |||||||
Purchase consideration, net | $ 76,800 | |||||||
Consideration transferred, cash | 70,400 | |||||||
Consideration transferred, settlement for pre-existing relationships | 7,600 | |||||||
Disposal of acquiree intangible assets, cumulative net book value | 3,600 | |||||||
Consideration transferred, accounts and financing receivable, net of deferred revenue, write-off | (500) | |||||||
Total net revenues | 12,500 | |||||||
Fair value of contingent consideration | 14,000 | |||||||
Payment for contingent consideration | 12,500 | |||||||
Gain recognized | 1,500 | |||||||
Debt push-down | $ (10,700) | |||||||
Goodwill adjustments | 1,200 | |||||||
WKS Krispy Kreme | ||||||||
Business Acquisition [Line Items] | ||||||||
Purchase consideration, net | $ 19,600 | |||||||
Consideration transferred, cash | 46,200 | |||||||
Consideration transferred, settlement for pre-existing relationships | 27,100 | |||||||
Disposal of acquiree intangible assets, cumulative net book value | 6,000 | |||||||
Goodwill and franchise rights deductible amount to reduce income tax expense | 49,200 | |||||||
Fair value of equity interest | 16,000 | |||||||
Consideration transferred, accounts and financing receivable, net of deferred revenue, write-off | (100) | |||||||
Fair value of contingent consideration | 500 | |||||||
Debt push-down | $ (33,000) | |||||||
Goodwill adjustments | $ 1,100 | |||||||
Payment period within lease agreement execution | 30 days | |||||||
Payment of contingent consideration related to a business combination | $ 500 | |||||||
KK U.S. Shops 2019 | ||||||||
Business Acquisition [Line Items] | ||||||||
Number of shops | store | 22 | |||||||
Purchase consideration, net | $ 26,600 | |||||||
Consideration transferred, cash | 23,200 | |||||||
Consideration transferred, settlement for pre-existing relationships | $ 3,400 | |||||||
Number of businesses acquired | acquiredBusiness | 3 | |||||||
Consideration transferred, accounts and financing receivable, net of deferred revenue, write-off | $ 200 | |||||||
Goodwill adjustments | 100 | |||||||
Intangible assets | 3,200 | |||||||
KK Mexico, WKS, And KK U.S. Shops | ||||||||
Business Acquisition [Line Items] | ||||||||
Fair value of equity interest | 16,010 | |||||||
Total net revenues | 31,700 | |||||||
Net loss attributable to Krispy Kreme, Inc. | 3,700 | |||||||
Intangible assets | $ 95,228 |
Acquisitions - Schedule of Asse
Acquisitions - Schedule of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Jan. 02, 2022 | Oct. 04, 2021 | Apr. 04, 2021 | Jan. 03, 2021 | Dec. 29, 2019 | Nov. 18, 2019 |
Liabilities assumed: | ||||||
Goodwill | $ 1,105,322 | $ 1,086,546 | $ 1,049,675 | |||
U.S. and Canada | ||||||
Liabilities assumed: | ||||||
Goodwill | 688,048 | 642,704 | 572,786 | |||
Market Development | ||||||
Liabilities assumed: | ||||||
Goodwill | 133,932 | 152,970 | 199,324 | |||
International | ||||||
Liabilities assumed: | ||||||
Goodwill | 283,342 | 290,872 | 277,565 | |||
KK Canada 2021 | ||||||
Liabilities assumed: | ||||||
Noncontrolling interest | $ (9,800) | |||||
KK Canada 2021 | U.S. and Canada | ||||||
Assets acquired: | ||||||
Cash and cash equivalents | $ 2,015 | |||||
Prepaid expense and other current assets | 301 | |||||
Property and equipment, net | 2,365 | |||||
Other intangible assets | 6,873 | |||||
Operating lease right of use asset | 2,894 | |||||
Other assets | 103 | |||||
Total identified assets acquired | 14,551 | |||||
Liabilities assumed: | ||||||
Accounts payable | (1,639) | |||||
Accrued liabilities | (489) | |||||
Current operating lease liabilities | (554) | |||||
Noncurrent operating lease liabilities | (2,327) | |||||
Deferred income taxes, net | (2,021) | |||||
Total liabilities assumed | (7,030) | |||||
Goodwill | 17,036 | |||||
Noncontrolling interest | (9,822) | |||||
Purchase consideration, net | 14,735 | |||||
Transaction costs | 2,502 | 24 | ||||
KK U.S. Shops 2021 | U.S. and Canada | ||||||
Assets acquired: | ||||||
Cash and cash equivalents | 40 | |||||
Prepaid expense and other current assets | 474 | |||||
Property and equipment, net | 3,829 | |||||
Other intangible assets | 23,906 | |||||
Operating lease right of use asset | 19,292 | |||||
Other assets | 897 | |||||
Total identified assets acquired | 48,438 | |||||
Liabilities assumed: | ||||||
Accounts payable | 0 | |||||
Accrued liabilities | (334) | |||||
Current operating lease liabilities | (2,093) | |||||
Noncurrent operating lease liabilities | (17,199) | |||||
Deferred income taxes, net | 0 | |||||
Total liabilities assumed | (19,626) | |||||
Goodwill | 9,254 | |||||
Noncontrolling interest | 0 | |||||
Purchase consideration, net | 38,066 | |||||
Transaction costs | 1,251 | 184 | ||||
KK U.S. and Canada 2021 | ||||||
Assets acquired: | ||||||
Cash and cash equivalents | 2,055 | |||||
Prepaid expense and other current assets | 775 | |||||
Property and equipment, net | 6,194 | |||||
Other intangible assets | 30,779 | |||||
Operating lease right of use asset | 22,186 | |||||
Other assets | 1,000 | |||||
Total identified assets acquired | 62,989 | |||||
Liabilities assumed: | ||||||
Accounts payable | (1,639) | |||||
Accrued liabilities | (823) | |||||
Current operating lease liabilities | (2,647) | |||||
Noncurrent operating lease liabilities | (19,526) | |||||
Deferred income taxes, net | (2,021) | |||||
Total liabilities assumed | (26,656) | |||||
Goodwill | 26,290 | |||||
Noncontrolling interest | (9,822) | |||||
Purchase consideration, net | $ 52,801 | |||||
Transaction costs | $ 3,753 | 208 | ||||
KK Japan | Market Development | ||||||
Assets acquired: | ||||||
Cash and cash equivalents | 5,340 | |||||
Prepaid expense and other current assets | 469 | |||||
Property and equipment, net | 1,029 | |||||
Other intangible assets | 0 | |||||
Operating lease right of use asset | 12,260 | |||||
Other assets | 3,975 | |||||
Accounts receivable, net | 3,322 | |||||
Inventory | 354 | |||||
Total identified assets acquired | 26,749 | |||||
Liabilities assumed: | ||||||
Accounts payable | (2,522) | |||||
Accrued liabilities | (3,049) | |||||
Current operating lease liabilities | (4,430) | |||||
Noncurrent operating lease liabilities | (7,861) | |||||
Deferred income taxes, net | (1,966) | |||||
Other long-term obligations and deferred credits | (2,468) | |||||
Total liabilities assumed | (22,296) | |||||
Goodwill | 0 | |||||
Bargain purchase gain | (688) | |||||
Purchase consideration, net | 3,765 | |||||
Transaction costs | 3,192 | |||||
KK U.S. Shops 2020 | U.S. and Canada | ||||||
Assets acquired: | ||||||
Cash and cash equivalents | 112 | |||||
Prepaid expense and other current assets | 23 | |||||
Property and equipment, net | 16,585 | |||||
Other intangible assets | 48,011 | |||||
Operating lease right of use asset | 38,096 | |||||
Other assets | 3,699 | |||||
Accounts receivable, net | 0 | |||||
Inventory | 779 | |||||
Total identified assets acquired | 107,305 | |||||
Liabilities assumed: | ||||||
Accounts payable | 0 | |||||
Accrued liabilities | (1,656) | |||||
Current operating lease liabilities | (2,968) | |||||
Noncurrent operating lease liabilities | (35,128) | |||||
Deferred income taxes, net | 0 | |||||
Other long-term obligations and deferred credits | 0 | |||||
Total liabilities assumed | (39,752) | |||||
Goodwill | 22,411 | |||||
Bargain purchase gain | 0 | |||||
Purchase consideration, net | 89,964 | |||||
Transaction costs | 4,636 | |||||
KK Japan and KK U.S. Shops | ||||||
Assets acquired: | ||||||
Cash and cash equivalents | 5,452 | |||||
Prepaid expense and other current assets | 492 | |||||
Property and equipment, net | 17,614 | |||||
Other intangible assets | 48,011 | |||||
Operating lease right of use asset | 50,356 | |||||
Other assets | 7,674 | |||||
Accounts receivable, net | 3,322 | |||||
Inventory | 1,133 | |||||
Total identified assets acquired | 134,054 | |||||
Liabilities assumed: | ||||||
Accounts payable | (2,522) | |||||
Accrued liabilities | (4,705) | |||||
Current operating lease liabilities | (7,398) | |||||
Noncurrent operating lease liabilities | (42,989) | |||||
Deferred income taxes, net | (1,966) | |||||
Other long-term obligations and deferred credits | (2,468) | |||||
Total liabilities assumed | (62,048) | |||||
Goodwill | 22,411 | |||||
Bargain purchase gain | (688) | |||||
Purchase consideration, net | 93,729 | |||||
Transaction costs | 7,828 | |||||
KK Mexico | International | ||||||
Assets acquired: | ||||||
Cash and cash equivalents | 856 | |||||
Prepaid expense and other current assets | 412 | |||||
Property and equipment, net | 14,383 | |||||
Other intangible assets | 52,779 | |||||
Operating lease right of use asset | 6,723 | |||||
Other assets | 1,649 | |||||
Accounts receivable, net | 4,242 | |||||
Inventory | 1,470 | |||||
Marketable securities | 1 | |||||
Total identified assets acquired | 82,515 | |||||
Liabilities assumed: | ||||||
Accounts payable | (6,002) | |||||
Accrued liabilities | (5,564) | |||||
Noncurrent operating lease liabilities | (2,846) | |||||
Deferred income taxes, net | (16,576) | |||||
Other long-term obligations and deferred credits | (271) | |||||
Note payable | (10,706) | |||||
Total liabilities assumed | (41,965) | |||||
Goodwill | 36,223 | |||||
Purchase consideration, net | 76,773 | |||||
Transaction costs | 1,734 | 7,447 | ||||
WKS Krispy Kreme | ||||||
Liabilities assumed: | ||||||
Noncontrolling interest | $ (16,000) | |||||
WKS Krispy Kreme | U.S. and Canada | ||||||
Assets acquired: | ||||||
Cash and cash equivalents | 2,356 | |||||
Prepaid expense and other current assets | 237 | |||||
Property and equipment, net | 19,213 | |||||
Other intangible assets | 26,400 | |||||
Operating lease right of use asset | 42,208 | |||||
Other assets | 51 | |||||
Accounts receivable, net | 115 | |||||
Inventory | 566 | |||||
Marketable securities | 19 | |||||
Total identified assets acquired | 91,165 | |||||
Liabilities assumed: | ||||||
Accounts payable | (1,702) | |||||
Accrued liabilities | (6,370) | |||||
Noncurrent operating lease liabilities | (38,121) | |||||
Note payable | (33,000) | |||||
Total liabilities assumed | (79,193) | |||||
Goodwill | 23,606 | |||||
Noncontrolling interest | (16,010) | |||||
Purchase consideration, net | 19,568 | |||||
Transaction costs | 540 | 3,053 | ||||
KK U.S. Shops 2019 | ||||||
Assets acquired: | ||||||
Other intangible assets | 3,200 | |||||
KK U.S. Shops 2019 | U.S. and Canada | ||||||
Assets acquired: | ||||||
Cash and cash equivalents | 44 | |||||
Prepaid expense and other current assets | 83 | |||||
Property and equipment, net | 5,758 | |||||
Other intangible assets | 16,049 | |||||
Operating lease right of use asset | 11,397 | |||||
Other assets | 559 | |||||
Accounts receivable, net | 334 | |||||
Inventory | 171 | |||||
Total identified assets acquired | 34,395 | |||||
Liabilities assumed: | ||||||
Accounts payable | (565) | |||||
Accrued liabilities | (2,167) | |||||
Noncurrent operating lease liabilities | (9,726) | |||||
Other long-term obligations and deferred credits | (950) | |||||
Total liabilities assumed | (13,408) | |||||
Goodwill | 5,625 | |||||
Purchase consideration, net | 26,612 | |||||
Transaction costs | 114 | 2,336 | ||||
KK Mexico, WKS, And KK U.S. Shops | ||||||
Assets acquired: | ||||||
Cash and cash equivalents | 3,256 | |||||
Prepaid expense and other current assets | 732 | |||||
Property and equipment, net | 39,354 | |||||
Other intangible assets | 95,228 | |||||
Operating lease right of use asset | 60,328 | |||||
Other assets | 2,259 | |||||
Accounts receivable, net | 4,691 | |||||
Inventory | 2,207 | |||||
Marketable securities | 20 | |||||
Total identified assets acquired | 208,075 | |||||
Liabilities assumed: | ||||||
Accounts payable | (8,269) | |||||
Accrued liabilities | (14,101) | |||||
Noncurrent operating lease liabilities | (50,693) | |||||
Deferred income taxes, net | (16,576) | |||||
Other long-term obligations and deferred credits | (1,221) | |||||
Note payable | (43,706) | |||||
Total liabilities assumed | (134,566) | |||||
Goodwill | 65,454 | |||||
Noncontrolling interest | (16,010) | |||||
Purchase consideration, net | 122,953 | |||||
Transaction costs | $ 2,388 | $ 12,836 |
Acquisitions - Business Acquisi
Acquisitions - Business Acquisition, Pro Forma Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 02, 2022 | Jan. 03, 2021 | Dec. 29, 2019 | |
Business Combination and Asset Acquisition [Abstract] | |||
Revenue | $ 1,384,391 | $ 1,151,041 | $ 1,083,747 |
Loss before income taxes | $ (4,098) | $ (48,788) | $ (5,989) |
Accounts Receivable, net (Detai
Accounts Receivable, net (Details) - USD ($) $ in Thousands | Jan. 02, 2022 | Jan. 03, 2021 |
Receivables [Abstract] | ||
Trade receivables, net | $ 41,132 | $ 39,624 |
Other receivables, net | 5,936 | 5,958 |
Receivables from related parties, net | 423 | 416 |
Total accounts receivable, net | $ 47,491 | $ 45,998 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Jan. 02, 2022 | Jan. 03, 2021 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 15,278 | $ 16,263 |
Work in progress | 700 | 871 |
Finished goods and purchased merchandise | 18,873 | 21,385 |
Total inventories | $ 34,851 | $ 38,519 |
Property and Equipment, net (De
Property and Equipment, net (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Jan. 02, 2022 | Jan. 03, 2021 | Dec. 29, 2019 | Dec. 31, 2018 | |
Property, Plant and Equipment [Line Items] | ||||
Property and equipment, gross | $ 703,581 | $ 609,100 | ||
Less: Accumulated depreciation | (264,663) | (213,845) | ||
Total property and equipment, net | 438,918 | 395,255 | $ 237,187 | |
Computer software costs | 4,700 | 4,200 | ||
Depreciation expense | 68,600 | 51,500 | $ 40,000 | |
Land | ||||
Property, Plant and Equipment [Line Items] | ||||
Property and equipment, gross | 12,931 | 13,187 | ||
Buildings | ||||
Property, Plant and Equipment [Line Items] | ||||
Property and equipment, gross | 146,923 | 141,853 | ||
Leasehold improvements | ||||
Property, Plant and Equipment [Line Items] | ||||
Property and equipment, gross | 195,129 | 158,145 | ||
Machinery and equipment | ||||
Property, Plant and Equipment [Line Items] | ||||
Property and equipment, gross | 243,673 | 217,566 | ||
Computer software | ||||
Property, Plant and Equipment [Line Items] | ||||
Property and equipment, gross | 43,985 | 34,580 | ||
Construction and projects in progress | ||||
Property, Plant and Equipment [Line Items] | ||||
Property and equipment, gross | $ 60,940 | $ 43,769 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets - Schedule of Goodwill (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 02, 2022 | Jan. 03, 2021 | |
Goodwill [Roll Forward] | ||
Beginning balance | $ 1,086,546 | $ 1,049,675 |
Acquisitions | 26,290 | 22,329 |
Measurement period adjustments | 82 | 2,425 |
Foreign currency impact | (7,596) | 12,117 |
Ending balance | 1,105,322 | 1,086,546 |
U.S. and Canada | ||
Goodwill [Roll Forward] | ||
Beginning balance | 642,704 | 572,786 |
Acquisitions | 45,328 | 68,683 |
Measurement period adjustments | 82 | 1,235 |
Foreign currency impact | (66) | 0 |
Ending balance | 688,048 | 642,704 |
International | ||
Goodwill [Roll Forward] | ||
Beginning balance | 290,872 | 277,565 |
Acquisitions | 0 | 0 |
Measurement period adjustments | 0 | 1,190 |
Foreign currency impact | (7,530) | 12,117 |
Ending balance | 283,342 | 290,872 |
Market Development | ||
Goodwill [Roll Forward] | ||
Beginning balance | 152,970 | 199,324 |
Acquisitions | (19,038) | (46,354) |
Measurement period adjustments | 0 | 0 |
Foreign currency impact | 0 | 0 |
Ending balance | $ 133,932 | $ 152,970 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets - Schedule of Other Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||
Jan. 02, 2022 | Jan. 03, 2021 | Dec. 29, 2019 | Dec. 31, 2018 | Dec. 30, 2018 | |
Intangible assets with definite lives | |||||
Gross Carrying Amount | $ 438,350 | $ 415,849 | |||
Accumulated Amortization | (103,730) | (75,735) | |||
Net Amount | 334,620 | 340,114 | |||
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |||||
Gross Carrying Amount | 1,096,250 | 1,073,749 | |||
Accumulated Amortization | (103,730) | (75,735) | |||
Net Amount | 992,520 | 998,014 | $ 912,960 | $ 920,265 | |
Amortization of intangible assets | 29,800 | 26,300 | $ 21,300 | ||
Trade name | |||||
Intangible assets with indefinite lives | |||||
Trade name | 657,900 | 657,900 | |||
Franchise agreements | |||||
Intangible assets with definite lives | |||||
Gross Carrying Amount | 32,545 | 36,254 | |||
Accumulated Amortization | (8,369) | (7,519) | |||
Net Amount | 24,176 | 28,735 | |||
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |||||
Accumulated Amortization | (8,369) | (7,519) | |||
Customer relationships | |||||
Intangible assets with definite lives | |||||
Gross Carrying Amount | 15,000 | 15,000 | |||
Accumulated Amortization | (4,684) | (3,819) | |||
Net Amount | 10,316 | 11,181 | |||
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |||||
Accumulated Amortization | (4,684) | (3,819) | |||
Reacquired franchise rights | |||||
Intangible assets with definite lives | |||||
Gross Carrying Amount | 384,305 | 358,095 | |||
Accumulated Amortization | (84,177) | (59,432) | |||
Net Amount | 300,128 | 298,663 | |||
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |||||
Accumulated Amortization | (84,177) | (59,432) | |||
Website development costs | |||||
Intangible assets with definite lives | |||||
Gross Carrying Amount | 6,500 | 6,500 | |||
Accumulated Amortization | (6,500) | (4,965) | |||
Net Amount | 0 | 1,535 | |||
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |||||
Accumulated Amortization | $ (6,500) | $ (4,965) |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets - Schedule of Finite-Lived Intangible Assets, Future Amortization Expense (Details) - USD ($) $ in Thousands | Jan. 02, 2022 | Jan. 03, 2021 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2022 | $ 28,726 | |
2023 | 28,726 | |
2024 | 28,892 | |
2025 | 28,726 | |
2026 | 28,566 | |
Thereafter | 190,984 | |
Net Amount | $ 334,620 | $ 340,114 |
Long-Term Debt - Schedule of Lo
Long-Term Debt - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands | Jan. 02, 2022 | Jan. 03, 2021 | Jun. 30, 2019 |
Debt Instrument [Line Items] | |||
Less: Debt issuance costs | $ (3,833) | $ (5,419) | |
Financing obligations | 24,473 | 26,224 | |
Total long-term debt | 716,890 | 827,055 | |
Less: Current portion of long-term debt | (36,583) | (41,245) | |
Long-term debt, less current portion | 680,307 | 785,810 | |
Related party notes payable (excluding accrued interest) | 0 | 337,148 | |
Total debt and related party notes payable | 680,307 | 1,122,958 | |
2019 Facility | |||
Debt Instrument [Line Items] | |||
Less: Debt issuance costs | $ (10,900) | ||
Term Loan | 2019 Facility | |||
Debt Instrument [Line Items] | |||
Long-term debt, gross | 621,250 | 656,250 | |
Less: Debt issuance costs | (8,000) | ||
Credit Facility | 2019 Facility | Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Long-term debt, gross | $ 75,000 | $ 150,000 | |
Less: Debt issuance costs | $ (2,900) |
Long-Term Debt - Narrative (Det
Long-Term Debt - Narrative (Details) $ in Thousands | Jul. 07, 2021USD ($) | Jun. 30, 2019USD ($) | Jan. 02, 2022USD ($)day | Jan. 03, 2021USD ($) | Dec. 29, 2019USD ($) | Mar. 11, 2022 | Jun. 17, 2021USD ($) | Jun. 10, 2021USD ($) | May 31, 2019USD ($) |
Debt Instrument [Line Items] | |||||||||
Loss on extinguishment of debt | $ 1,700 | $ 0 | $ 1,567 | ||||||
Debt issuance costs, net | 3,833 | 5,419 | |||||||
Interest and debt expense | 44,300 | 33,500 | $ 40,100 | ||||||
Prior Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | $ 500,000 | ||||||||
Loss on extinguishment of debt | $ 1,600 | ||||||||
Prior Facility | Revolving Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | 150,000 | ||||||||
Prior Facility, Amendment One | Revolving Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity increase | 15,000 | ||||||||
2019 Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | 1,000,000 | ||||||||
Debt issuance costs, net | $ 10,900 | ||||||||
Long-term line of credit | $ 225,000 | $ 150,000 | |||||||
Leverage ratio, maximum | 6 | 5.50 | 5.50 | ||||||
Indebtedness threshold | $ 35,000 | ||||||||
Judgement defaults threshold | $ 35,000 | ||||||||
2019 Facility | Subsequent Event | |||||||||
Debt Instrument [Line Items] | |||||||||
Leverage ratio, maximum | 5 | ||||||||
2019 Facility | Revolving Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | $ 300,000 | ||||||||
Unused capacity, commitment fee percentage | 0.25% | 0.25% | 0.25% | ||||||
2019 Facility | Minimum | Revolving Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Unused capacity, commitment fee percentage | 0.25% | ||||||||
2019 Facility | Maximum | Revolving Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Unused capacity, commitment fee percentage | 0.375% | ||||||||
2019 Facility | Alternate Base Rate, Federal Funds Rate | |||||||||
Debt Instrument [Line Items] | |||||||||
Variable rate (percentage) | 0.50% | ||||||||
2019 Facility | Alternate Base Rate, One-Month LIBOR | |||||||||
Debt Instrument [Line Items] | |||||||||
Variable rate (percentage) | 1.00% | ||||||||
2019 Facility | London Interbank Offered Rate (LIBOR) | |||||||||
Debt Instrument [Line Items] | |||||||||
Variable rate rounding percentage | 6.25% | ||||||||
Variable rate (percentage) | 2.00% | 2.00% | |||||||
2019 Facility | London Interbank Offered Rate (LIBOR) | Minimum | |||||||||
Debt Instrument [Line Items] | |||||||||
Variable rate (percentage) | 1.75% | ||||||||
2019 Facility | London Interbank Offered Rate (LIBOR) | Maximum | |||||||||
Debt Instrument [Line Items] | |||||||||
Variable rate (percentage) | 2.25% | ||||||||
2019 Facility | Base Rate | Minimum | |||||||||
Debt Instrument [Line Items] | |||||||||
Variable rate (percentage) | 0.75% | ||||||||
2019 Facility | Base Rate | Maximum | |||||||||
Debt Instrument [Line Items] | |||||||||
Variable rate (percentage) | 1.25% | ||||||||
Term Loan | Prior Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | 350,000 | ||||||||
Term Loan | Prior Facility, Amendment One | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity increase | 65,000 | ||||||||
Term Loan | Prior Facility, Amendment Two | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity increase | 125,000 | ||||||||
Term Loan | Prior Facility, Amendment Three | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity increase | $ 50,000 | ||||||||
Term Loan | 2019 Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | 700,000 | ||||||||
Debt issuance costs, net | 8,000 | ||||||||
Long-term debt, gross | $ 621,250 | $ 656,250 | |||||||
Amount of debt hedged | $ 505,000 | $ 505,000 | |||||||
Effective interest rate | 3.74% | 3.67% | |||||||
Term Loan | Term Loan Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Maturity period, number of business days following IPO | day | 4 | ||||||||
Term Loan | Term Loan Facility | Krispy Kreme Holdings, Inc. (“KKHI”) | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt issuance costs, net | $ 1,700 | ||||||||
Debt instrument, face amount | $ 500,000 | ||||||||
Debt, weighted average interest rate | 2.68175% | ||||||||
Interest expense, debt | $ 2,400 | ||||||||
Credit Facility | 2019 Facility | Revolving Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt issuance costs, net | $ 2,900 | ||||||||
Long-term debt, gross | $ 75,000 | $ 150,000 | |||||||
Proceeds from long-term lines of credit | $ 100,000 |
Long-Term Debt - Schedule of Ma
Long-Term Debt - Schedule of Maturities of Long-term Debt (Details) $ in Thousands | Jan. 02, 2022USD ($) |
Debt Disclosure [Abstract] | |
2022 | $ 35,000 |
2023 | 35,000 |
2024 | 626,250 |
2025 | 0 |
2026 | $ 0 |
Leases - Additional Information
Leases - Additional Information (Details) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Dec. 31, 2021USD ($)property | Jan. 02, 2022USD ($) | Jan. 03, 2021USD ($) | Dec. 29, 2019USD ($) | |
Leases [Abstract] | ||||
Leases, termination costs | $ 600 | $ 4,400 | $ 2,600 | |
Decrease in operating lease, right-of-use asset | 600 | 4,400 | 2,600 | |
Number of real estate properties | property | 4 | |||
Sale leaseback transaction, net proceeds | $ 11,100 | |||
Gain on sale-leaseback | $ 8,700 | $ 8,673 | $ 0 | $ 0 |
Leases - Schedule of Supplement
Leases - Schedule of Supplemental Balance Sheet Information Related to Leases (Details) - USD ($) $ in Thousands | Jan. 02, 2022 | Jan. 03, 2021 | Dec. 31, 2018 |
Assets | |||
Operating lease | $ 435,168 | $ 399,688 | $ 270,170 |
Finance lease | $ 19,298 | $ 23,556 | |
Finance lease assets, statement of financial position [Extensible Enumeration] | Property and equipment, net | Property and equipment, net | |
Total leased assets | $ 454,466 | $ 423,244 | |
Current | |||
Current operating lease liabilities | 50,359 | 45,675 | 24,088 |
Current finance lease liabilities | $ 1,583 | $ 6,245 | |
Finance lease liabilities, current, statement of financial position [Extensible Enumeration] | Current portion of long-term debt | Current portion of long-term debt | |
Noncurrent | |||
Noncurrent operating lease liabilities | $ 415,208 | $ 376,099 | $ 258,152 |
Noncurrent finance lease liabilities | $ 22,890 | $ 19,979 | |
Finance lease liabilities, noncurrent, statement of financial position [Extensible Enumeration] | Long-term debt, less current portion | Long-term debt, less current portion | |
Total leased liabilities | $ 490,040 | $ 447,998 | |
Weighted average remaining lease term: | |||
Operating lease | 11 years 7 months 6 days | 11 years 1 month 6 days | |
Finance lease | 13 years 9 months 18 days | 12 years | |
Weighted average discount rate: | |||
Operating lease | 6.65% | 6.94% | |
Finance lease | 7.13% | 7.13% |
Leases - Schedule of Lease Cost
Leases - Schedule of Lease Costs (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 02, 2022 | Jan. 03, 2021 | Dec. 29, 2019 | |
Operating lease cost | |||
Short-term lease cost | $ 2,513 | $ 2,867 | $ 1,850 |
Variable lease costs | 16,414 | 9,195 | 13,161 |
Sublease income | (386) | (506) | (480) |
Amortization of right-of-use assets | 3,217 | 2,587 | 2,469 |
Interest on lease liabilities | 2,002 | 2,040 | 1,915 |
Selling, general and administrative expense | |||
Operating lease cost | |||
Operating lease cost | 2,481 | 3,127 | 2,816 |
Operating expenses | |||
Operating lease cost | |||
Operating lease cost | $ 85,429 | $ 70,855 | $ 45,732 |
Leases - Schedule of Suppleme_2
Leases - Schedule of Supplemental Cash Flow Information Related to Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 02, 2022 | Jan. 03, 2021 | Dec. 29, 2019 | |
Cash paid for amounts included in the measurement of lease liabilities: | |||
Operating cash flows for operating leases | $ 91,967 | $ 78,465 | $ 59,227 |
Operating cash flows for finance leases | 1,916 | 1,781 | 1,914 |
Financing cash flows for finance leases | 4,901 | 3,694 | 1,290 |
Right-of-use assets obtained in exchange for new lease liabilities: | |||
Operating leases | 95,284 | 74,979 | 135,163 |
Finance leases | $ 2,328 | $ 7,500 | $ 5,062 |
Leases - Maturities of Operatin
Leases - Maturities of Operating and Financing Lease Liabilities (Details) - USD ($) $ in Thousands | Jan. 02, 2022 | Jan. 03, 2021 |
Operating Leases | ||
2022 | $ 80,268 | |
2023 | 67,952 | |
2024 | 63,907 | |
2025 | 58,440 | |
2026 | 56,505 | |
Thereafter | 395,510 | |
Total lease payments | 722,582 | |
Less: interest | (257,015) | |
Present value of lease liabilities | 465,567 | |
Finance Leases | ||
2022 | 3,275 | |
2023 | 2,728 | |
2024 | 2,588 | |
2025 | 2,605 | |
2026 | 2,824 | |
Thereafter | 25,846 | |
Total lease payments | 39,866 | |
Less: interest | (15,393) | |
Financing obligations | $ 24,473 | $ 26,224 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Fair value, recurring - USD ($) $ in Thousands | Jan. 02, 2022 | Jan. 03, 2021 |
Level 1 | ||
Assets: | ||
401(k) mirror plan assets | $ 111 | $ 237 |
Total Assets | 111 | 237 |
Liabilities: | ||
Total Liabilities | 0 | 0 |
Level 1 | Commodity derivatives | ||
Assets: | ||
Derivative assets | 0 | 0 |
Level 1 | Foreign currency derivative | ||
Assets: | ||
Derivative assets | 0 | |
Liabilities: | ||
Derivative liabilities | 0 | |
Level 1 | Interest rate derivative | ||
Liabilities: | ||
Derivative liabilities | 0 | 0 |
Level 2 | ||
Assets: | ||
401(k) mirror plan assets | 0 | 0 |
Total Assets | 1,486 | 551 |
Liabilities: | ||
Total Liabilities | 14,747 | 32,813 |
Level 2 | Commodity derivatives | ||
Assets: | ||
Derivative assets | 1,486 | 420 |
Level 2 | Foreign currency derivative | ||
Assets: | ||
Derivative assets | 131 | |
Liabilities: | ||
Derivative liabilities | 80 | |
Level 2 | Interest rate derivative | ||
Liabilities: | ||
Derivative liabilities | 14,667 | 32,813 |
Level 3 | ||
Assets: | ||
401(k) mirror plan assets | 0 | 0 |
Total Assets | 0 | 0 |
Liabilities: | ||
Total Liabilities | 0 | 0 |
Level 3 | Commodity derivatives | ||
Assets: | ||
Derivative assets | 0 | 0 |
Level 3 | Foreign currency derivative | ||
Assets: | ||
Derivative assets | 0 | |
Liabilities: | ||
Derivative liabilities | 0 | |
Level 3 | Interest rate derivative | ||
Liabilities: | ||
Derivative liabilities | $ 0 | $ 0 |
Derivative Instruments - Additi
Derivative Instruments - Additional Information (Details) $ in Thousands, gal in Millions | Jan. 02, 2022USD ($)gal | Jan. 03, 2021USD ($)gal | Feb. 29, 2020USD ($) | Jun. 30, 2019USD ($) | Nov. 30, 2018USD ($) | May 31, 2018USD ($) | Nov. 30, 2016USD ($) |
Derivatives Not Designated as Hedging Instruments | |||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||
Derivative asset, fair value | $ 1,486 | $ 551 | |||||
Derivative liability, fair value | 80 | 0 | |||||
Derivatives Designated as Hedging Instruments | |||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||
Derivative liability, fair value | $ 14,667 | $ 32,813 | |||||
Commodity derivatives | Derivatives Not Designated as Hedging Instruments | |||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||
Derivative, notional amount (in gallon) | gal | 1.9 | 3 | |||||
Derivative asset, fair value | $ 1,500 | $ 400 | |||||
Interest rate derivative | |||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||
Fixed interest rate | 1.99% | ||||||
Interest rate derivative | Derivatives Designated as Hedging Instruments | |||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||
Derivative, notional amount | $ 50,000 | $ 455,000 | $ 155,000 | $ 300,000 | $ 300,000 | ||
Fixed interest rate | 2.92% | 2.70% | 1.18% | ||||
Derivative, notional amount, cancelled | $ 155,000 | $ 300,000 | |||||
Interest rate derivative | Derivatives Designated as Hedging Instruments | Cash Flow Hedging | |||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||
Derivative liability, fair value | 14,700 | 32,800 | |||||
Interest Rate Contract, February 2020 Swap Agreement | Derivatives Designated as Hedging Instruments | |||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||
Fixed interest rate | 2.72% | ||||||
Interest Rate Contract, New Interest Rate Swap Agreement | Derivatives Designated as Hedging Instruments | |||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||
Fixed interest rate | 0.95% | ||||||
Foreign currency derivative | Derivatives Not Designated as Hedging Instruments | |||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||
Derivative, notional amount | 51,800 | 26,700 | |||||
Derivative asset, fair value | $ 100 | $ 100 |
Derivative Instruments - Schedu
Derivative Instruments - Schedule of Derivative Instruments in Condensed Consolidated Balance Sheets, Fair Value (Details) - USD ($) $ in Thousands | Jan. 02, 2022 | Jan. 03, 2021 |
Derivatives Not Designated as Hedging Instruments | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset, fair value | $ 1,486 | $ 551 |
Derivative liability, fair value | 80 | 0 |
Derivatives Designated as Hedging Instruments | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability, fair value | 14,667 | 32,813 |
Foreign currency derivative | Derivatives Not Designated as Hedging Instruments | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset, fair value | 100 | 100 |
Commodity derivatives | Derivatives Not Designated as Hedging Instruments | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset, fair value | 1,500 | 400 |
Prepaid expense and other current assets | Foreign currency derivative | Derivatives Not Designated as Hedging Instruments | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset, fair value | 0 | 131 |
Prepaid expense and other current assets | Commodity derivatives | Derivatives Not Designated as Hedging Instruments | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset, fair value | 1,486 | 420 |
Accrued liabilities | Foreign currency derivative | Derivatives Not Designated as Hedging Instruments | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability, fair value | 80 | 0 |
Accrued liabilities | Interest rate derivative | Derivatives Designated as Hedging Instruments | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability, fair value | 8,535 | 10,235 |
Other long-term obligations and deferred credits | Interest rate derivative | Derivatives Designated as Hedging Instruments | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability, fair value | $ 6,132 | $ 22,578 |
Derivative Instruments - Sche_2
Derivative Instruments - Schedule of Derivative Instruments in Condensed Consolidated Statements of Operations, Gain (Loss) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 02, 2022 | Jan. 03, 2021 | Dec. 29, 2019 | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Derivative gain (loss) recognised in income, derivatives designated as hedging instruments | $ (10,291) | $ (7,633) | $ (1,774) |
Derivative gain (loss) recognised in income, derivatives not designated as hedging instruments | 1,004 | 246 | (95) |
Interest rate derivative | Interest expense, net | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Derivative gain (loss) recognised in income, derivatives designated as hedging instruments | (10,291) | (7,633) | (1,774) |
Foreign currency derivative | Other non-operating expense/(income), net | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Derivative gain (loss) recognised in income, derivatives not designated as hedging instruments | (62) | (21) | (248) |
Commodity derivatives | Other non-operating expense/(income), net | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Derivative gain (loss) recognised in income, derivatives not designated as hedging instruments | $ 1,066 | $ 267 | $ 153 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 02, 2022 | Jan. 03, 2021 | Dec. 29, 2019 | |
Defined Benefit Plan Disclosure [Line Items] | |||
Contribution plan expense | $ 6.6 | $ 4.9 | $ 4.6 |
Net periodic benefit cost (less than) | $ 0.1 | 0.1 | |
401(k) Plan | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Maximum annual contributions per employee, percent | 100.00% | ||
401(k) Plan | Matching Contribution, Tranche One | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Employer matching contribution, percent of match | 100.00% | ||
Employer matching contribution, percent of employees' gross pay | 3.00% | ||
401(k) Plan | Matching Contribution, Tranche Two | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Employer matching contribution, percent of match | 50.00% | ||
Employer matching contribution, percent of employees' gross pay | 2.00% | ||
KKUK and Ireland Contribution Plans | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Maximum annual contributions per employee, percent | 100.00% | ||
Employer matching contribution, percent of match | 3.00% | ||
Insomnia Cookies Contribution Plan | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Employer matching contribution, percent of employees' gross pay | 2.00% | ||
Maximum annual compensation deferral per employee, percent | 100.00% | ||
Australia Plan | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Employer contribution, percent | 9.50% | ||
New Zealand Plan | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Employer matching contribution, percent of match | 3.00% | ||
Canada Plan | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Employer matching contribution, percent of match | 2.50% | ||
Mexico Seniority Premium Plan | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Period of pay salary per full year of service | 12 days | ||
Mexico Termination Indemnity Plan | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Maximum period of paid salary | 3 months | ||
401(k) Mirror Plan | Executive Officer | Nonqualified Plan | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Deferred compensation arrangement with individual, recorded liability | $ 0.1 | $ 0.2 |
Share-based Compensation - Narr
Share-based Compensation - Narrative (Details) - USD ($) | 12 Months Ended | ||
Jan. 02, 2022 | Jan. 03, 2021 | Dec. 29, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Noncash expense | $ 22,923,000 | $ 11,601,000 | $ 10,741,000 |
Restricted Stock Units (RSUs) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Restricted stock unit expense | 19,600,000 | 11,600,000 | 10,700,000 |
Tax (expense)/benefit | (4,900,000) | 2,700,000 | 2,600,000 |
Restricted Stock Units (RSUs) | KKI | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total vested fair value | $ 24,000,000 | $ 0 | 1,700,000 |
Vested (in shares) | 2,585,390 | 2,283 | |
Restricted Stock Units (RSUs) | KKUK | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total vested fair value | $ 4,300,000 | $ 0 | 0 |
Vested (in shares) | 351,500 | 0 | |
Restricted Stock Units (RSUs) | Insomnia Cookies | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total vested fair value | $ 100,000 | $ 100,000 | $ 100,000 |
Vested (in shares) | 809 | 810 | |
Restricted Stock Units (RSUs) | KK Australia | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vested (in shares) | 0 | 0 | 0 |
Restricted Stock Units (RSUs) | KK Mexico | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vested (in shares) | 0 | 0 | 0 |
Restricted Stock Units (RSUs), Fifty-Four Month Vesting | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period | 54 months | ||
Minimum holding period | 6 months | ||
Restricted Stock Units (RSUs), Sixty Month Vesting Period | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period | 60 months | ||
Restricted Stock Units (RSUs), Sixty Month Vesting Period | Share-based Payment Arrangement, Tranche One | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 60.00% | ||
Restricted Stock Units (RSUs), Sixty Month Vesting Period | Share-based Payment Arrangement, Tranche Two | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 20.00% | ||
Restricted Stock Units (RSUs), Sixty Month Vesting Period | Share-based Payment Arrangement, Tranche Three | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 20.00% | ||
Stock Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period | 60 months | ||
Service period | 10 years | ||
Noncash expense | $ 3,300,000 | $ 0 | $ 0 |
Stock Options | Share-based Payment Arrangement, Tranche One | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 60.00% | ||
Stock Options | Share-based Payment Arrangement, Tranche Two | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 20.00% | ||
Stock Options | Share-based Payment Arrangement, Tranche Three | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 20.00% |
Share-based Compensation - Sche
Share-based Compensation - Schedule of RSU Activity (Details) - Restricted Stock Units (RSUs) - $ / shares | 12 Months Ended | ||
Jan. 02, 2022 | Jan. 03, 2021 | Dec. 29, 2019 | |
KKI | |||
RSUs | |||
Beginning balance, non-vested shares outstanding (in shares) | 4,649,551 | 4,108,726 | |
Granted (in shares) | 3,339,608 | 696,371 | |
Vested (in shares) | 2,585,390 | 2,283 | |
Forfeited (in shares) | 556,291 | 153,263 | |
RSU Divided Equivalents (in shares) | 1,018,629 | ||
Ending balance, non-vested shares outstanding (in shares) | 5,866,107 | 4,649,551 | 4,108,726 |
Weighted Average Grant Date Fair Value | |||
Beginning balance, non-vested shares outstanding (in USD per share) | $ 11.37 | $ 10.43 | |
Granted, weighted average grant date fair value (in USD per share) | 17.95 | 16.90 | |
Vested, weighted average grant date fair value (in USD per share) | 9.29 | 10.35 | |
Forfeited, weighted average grant date fair value (in USD per share) | 14.32 | 11.43 | |
RSU Divided Equivalents, weighted average grant date fair value (in USD per share) | 0 | ||
Ending balance, non-vested shares outstanding (in USD per share) | $ 13.78 | $ 11.37 | $ 10.43 |
KKUK | |||
RSUs | |||
Beginning balance, non-vested shares outstanding (in shares) | 404,568 | 416,068 | |
Granted (in shares) | 6,785 | 0 | |
Vested (in shares) | 351,500 | 0 | |
Forfeited (in shares) | 0 | 11,500 | |
Ending balance, non-vested shares outstanding (in shares) | 59,853 | 404,568 | 416,068 |
Weighted Average Grant Date Fair Value | |||
Beginning balance, non-vested shares outstanding (in USD per share) | $ 12.45 | $ 12.44 | |
Granted, weighted average grant date fair value (in USD per share) | 29.80 | 0 | |
Vested, weighted average grant date fair value (in USD per share) | 12.22 | 0 | |
Forfeited, weighted average grant date fair value (in USD per share) | 0 | 12.22 | |
Ending balance, non-vested shares outstanding (in USD per share) | $ 15.77 | $ 12.45 | $ 12.44 |
Insomnia Cookies | |||
RSUs | |||
Beginning balance, non-vested shares outstanding (in shares) | 29,279 | 30,959 | |
Granted (in shares) | 15,173 | 13,688 | |
Vested (in shares) | 809 | 810 | |
Forfeited (in shares) | 10,147 | 14,558 | |
Ending balance, non-vested shares outstanding (in shares) | 33,496 | 29,279 | 30,959 |
Weighted Average Grant Date Fair Value | |||
Beginning balance, non-vested shares outstanding (in USD per share) | $ 68.87 | $ 67.82 | |
Granted, weighted average grant date fair value (in USD per share) | 97.77 | 66.71 | |
Vested, weighted average grant date fair value (in USD per share) | 74.12 | 74.12 | |
Forfeited, weighted average grant date fair value (in USD per share) | 75.68 | 64.30 | |
Ending balance, non-vested shares outstanding (in USD per share) | $ 79.66 | $ 68.87 | $ 67.82 |
KK Australia | |||
RSUs | |||
Beginning balance, non-vested shares outstanding (in shares) | 1,844,241 | 1,880,941 | |
Granted (in shares) | 78,534 | 63,560 | |
Vested (in shares) | 0 | 0 | 0 |
Forfeited (in shares) | 26,042 | 100,260 | |
Ending balance, non-vested shares outstanding (in shares) | 1,896,733 | 1,844,241 | 1,880,941 |
Weighted Average Grant Date Fair Value | |||
Beginning balance, non-vested shares outstanding (in USD per share) | $ 1.48 | $ 1.47 | |
Granted, weighted average grant date fair value (in USD per share) | 1.45 | 1.67 | |
Vested, weighted average grant date fair value (in USD per share) | 0 | 0 | |
Forfeited, weighted average grant date fair value (in USD per share) | 1.36 | 1.36 | |
Ending balance, non-vested shares outstanding (in USD per share) | $ 1.48 | $ 1.48 | $ 1.47 |
KK Mexico | |||
RSUs | |||
Beginning balance, non-vested shares outstanding (in shares) | 25,055 | 0 | |
Granted (in shares) | 32,963 | 25,055 | |
Vested (in shares) | 0 | 0 | 0 |
Forfeited (in shares) | 0 | 0 | |
Ending balance, non-vested shares outstanding (in shares) | 58,018 | 25,055 | 0 |
Weighted Average Grant Date Fair Value | |||
Beginning balance, non-vested shares outstanding (in USD per share) | $ 29.21 | $ 0 | |
Granted, weighted average grant date fair value (in USD per share) | 35.64 | 29.21 | |
Vested, weighted average grant date fair value (in USD per share) | 0 | 0 | |
Forfeited, weighted average grant date fair value (in USD per share) | 0 | 0 | |
Ending balance, non-vested shares outstanding (in USD per share) | $ 32.86 | $ 29.21 | $ 0 |
Share-based Compensation - Sc_2
Share-based Compensation - Schedule of RSU Unrecognized Compensation Expense (Details) - Restricted Stock Units (RSUs) $ in Thousands | 12 Months Ended |
Jan. 02, 2022USD ($) | |
KKI | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized Compensation Cost | $ 57,087 |
Recognized Over a Weighted- Average Period of | 3 years 1 month 6 days |
KKUK | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized Compensation Cost | $ 434 |
Recognized Over a Weighted- Average Period of | 2 years |
Insomnia Cookies | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized Compensation Cost | $ 1,837 |
Recognized Over a Weighted- Average Period of | 3 years |
KK Australia | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized Compensation Cost | $ 607 |
Recognized Over a Weighted- Average Period of | 1 year |
KK Mexico | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized Compensation Cost | $ 1,661 |
Recognized Over a Weighted- Average Period of | 3 years 10 months 24 days |
Share-based Compensation - Sc_3
Share-based Compensation - Schedule of Weighted-Average Assumptions, Stock Options (Details) - Stock Options - KKI | 12 Months Ended | |
Jan. 02, 2022 | Jan. 03, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Risk-free interest rate | 1.30% | 0.00% |
Expected volatility | 34.40% | 0.00% |
Dividend yield | 1.00% | 0.00% |
Expected term (years) | 6 years 9 months 18 days |
Share-based Compensation - Sc_4
Share-based Compensation - Schedule of Stock Option Activity (Details) - KKI - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Jan. 02, 2022 | Jan. 03, 2021 | |
Options | ||
Beginning balance, share options outstanding (in shares) | 0 | |
Granted (in shares) | 2,817,398 | |
Exercised (in shares) | 0 | |
Forfeited or expired (in shares) | 0 | |
Ending balance, share options outstanding (in shares) | 2,817,398 | |
Weighted Average Grant Date Fair Value | ||
Beginning balance, share options outstanding (in USD per share) | $ 0 | |
Granted (in USD per share) | 6.10 | |
Exercised (in USD per share) | 0 | |
Forfeited or expired (in USD per share) | 0 | |
Ending balance, share options outstanding (in USD per share) | 6.10 | |
Weighted Average Exercise Price | ||
Beginning balance, share options outstanding (in USD per share) | 0 | |
Granted (in USD per share) | 14.61 | |
Exercised (in USD per share) | 0 | |
Forfeited or expired (in USD per share) | 0 | |
Ending balance, share options outstanding (in USD per share) | $ 14.61 | |
Weighted Average Remaining Contractual Term (years) | 9 years 3 months 18 days | |
Aggregate Intrinsic Value (in thousands) | $ 12,151 | $ 0 |
Share-based Compensation - Sc_5
Share-based Compensation - Schedule of Stock Option Unrecognized Compensation Expense (Details) - Stock Options - KKI $ in Thousands | 12 Months Ended |
Jan. 02, 2022USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized compensation cost | $ 13,830 |
Recognized Over a Weighted- Average Period of | 3 years 2 months 12 days |
Income Taxes - Schedule of Inco
Income Taxes - Schedule of Income (Loss) Before Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 02, 2022 | Jan. 03, 2021 | Dec. 29, 2019 | |
Income Tax Disclosure [Abstract] | |||
Domestic | $ (49,348) | $ (47,080) | $ (34,836) |
Foreign | 45,250 | (4,748) | 13,412 |
Loss before income taxes | $ (4,098) | $ (51,828) | $ (21,424) |
Income Taxes - Schedule of Comp
Income Taxes - Schedule of Components of Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 02, 2022 | Jan. 03, 2021 | Dec. 29, 2019 | |
Current: | |||
Federal | $ 0 | $ 0 | $ 2,209 |
State | 347 | 156 | (396) |
International | 13,894 | 8,992 | 2,342 |
Total current | 14,241 | 9,148 | 4,155 |
Deferred: | |||
Federal | 4,310 | (8,844) | 10,117 |
State | (5,739) | 13,472 | (743) |
International | (2,067) | (4,664) | (952) |
Total deferred | (3,496) | (36) | 8,422 |
Income tax expense | $ 10,745 | $ 9,112 | $ 12,577 |
Income Taxes - Schedule of Effe
Income Taxes - Schedule of Effective Income Tax Rate Reconciliation (Details) | 12 Months Ended | ||
Jan. 02, 2022 | Jan. 03, 2021 | Dec. 29, 2019 | |
Income Tax Disclosure [Abstract] | |||
Statutory federal rate | 21.00% | 21.00% | 21.00% |
State income taxes, net of federal benefit | (2.80%) | 4.10% | 0.80% |
Foreign operations | (12.90%) | (10.70%) | 6.00% |
Credit for foreign income taxes | 0.00% | 0.00% | 6.30% |
Change in valuation allowance | 14.30% | (34.90%) | (31.00%) |
Noncontrolling interest | 46.80% | 2.60% | (3.30%) |
Impact of uncertain tax positions | 9.10% | (1.30%) | (55.80%) |
Other permanent differences | (14.20%) | 1.30% | 3.00% |
Transaction costs | (5.10%) | (0.80%) | (10.00%) |
Deferred adjustments | (96.10%) | (0.90%) | (10.20%) |
Stock compensation | (217.40%) | 0.00% | 0.00% |
Other | (4.90%) | 2.00% | 14.50% |
Effective tax rate | (262.20%) | (17.60%) | (58.70%) |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Jan. 02, 2022 | Jan. 03, 2021 |
Deferred income tax assets: | ||
Intangible assets | $ 1,665 | $ 1,884 |
Accrued compensation | 4,330 | 3,302 |
Insurance accruals | 1,934 | 2,040 |
Share-based compensation | 2,786 | 7,676 |
Deferred revenue | 1,735 | 1,903 |
Transaction costs | 1,397 | 1,091 |
Disallowed interest expense | 10,527 | 9,660 |
Lease liabilities | 101,629 | 91,828 |
Foreign net operating loss carryforward | 2,565 | 574 |
Foreign capital loss carryforward | 0 | 23,067 |
Federal net operating loss carryforward | 22,493 | 22,976 |
Federal tax credits | 13,913 | 12,320 |
State net operating loss and credit carryforwards | 11,169 | 9,082 |
Unrealized loss on foreign currency | 3,667 | 8,203 |
Other | 9,567 | 11,243 |
Gross deferred income tax assets | 189,377 | 206,849 |
Valuation allowance | (29,972) | (40,502) |
Deferred income tax assets, net of valuation allowance | 159,405 | 166,347 |
Deferred income tax liabilities: | ||
Intangible assets | (147,621) | (150,818) |
Subsidiary investments | (8,038) | (5,359) |
Property and equipment | (14,254) | (19,104) |
Foreign reacquired franchise rights | (37,600) | (44,236) |
Lease right of use assets | (93,250) | (85,764) |
Other | (3,683) | (5,840) |
Gross deferred income tax liabilities | (304,446) | (311,121) |
Net deferred income tax liabilities | (145,041) | (144,774) |
Income Tax Examination [Line Items] | ||
Net deferred income tax liabilities | (145,041) | (144,774) |
Other assets | ||
Deferred income tax liabilities: | ||
Net deferred income tax liabilities | (377) | (92) |
Income Tax Examination [Line Items] | ||
Net deferred income tax liabilities | (377) | (92) |
Deferred income taxes, net | ||
Deferred income tax liabilities: | ||
Net deferred income tax liabilities | (145,418) | (144,866) |
Income Tax Examination [Line Items] | ||
Net deferred income tax liabilities | $ (145,418) | $ (144,866) |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) | 12 Months Ended | ||
Jan. 02, 2022 | Jan. 03, 2021 | Dec. 29, 2019 | |
Income Tax Examination [Line Items] | |||
NOL carryforwards, 10-year carryover period | $ 8,300,000 | ||
NOL carryforwards, 20-year carryover period or no expiration | 200,000 | ||
Foreign capital loss carryforward | 0 | $ 23,067,000 | |
Tax credit carryforwards | 13,913,000 | 12,320,000 | |
Valuation allowance | 29,972,000 | 40,502,000 | |
Deferred social security taxes | 7,300,000 | ||
Income tax payments, net of refunds | 13,600,000 | 9,300,000 | $ 9,300,000 |
Unrecognized income tax benefits | 18,478,000 | 17,341,000 | $ 17,342,000 |
Accrued interest and penalties | $ 1,900,000 | 1,900,000 | |
Minimum | |||
Income Tax Examination [Line Items] | |||
Carryforward period | 10 years | ||
Maximum | |||
Income Tax Examination [Line Items] | |||
Carryforward period | 20 years | ||
State and Local Jurisdiction | |||
Income Tax Examination [Line Items] | |||
NOL carryforwards | $ 327,500,000 | 243,000,000 | |
Tax credit carryforwards | 0 | 0 | |
Valuation allowance | 13,200,000 | 11,800,000 | |
Foreign Tax Authority | |||
Income Tax Examination [Line Items] | |||
NOL carryforwards | 8,500,000 | 2,400,000 | |
Foreign capital loss carryforward | 0 | ||
Valuation allowance | 14,200,000 | 12,000,000 | |
Domestic Tax Authority | |||
Income Tax Examination [Line Items] | |||
NOL carryforwards | 107,100,000 | 109,400,000 | |
Tax credit carryforwards | 13,900,000 | 12,000,000 | |
KK Mexico | |||
Income Tax Examination [Line Items] | |||
Valuation allowance | $ 2,500,000 | $ 16,700,000 |
Income Taxes - Schedule of Unre
Income Taxes - Schedule of Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 02, 2022 | Jan. 03, 2021 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||
Unrecognized tax benefits at beginning of year | $ 17,341 | $ 17,342 |
Increases related to positions taken in the current year | 1,383 | 18 |
Increases (decreases) related to positions taken in prior years | (246) | (19) |
Unrecognized tax benefits at end of year | $ 18,478 | $ 17,341 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Millions | Mar. 11, 2021 | Apr. 07, 2009 | Jan. 02, 2022 | Jan. 03, 2021 |
Loss Contingencies [Line Items] | ||||
Purchase commitments | $ 132.4 | $ 48.3 | ||
Letters of credit outstanding | $ 8.5 | $ 14 | ||
K2 Asia litigation | ||||
Loss Contingencies [Line Items] | ||||
Loss contingency, damages sought | $ 3 | |||
Insomnia Cookies litigation, employee wages | ||||
Loss Contingencies [Line Items] | ||||
Litigation settlement, amount awarded to other party | $ 0.4 |
Related Party Transactions (Det
Related Party Transactions (Details) | 12 Months Ended | ||||
Jan. 02, 2022USD ($)equityMethodInvestment | Jan. 03, 2021USD ($)equityMethodInvestment | Dec. 29, 2019USD ($) | Apr. 30, 2019USD ($) | Dec. 31, 2017USD ($) | |
Related Party Transaction [Line Items] | |||||
Number of franchisees | equityMethodInvestment | 2 | 2 | |||
Income taxes receivable | $ 15,300,000 | ||||
Interest expense, related party | $ 10,387,000 | 22,468,000 | $ 21,947,000 | ||
Equity Method Investee | |||||
Related Party Transaction [Line Items] | |||||
Equity method investments | 1,100,000 | 900,000 | |||
Equity Method Investee | Sales of Ingredients and Equipment to Franchisees | |||||
Related Party Transaction [Line Items] | |||||
Revenue from related parties | 7,400,000 | 6,600,000 | 5,200,000 | ||
Equity Method Investee | Royalty Revenues from Franchisees | |||||
Related Party Transaction [Line Items] | |||||
Revenue from related parties | 1,300,000 | 1,200,000 | 1,200,000 | ||
Affiliated Entity | |||||
Related Party Transaction [Line Items] | |||||
Due from employees | 4,400,000 | 18,700,000 | |||
Affiliated Entity | Keurig Dr Pepper Inc. (“KDP”) | Licensing Revenues | |||||
Related Party Transaction [Line Items] | |||||
Revenue from related parties | 1,900,000 | 1,900,000 | 2,400,000 | ||
Affiliated Entity | BDT Capital Partners, LLC (“BDT”) | Advisory Services Agreement | |||||
Related Party Transaction [Line Items] | |||||
Expenses from transactions with related party | 1,000,000 | 1,800,000 | 100,000 | ||
Affiliated Entity | BDT Capital Partners, LLC (“BDT”) | Valuation Assistance in Preparation for IPO | |||||
Related Party Transaction [Line Items] | |||||
Expenses from transactions with related party | 6,300,000 | 0 | 0 | ||
Affiliated Entity | Krispy Kreme by JAB Holding Company | |||||
Related Party Transaction [Line Items] | |||||
Related party receivable | 7,400,000 | ||||
Related party payable | 0 | ||||
Affiliated Entity | Other JAB Portfolio Companies | |||||
Related Party Transaction [Line Items] | |||||
Related party payable | 15,300,000 | ||||
Affiliated Entity | Krispy Kreme, G.P. (“KK GP”) | Unsecured Debt | |||||
Related Party Transaction [Line Items] | |||||
Long-term debt | 344,600,000 | ||||
Interest expense, related party | $ 10,400,000 | $ 22,500,000 | $ 21,900,000 | ||
Affiliated Entity | Krispy Kreme, G.P. (“KK GP”) | Unsecured Debt | Senior Unsecured Note (The Original Agreement) | |||||
Related Party Transaction [Line Items] | |||||
Debt instrument, face amount | $ 283,100,000 | ||||
Affiliated Entity | Krispy Kreme, G.P. (“KK GP”) | Unsecured Debt | Senior Unsecured Note (The Additional Agreement) | |||||
Related Party Transaction [Line Items] | |||||
Debt instrument, face amount | $ 54,000,000 | ||||
KremeWorks USA, LLC | |||||
Related Party Transaction [Line Items] | |||||
Ownership percentage | 25.00% | 25.00% | |||
KremeWorks Canada, L.P. | |||||
Related Party Transaction [Line Items] | |||||
Ownership percentage | 25.00% | 25.00% |
Revenue Recognition - Summary o
Revenue Recognition - Summary of Disaggregation of Revenues (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 02, 2022 | Jan. 03, 2021 | Dec. 29, 2019 | |
Disaggregation of Revenue [Line Items] | |||
Total net revenues | $ 1,384,391 | $ 1,122,036 | $ 959,408 |
Company Shops, DFD and Branded Sweet Treat Line | |||
Disaggregation of Revenue [Line Items] | |||
Total net revenues | 1,305,597 | 1,014,790 | 788,607 |
Mix and equipment revenue from franchisees | |||
Disaggregation of Revenue [Line Items] | |||
Total net revenues | 47,869 | 70,320 | 124,198 |
Franchise royalties and other | |||
Disaggregation of Revenue [Line Items] | |||
Total net revenues | $ 30,925 | $ 36,926 | $ 46,603 |
Revenue Recognition - Summary_2
Revenue Recognition - Summary of Contract Balances with Customers (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 02, 2022 | Jan. 03, 2021 | |
Revenue from Contract with Customer [Abstract] | ||
Trade receivables, net of allowances of $896 and $1,437, respectively | $ 41,132 | $ 39,624 |
Trade receivables, allowance for credit loss | 896 | 1,437 |
Deferred revenue | ||
Current | 17,458 | 16,045 |
Noncurrent | 2,981 | 2,838 |
Total deferred revenue | 20,439 | 18,883 |
Deferred revenue recognized | $ 8,400 | $ 7,800 |
Revenue Recognition - Revenue,
Revenue Recognition - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction (Details) $ in Thousands | Jan. 02, 2022USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, amount | $ 20,439 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-03 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, amount | $ 12,869 |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-02 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, amount | $ 2,654 |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, amount | $ 1,080 |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-12-30 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, amount | $ 1,218 |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-05 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, amount | $ 526 |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-01-04 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, amount | $ 2,092 |
Revenue, remaining performance obligation, expected timing of satisfaction, period |
Net Loss per Share - Schedule o
Net Loss per Share - Schedule of Net Loss Per Share, Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Jan. 02, 2022 | Jan. 03, 2021 | Dec. 29, 2019 | |
Earnings Per Share [Abstract] | |||
Net loss attributable to Krispy Kreme, Inc. | $ (24,506) | $ (64,301) | $ (37,409) |
Adjustment to net loss attributable to common shareholders | (1,468) | (477) | 278 |
Net loss attributable to common shareholders — Basic | (25,974) | (64,778) | (37,131) |
Additional income attributed to noncontrolling interest due to subsidiary potential common shares | (122) | (10) | (64) |
Net loss attributable to common shareholders — Diluted | $ (26,096) | $ (64,788) | $ (37,195) |
Basic weighted average common shares outstanding (in shares) | 147,654,548 | 124,987,370 | 124,987,370 |
Dilutive effect of outstanding common stock options and RSUs (in shares) | 0 | 0 | 0 |
Diluted weighted average common shares outstanding (in shares) | 147,654,548 | 124,987,370 | 124,987,370 |
Loss per share attributable to common shareholders: | |||
Basic loss per share (in dollars per shares) | $ (0.18) | $ (0.52) | $ (0.30) |
Diluted loss per share (in dollars per shares) | $ (0.18) | $ (0.52) | $ (0.30) |
Net Loss per Share - Schedule_2
Net Loss per Share - Schedule of Antidilutive Unvested RSUs Excluded from Computation of Net Loss per Share (Details) - Restricted Stock Units (RSUs) - shares | 12 Months Ended | ||
Jan. 02, 2022 | Jan. 03, 2021 | Dec. 29, 2019 | |
KKI | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from computation of net loss per share | 5,866,107 | 4,649,551 | 4,108,726 |
KKUK | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from computation of net loss per share | 0 | 404,568 | 416,068 |
Insomnia Cookies | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from computation of net loss per share | 0 | 0 | 809 |
KK Australia | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from computation of net loss per share | 0 | 0 | 0 |
KK Mexico | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from computation of net loss per share | 0 | 0 | 0 |
Net Loss per Share - Additional
Net Loss per Share - Additional Information (Details) | 12 Months Ended |
Jan. 02, 2022shares | |
Stock Options | KKI | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Antidilutive securities excluded from computation of net loss per share | 2,817,398 |
Segment Reporting - Schedule of
Segment Reporting - Schedule of Segment Reporting Information, by Segment (Details) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Dec. 31, 2021USD ($) | Jan. 02, 2022USD ($)segment | Jan. 03, 2021USD ($) | Dec. 29, 2019USD ($) | |
Segment Reporting Information [Line Items] | ||||
Number of reportable segments | segment | 3 | |||
Total net revenues | $ 1,384,391 | $ 1,122,036 | $ 959,408 | |
Depreciation and amortization expense | 101,608 | 80,398 | 63,767 | |
Segment adjusted EBITDA | 187,945 | 145,434 | 146,384 | |
Interest expense, net | 32,622 | 34,741 | 38,085 | |
Interest expense – related party | 10,387 | 22,468 | 21,947 | |
Income tax expense | 10,745 | 9,112 | 12,577 | |
Share-based compensation | 22,923 | 11,601 | 10,741 | |
Employer payroll taxes related to share-based compensation | 2,044 | 0 | 0 | |
Other non-operating expense/(income), net | 2,191 | (1,101) | (609) | |
New York City flagship Hot Light Theater Shop opening | 6,513 | 3,784 | ||
Strategic initiatives | 0 | 20,517 | 4,059 | |
Acquisition and integration expenses | 5,255 | 12,679 | 20,433 | |
Shop closure expenses | 2,766 | 6,269 | 629 | |
Restructuring and severance expenses | 1,733 | 0 | 583 | |
IPO-related expenses | 14,534 | 3,184 | 0 | |
Gain on sale-leaseback | $ (8,700) | (8,673) | 0 | 0 |
Other | 4,653 | (7) | 4,389 | |
Net loss | (14,843) | (60,940) | (34,001) | |
Lease impairment expenses | 3,100 | |||
Krispy Kreme by JAB Holding Company | ||||
Segment Reporting Information [Line Items] | ||||
Payment for management fees | 1,200 | |||
Corporate | ||||
Segment Reporting Information [Line Items] | ||||
Depreciation and amortization expense | 7,980 | 4,600 | 4,505 | |
Segment adjusted EBITDA | (41,872) | (29,754) | (30,062) | |
U.S. and Canada | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Total net revenues | 928,413 | 782,717 | 587,522 | |
Depreciation and amortization expense | 55,447 | 43,056 | 30,610 | |
Segment adjusted EBITDA | 107,571 | 91,574 | 71,620 | |
International | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Total net revenues | 332,995 | 230,185 | 223,115 | |
Depreciation and amortization expense | 36,139 | 30,438 | 25,188 | |
Segment adjusted EBITDA | 81,422 | 44,554 | 53,252 | |
Market Development | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Total net revenues | 122,983 | 109,134 | 148,771 | |
Depreciation and amortization expense | 2,042 | 2,304 | 3,464 | |
Segment adjusted EBITDA | $ 40,824 | $ 39,060 | $ 51,574 |
Segment Reporting - Schedule _2
Segment Reporting - Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 02, 2022 | Jan. 03, 2021 | Dec. 29, 2019 | |
Segment Reporting Information [Line Items] | |||
Total net revenues | $ 1,384,391 | $ 1,122,036 | $ 959,408 |
Total long-lived assets | 874,086 | 794,943 | 708,734 |
United States | |||
Segment Reporting Information [Line Items] | |||
Total net revenues | 955,384 | 854,097 | 696,841 |
Total long-lived assets | 684,790 | 625,928 | 565,933 |
United Kingdom | |||
Segment Reporting Information [Line Items] | |||
Total net revenues | 147,233 | 93,121 | 120,009 |
Total long-lived assets | 69,112 | 68,500 | 63,543 |
Australia / New Zealand | |||
Segment Reporting Information [Line Items] | |||
Total net revenues | 99,582 | 78,677 | 86,734 |
Total long-lived assets | 61,155 | 59,656 | 54,003 |
Mexico | |||
Segment Reporting Information [Line Items] | |||
Total net revenues | 77,831 | 53,085 | 8,991 |
Total long-lived assets | 30,944 | 23,094 | 20,965 |
All other | |||
Segment Reporting Information [Line Items] | |||
Total net revenues | 104,361 | 43,056 | 46,833 |
Total long-lived assets | $ 28,085 | $ 17,765 | $ 4,290 |
Subsequent Events (Details)
Subsequent Events (Details) - $ / shares | Feb. 09, 2022 | Jan. 02, 2022 |
Subsequent Event [Line Items] | ||
Dividends declared on common stock (in dollars per share) | $ 0.035 | |
Subsequent Event | ||
Subsequent Event [Line Items] | ||
Dividends declared on common stock (in dollars per share) | $ 0.035 |