Documents and Entity Informatio
Documents and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 28, 2021 | Feb. 14, 2022 | Jun. 29, 2021 | |
Document and Entity Information | |||
Entity Registrant Name | THE CHEESECAKE FACTORY INCORPORATED | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Entity File Number | 0-20574 | ||
Title of 12(b) Security | Common Stock, par value $.01 per share | ||
Trading Symbol | CAKE | ||
Entity Address, Postal Zip Code | 91301 | ||
Entity Address, Address Line One | 26901 Malibu Hills Road | ||
Entity Address, City or Town | Calabasas Hills | ||
Entity Address, State or Province | CA | ||
Security Exchange Name | NASDAQ | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 51-0340466 | ||
Entity Central Index Key | 0000887596 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 28, 2021 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-28 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 2,555,490,614 | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 52,743,067 | ||
Local Phone Number | 871-3000 | ||
City Area Code | 818 | ||
Document Fiscal Year Focus | 2021 | ||
Document Fiscal Period Focus | FY | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Auditor Name | KPMG LLP | ||
Auditor Firm ID | 185 | ||
Auditor Location | California |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 28, 2021 | Dec. 29, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 189,627 | $ 154,085 |
Accounts and other receivable | 100,504 | 75,787 |
Income taxes receivable | 36,173 | 36,889 |
Inventories | 42,839 | 39,288 |
Prepaid expenses | 36,446 | 35,310 |
Total current assets | 405,589 | 341,359 |
Property and equipment, net | 741,746 | 774,137 |
Other assets: | ||
Intangible assets, net | 251,701 | 253,160 |
Operating lease assets | 1,241,237 | 1,251,027 |
Other | 157,852 | 127,371 |
Total other assets | 1,650,790 | 1,631,558 |
Total assets | 2,798,125 | 2,747,054 |
Current liabilities: | ||
Accounts payable | 54,086 | 58,432 |
Gift card liabilities | 211,182 | 184,655 |
Operating lease liabilities | 131,818 | 132,519 |
Other accrued expenses | 239,187 | 210,461 |
Total current liabilities | 636,273 | 586,067 |
Long-term debt | 466,017 | 280,000 |
Operating lease liabilities | 1,218,269 | 1,224,321 |
Other noncurrent liabilities | 147,400 | 149,725 |
Commitments and contingencies (Note 16) | ||
Series A convertible preferred stock, $.01 par value, 200,000 shares authorized; 0 and 200,000 shares issued and outstanding at December 28, 2021 and December 29, 2020, respectively | 218,248 | |
Stockholders' equity: | ||
Preferred stock, $.01 par value, other than Series A convertible preferred stock, 4,800,000 shares authorized; none issued | ||
Common stock, $.01 par value, 250,000,000 shares authorized; 105,365,678 and 98,645,147 shares issued at December 28, 2021 and December 29, 2020, respectively | 1,054 | 986 |
Additional paid-in capital | 862,758 | 878,148 |
Retained earnings | 1,169,150 | 1,110,087 |
Treasury stock, 53,139,172 and 53,026,409 shares at cost at December 28, 2021 and December 29, 2020, respectively | (1,702,509) | (1,696,743) |
Accumulated other comprehensive loss | (287) | (3,785) |
Total stockholders' equity | 330,166 | 288,693 |
Total liabilities, Series A convertible preferred stock and stockholders' equity | $ 2,798,125 | $ 2,747,054 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 28, 2021 | Dec. 29, 2020 |
CONSOLIDATED BALANCE SHEETS | ||
Series A convertible preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Series A convertible preferred stock, shares authorized (in shares) | 200,000 | 200,000 |
Series A convertible preferred stock, shares issued (in shares) | 0 | 200,000 |
Series A convertible preferred stock, shares outstanding (in shares) | 0 | 200,000 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 4,800,000 | 4,800,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 105,365,678 | 98,645,147 |
Treasury stock, shares | 53,139,172 | 53,026,409 |
CONSOLIDATED STATEMENTS OF (LOS
CONSOLIDATED STATEMENTS OF (LOSS)/INCOME - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 28, 2021 | Dec. 29, 2020 | Dec. 31, 2019 | |
CONSOLIDATED STATEMENTS OF INCOME /(LOSS) | |||
Revenues | $ 2,927,540 | $ 1,983,225 | $ 2,482,692 |
Costs and expenses: | |||
Cost of sales | 653,133 | 458,332 | 561,783 |
Labor expenses | 1,072,628 | 778,586 | 899,667 |
Other operating costs and expenses | 792,311 | 616,069 | 631,613 |
General and administrative expenses | 186,136 | 157,644 | 160,199 |
Depreciation and amortization expenses | 89,654 | 91,415 | 88,133 |
Impairment of assets and lease termination expenses | 18,139 | 219,333 | 18,247 |
Acquisition-related costs | 2,699 | 5,270 | |
Acquisition-related contingent consideration, compensation and amortization expenses/(benefit) | 19,510 | (3,872) | 1,033 |
Preopening costs | 13,711 | 10,456 | 13,149 |
Total costs and expenses | 2,845,222 | 2,330,662 | 2,379,094 |
Income/(loss) from operations | 82,318 | (347,437) | 103,598 |
Gain on investments in unconsolidated affiliates | 39,233 | ||
Interest and other expense, net | (10,698) | (8,599) | (2,497) |
Income/(loss) before income taxes | 71,620 | (356,036) | 140,334 |
Income tax (benefit)/ provision | (753) | (102,671) | 13,041 |
Net income/(loss) | 72,373 | (253,365) | 127,293 |
Dividends on Series A preferred stock | (18,661) | (13,485) | |
Direct and incremental Series A preferred stock issuance costs | (10,257) | ||
Undistributed earnings allocated to Series A preferred stock | 4,581 | ||
Net income/(loss) available to common stockholders | $ 49,131 | $ (277,107) | $ 127,293 |
Net income/(loss) per common share: | |||
Basic (in dollars per share) | $ 1.03 | $ (6.32) | $ 2.90 |
Diluted (in dollars per share) | $ 1.01 | $ (6.32) | $ 2.86 |
Weighted-average common shares outstanding: | |||
Basic (in shares) | 47,529 | 43,869 | 43,949 |
Diluted (in shares) | 48,510 | 43,869 | 44,545 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 28, 2021 | Dec. 29, 2020 | Dec. 31, 2019 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME | |||
Net income/(loss) | $ 72,373 | $ (253,365) | $ 127,293 |
Other comprehensive gain/(loss): | |||
Foreign currency translation adjustment | 34 | 114 | 503 |
Unrealized gain/(loss) on derivative, net of tax | 3,464 | (3,464) | |
Other comprehensive gain/(loss) | 3,498 | (3,350) | 503 |
Total comprehensive income/(loss) | 75,871 | (256,715) | 127,796 |
Comprehensive income attributable to Series A preferred stockholders | (23,540) | (23,742) | |
Total comprehensive income/(loss) available to common stockholders | $ 52,331 | $ (280,457) | $ 127,796 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND SERIES A CONVERTIBLE PREFERRED STOCK - USD ($) shares in Thousands, $ in Thousands | Preferred stockCumulative effect of adopting ASU 2020-06Series A Convertible Preferred stock | Preferred stockCumulative effect of adopting ASU 2020-06, adjusted balanceSeries A Convertible Preferred stock | Preferred stockSeries A Convertible Preferred stock | Common StockCumulative effect of adopting ASU 2020-06 | Common StockCumulative effect of adopting ASU 2020-06, adjusted balance | Common StockSeries A Convertible Preferred stock | Common Stock | Additional Paid-in CapitalCumulative effect of adopting ASU 2020-06 | Additional Paid-in CapitalCumulative effect of adopting ASU 2020-06, adjusted balance | Additional Paid-in Capital | Retained EarningsCumulative effect of adopting ASU 2020-06 | Retained EarningsCumulative effect of adopting ASU 2020-06, adjusted balance | Retained EarningsSeries A Convertible Preferred stock | Retained Earnings | Treasury StockCumulative effect of adopting ASU 2020-06 | Treasury StockCumulative effect of adopting ASU 2020-06, adjusted balance | Treasury Stock | Accumulated Other Comprehensive Income/(Loss)Cumulative effect of adopting ASU 2020-06 | Accumulated Other Comprehensive Income/(Loss)Cumulative effect of adopting ASU 2020-06, adjusted balance | Accumulated Other Comprehensive Income/(Loss) | Cumulative effect of adopting ASU 2020-06 | Cumulative effect of adopting ASU 2020-06, adjusted balance | Series A Convertible Preferred stock | Total |
Increase (Decrease) in Stockholders' Equity | ||||||||||||||||||||||||
Cumulative effect of adopting ASU 2020-06 | $ 0 | $ 967 | $ 828,676 | $ 1,384,494 | $ (1,642,140) | $ (938) | $ 571,059 | |||||||||||||||||
Balance (as adjusted) (in shares) | 96,622 | |||||||||||||||||||||||
Beginning balance at Jan. 01, 2019 | 0 | $ 967 | 828,676 | 1,384,494 | (1,642,140) | (938) | 571,059 | |||||||||||||||||
Beginning balance (in shares) at Jan. 01, 2019 | 96,622 | |||||||||||||||||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||||||||||||||
Net income (loss) | $ 0 | 127,293 | 127,293 | |||||||||||||||||||||
Foreign currency translation adjustment | 0 | 503 | 503 | |||||||||||||||||||||
Cash dividends declared common stock | 0 | (61,988) | (61,988) | |||||||||||||||||||||
Stock-based compensation | $ 4 | 19,595 | 19,599 | |||||||||||||||||||||
Stock-based compensation (in shares) | 476 | |||||||||||||||||||||||
Common stock issued under stock-based compensation plans | $ 6 | 7,718 | 7,724 | |||||||||||||||||||||
Common stock issued under stock-based compensation plans (in shares) | 587 | |||||||||||||||||||||||
Treasury stock purchases | $ 0 | (50,982) | (50,982) | |||||||||||||||||||||
Ending balance at Dec. 31, 2019 | $ 0 | $ 0 | $ 0 | $ 0 | $ 967 | $ 977 | $ 0 | $ 828,676 | 855,989 | $ (41,466) | $ 1,343,028 | 1,408,333 | $ 0 | $ (1,642,140) | (1,693,122) | $ 0 | $ (938) | (435) | $ (41,466) | $ 529,593 | 571,742 | |||
Ending balance (in shares) at Dec. 31, 2019 | 0 | 0 | 0 | 0 | 96,622 | 97,685 | ||||||||||||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||||||||||||||
Cumulative effect of adopting ASU 2020-06 | $ 0 | $ 0 | $ 0 | $ 0 | $ 967 | $ 977 | $ 0 | 828,676 | 855,989 | (41,466) | 1,343,028 | 1,408,333 | $ 0 | (1,642,140) | (1,693,122) | $ 0 | (938) | (435) | (41,466) | 529,593 | 571,742 | |||
Balance (as adjusted) (in shares) | 0 | 0 | 0 | 0 | 96,622 | 97,685 | ||||||||||||||||||
Net income (loss) | $ 0 | (253,365) | (253,365) | |||||||||||||||||||||
Foreign currency translation adjustment | 0 | 114 | 114 | |||||||||||||||||||||
Change in derivative, net of tax | 0 | (3,464) | (3,464) | |||||||||||||||||||||
Cash dividends declared common stock | 0 | (16,376) | (16,376) | |||||||||||||||||||||
Stock-based compensation | $ 7 | 21,550 | 21,557 | |||||||||||||||||||||
Stock-based compensation (in shares) | 637 | |||||||||||||||||||||||
Common stock issued under stock-based compensation plans | $ 2 | 609 | 611 | |||||||||||||||||||||
Common stock issued under stock-based compensation plans (in shares) | 323 | |||||||||||||||||||||||
Common stock issuance | $ 189,743 | $ 0 | ||||||||||||||||||||||
Treasury stock purchases | 0 | (3,621) | (3,621) | |||||||||||||||||||||
Preferred stock direct costs. | 10,257 | $ 0 | ||||||||||||||||||||||
Paid-in-kind preferred stock dividend beneficial conversion feature | 18,248 | 0 | 18,248 | 18,248 | ||||||||||||||||||||
Ending balance at Dec. 29, 2020 | $ (4,763) | $ 213,485 | $ 218,248 | $ 986 | $ 986 | 878,148 | 878,148 | 4,763 | 1,114,850 | 1,110,087 | (1,696,743) | (1,696,743) | (3,785) | (3,785) | 4,763 | 293,456 | 288,693 | |||||||
Ending balance (in shares) at Dec. 29, 2020 | 200 | 200 | 0 | 98,645 | 98,645 | |||||||||||||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||||||||||||||
Cumulative effect of adopting ASU 2020-06 | $ (4,763) | $ 213,485 | $ 218,248 | $ 986 | $ 986 | $ 878,148 | 878,148 | $ 4,763 | $ 1,114,850 | 1,110,087 | $ (1,696,743) | (1,696,743) | $ (3,785) | (3,785) | $ 4,763 | $ 293,456 | 288,693 | |||||||
Balance (as adjusted) (in shares) | 200 | 200 | 0 | 98,645 | 98,645 | |||||||||||||||||||
Net income (loss) | $ 0 | 72,373 | 72,373 | |||||||||||||||||||||
Foreign currency translation adjustment | 0 | 34 | 34 | |||||||||||||||||||||
Change in derivative, net of tax | 0 | 3,464 | 3,464 | |||||||||||||||||||||
Cash dividends declared common stock | 0 | 588 | 588 | |||||||||||||||||||||
Stock-based compensation | $ 8 | 24,778 | 24,786 | |||||||||||||||||||||
Stock-based compensation (in shares) | 759 | |||||||||||||||||||||||
Common stock issued under stock-based compensation plans | $ 5 | 23,177 | 23,182 | |||||||||||||||||||||
Common stock issued under stock-based compensation plans (in shares) | 436 | |||||||||||||||||||||||
Common stock issuance | $ 31 | 167,019 | 167,050 | |||||||||||||||||||||
Common stock issuance (in shares) | 200 | 3,125 | ||||||||||||||||||||||
Treasury stock purchases | $ 0 | (5,766) | (5,766) | |||||||||||||||||||||
Cash dividend declared Series A preferred stock, $25.35 per share | $ 0 | (5,070) | (5,070) | |||||||||||||||||||||
Series A preferred stock cash-settled conversion | $ (160,114) | (283,637) | (283,637) | |||||||||||||||||||||
Series A preferred stock cash-settled conversion (in shares) | (150) | 0 | ||||||||||||||||||||||
Series A preferred stock conversion to common stock | $ (53,371) | $ 24 | 53,273 | 53,297 | ||||||||||||||||||||
Series A preferred stock conversion to common stock (in shares) | (50) | 2,401 | ||||||||||||||||||||||
Deemed dividends on Series A preferred stock | $ 0 | (13,591) | (13,591) | |||||||||||||||||||||
Preferred stock direct costs. | $ (10,257) | $ (10,257) | ||||||||||||||||||||||
Ending balance at Dec. 28, 2021 | $ 1,054 | 862,758 | 1,169,150 | (1,702,509) | (287) | 330,166 | ||||||||||||||||||
Ending balance (in shares) at Dec. 28, 2021 | 105,366 | |||||||||||||||||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||||||||||||||
Cumulative effect of adopting ASU 2020-06 | $ 1,054 | $ 862,758 | $ 1,169,150 | $ (1,702,509) | $ (287) | $ 330,166 | ||||||||||||||||||
Balance (as adjusted) (in shares) | 105,366 |
CONSOLIDATED STATEMENTS OF ST_2
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND SERIES A CONVERTIBLE PREFERRED STOCK (Parenthetical) - $ / shares | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2020 | Dec. 28, 2021 | Dec. 29, 2020 | Dec. 31, 2019 | |
Increase (Decrease) in Temporary Equity [Roll Forward] | ||||
Cash dividend per share of preferred stock | $ 25.35 | |||
Cash dividends declared per common share (in dollars per share) | $ 0.36 | $ 0.36 | $ 1.38 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 28, 2021 | Dec. 29, 2020 | Dec. 31, 2019 | |
Cash flows from operating activities: | |||
Net income/(loss) | $ 72,373 | $ (253,365) | $ 127,293 |
Adjustments to reconcile net income/(loss) to cash provided by operating activities: | |||
Depreciation and amortization expenses | 89,654 | 91,415 | 88,133 |
Impairment of assets and lease termination expenses | 17,937 | 208,066 | 16,223 |
Deferred income taxes | (20,849) | (67,228) | (2,197) |
Stock-based compensation | 22,988 | 21,350 | 19,373 |
Gain from investments in unconsolidated affiliates | (39,233) | ||
Changes in assets and liabilities, net of acquired amounts: | |||
Accounts and other receivables | (24,816) | 15,148 | 3,777 |
Income taxes receivable/payable | 715 | (32,263) | (5,338) |
Inventories | (3,478) | 7,921 | (5,766) |
Prepaid expenses | (1,137) | 8,563 | (4,133) |
Operating lease assets/liabilities | (4,106) | 22,958 | 5,019 |
Other assets | (9,227) | (6,019) | (11,989) |
Accounts payable | (3,678) | (2,005) | 2,326 |
Gift card liabilities | 26,527 | (3,324) | 9,695 |
Other accrued expenses | 50,103 | (8,309) | 15,578 |
Cash provided by operating activities | 213,006 | 2,908 | 218,761 |
Cash flows from investing activities: | |||
Additions to property and equipment | (66,943) | (50,329) | (73,765) |
Additions to intangible assets | (606) | (585) | (2,100) |
Acquisition, net of cash acquired | (261,695) | ||
Investments in unconsolidated affiliates | (3,000) | ||
Loans made to unconsolidated affiliates | (22,500) | ||
Other | (1,061) | ||
Cash used in investing activities | (68,610) | (50,914) | (363,060) |
Cash flows from financing activities: | |||
Acquisition-related deferred consideration | (17,000) | (17,250) | |
Borrowings on credit facility | 90,000 | 335,000 | |
Repayments on credit facility | (150,000) | (100,000) | (55,000) |
Convertible debt issuance | 345,000 | ||
Convertible debt direct and incremental costs | (10,074) | ||
Series A preferred stock issuance | 200,000 | ||
Series A preferred stock direct and incremental costs | (10,257) | ||
Series A preferred stock cash-settled conversion | (443,751) | ||
Series A preferred stock conversion direct and incremental costs | (74) | ||
Series A preferred stock dividend paid | (18,661) | ||
Common stock issuance | 175,000 | ||
Common stock issuance direct and incremental costs | (7,950) | ||
Proceeds from exercise of stock options | 24,786 | 611 | 7,724 |
Common stock dividends paid | (337) | (15,791) | (60,722) |
Treasury stock purchases | (5,766) | (3,621) | (50,982) |
Cash (used in)/provided by financing activities | (108,827) | 143,692 | 176,020 |
Foreign currency translation adjustment | (27) | (17) | 117 |
Net change in cash and cash equivalents | 35,542 | 95,669 | 31,838 |
Cash and cash equivalents at beginning of period | 154,085 | 58,416 | 26,578 |
Cash and cash equivalents at end of period | 189,627 | 154,085 | 58,416 |
Supplemental disclosures: | |||
Interest paid | 9,586 | 13,045 | 1,646 |
Income taxes paid | 13,031 | 2,968 | 20,778 |
Construction payable | 4,343 | $ 5,007 | 6,504 |
Non-cash investing: | |||
Acquisition-related deferred consideration and compensation | (66,257) | ||
Fair value of previously-held equity investments | (122,000) | ||
Loans repaid by unconsolidated affiliates as a reduction of acquisition cash | 12,500 | ||
Loan to unconsolidated affiliate assumed in acquisition | $ 10,000 | ||
Non-cash financing: | |||
Series A preferred stock conversion to common stock | $ 53,297 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 28, 2021 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 1. Summary of Significant Accounting Policies Description of Business The Cheesecake Factory Incorporated is a leader in experiential dining. We are culinary forward and relentlessly focused on hospitality. We currently own and operate 306 restaurants throughout the United States and Canada, including 208 The Cheesecake Factory ® ® ® Basis of Presentation The accompanying consolidated financial statements include the accounts of The Cheesecake Factory Incorporated and its wholly owned subsidiaries (referred to herein collectively as the “Company,” “we,” “us” and “our”) and are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All intercompany accounts and transactions for the periods presented have been eliminated in consolidation. On October 2, 2019, we completed the acquisition of North Italia and the remaining business of FRC, including Flower Child and all other FRC brands (the “Acquisition”). The results of operations, financial position and cash flows of the acquired businesses are included in our consolidated financial statements as of the acquisition date. We utilize a 52/53-week fiscal year ending on the Tuesday closest to December 31 for financial reporting purposes. Fiscal years 2021, 2020 and 2019 each consisted of 52 weeks and fiscal year 2022 will consist of 53 weeks. Use of Estimates The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions for the reporting periods covered by the financial statements. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent liabilities. Actual results could differ from these estimates. COVID-19 Pandemic Beginning in March 2020, COVID-19 and measures to prevent its spread led to significant disruptions to our business as suggested and mandated social distancing and shelter-in-place orders led to the temporary closure of a number of restaurants across our portfolio while our remaining locations shifted to an off-premise only operating model on an interim basis. Reopening of restaurant dining rooms resumed, generally at reduced capacity, at various points since May 2020. While restrictions on the type of permitted operating model and occupancy capacity may continue to change, currently nearly all of our restaurants are operating with no capacity restrictions on indoor dining. The ongoing effects of COVID-19 and its variants, including, but not limited to, consumer behavior, capacity restrictions, mask and vaccination mandates, wage inflation, our ability to continue to staff our restaurants and disruptions in the supply chain, will determine the impact to our operating results and financial position. The impact to our operations has been most notable during the periods of greatest accelerating COVID-19 case counts. We have incurred and will continue to incur additional costs to address government regulations and the safety of our staff members and customers. Cash and Cash Equivalents Amounts receivable from credit card processors, totaling $17.5 million and $9.1 million at December 28, 2021 and December 29, 2020, respectively, are considered cash equivalents because they are both short-term and highly liquid in nature and are typically converted to cash within three days of the sales transaction. During the last week of fiscal 2020, almost all of our restaurants were operating under capacity restrictions or in an off-premise-only model. Therefore, we processed less sales through credit cards causing a lower receivable in fiscal 2020. Our cash management system provides for the funding of all major bank disbursement accounts on a daily basis as checks are presented for payment. Under this system, outstanding checks are in excess of the cash balances at certain banks, which creates book overdrafts. Book overdrafts are presented as a current liability in other accrued expenses on our consolidated balance sheet. Concentration of Credit Risk Financial instruments that potentially subject us to a concentration of credit risk are cash and cash equivalents and receivables. We maintain our day-to-day operating cash balances in non-interest-bearing transaction accounts, which are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. We invest our excess cash in a money market deposit account, which is insured by the FDIC up to $250,000. Although we maintain balances that exceed the federally insured limit, we have not experienced any losses related to this balance, and we believe credit risk to be minimal. We consider the concentration of credit risk for accounts receivable from our bakery customers to be minimal due to the payment histories and general financial condition of our larger bakery accounts. Concentration of credit risk related to other receivables is limited as this balance is comprised primarily of amounts due from our gift card distributors, insurance providers and delivery partner. Inventories Inventories consist of restaurant food and other supplies, bakery raw materials and bakery finished goods and are stated at the lower of cost or net realizable value on an average cost basis at the restaurants and on a first-in, first-out basis at the bakeries. Property and Equipment We record property and equipment at cost less accumulated depreciation. Improvements are capitalized while repairs and maintenance costs are expensed as incurred. Depreciation and amortization are calculated using the straight-line method over the estimated useful life of the assets or the reasonably certain lease term, whichever is shorter. Leasehold improvements include the cost of our internal development and construction department. Depreciation and amortization periods are as follows: Buildings and land improvements 30 years Leasehold improvements 10 Furnishings, fixtures and equipment 3 (1) Computer software and equipment 5 years (1) Other than certain types of restaurant equipment with estimated useful lives that equal or exceed the reasonably certain lease term, in which case the reasonably certain lease term is utilized. Gains and losses related to property and equipment disposals are recorded in depreciation and amortization expenses. Impairment of Long-Lived Assets and Lease Termination Expenses We assess the potential impairment of our long-lived assets on an annual basis or whenever events or changes in circumstances indicate the carrying value of the assets or asset group may not be recoverable. Factors considered include, but are not limited to, negative cash flow, significant underperformance relative to historical or projected future operating results, significant changes in the manner in which an asset is being used, an expectation that an asset will be disposed of significantly before the end of its previously estimated useful life and significant negative industry or economic trends. At any given time, we may be monitoring a number of locations, and future impairment charges could be required if individual restaurant performance does not improve or we make the decision to close or relocate a restaurant. Long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Impairment testing is performed at the individual restaurant asset group level, which is inclusive of property and equipment and lease right-of-use assets. Recoverability is assessed by comparing the carrying value of the assets to the undiscounted cash flows expected to be generated by those assets. Impairment losses are measured as the amount by which the carrying values of the assets exceed their fair value, which is determined based on discounted future net cash flows expected to be generated by the assets. In fiscal 2021, we recorded $16.3 million of expense primarily related to the impairment of long-lived assets for three The Cheesecake Factory and two Other restaurants. In fiscal 2020, we recorded $36.2 million of expense primarily related to the impairment of one The Cheesecake Factory, one North Italia, two Other FRC and six Other restaurants, as well as lease termination costs and accelerated depreciation for one The Cheesecake Factory and seven Other restaurants. In fiscal 2019, we recorded $18.2 million of expense related to the impairment of two The Cheesecake Factory and two Other restaurants, as well as lease termination costs and accelerated depreciation for two Other restaurants. These amounts are recorded in impairment of assets and lease terminations on the consolidated statements of income. Intangible Assets Our intangible assets consist of goodwill, indefinite-lived trade names, trademarks and transferable alcoholic beverage licenses and definite-lived licensing agreements and non-transferable alcoholic beverage licenses. Definite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives and reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable based on estimated undiscounted future cash flows. If impaired, the asset or asset group is written down to fair value based on discounted future cash flows. Goodwill and other indefinite-lived intangible assets are not amortized and are tested for impairment annually as of the first day of our fiscal fourth quarter or on an interim basis if events or changes in circumstances between annual tests indicate a potential impairment. First, we determine if, based on qualitative factors, it is more likely than not that an impairment exists. Factors considered include, but are not limited to, historical financial performance, a significant decline in expected future cash flows, unanticipated competition, changes in management or key personnel, macroeconomic and industry conditions and the legal and regulatory environment. If the qualitative assessment indicates that it is more likely than not that an impairment exists, then a quantitative assessment is performed. The quantitative assessments require the use of estimates and assumptions regarding future cash flows and asset fair values. For the goodwill impairment test, the estimated fair value of the reporting units is determined using a blend of the income approach using a discounted cash flow analysis and the market capitalization approach. The fair value of the trade names, trademarks and licensing agreements is estimated using the relief from royalty method. These fair value assessments could change materially if different estimates and assumptions were used. We evaluate the useful lives of our intangible assets, other than goodwill, at each reporting period to determine if they are definite or indefinite-lived. A determination on useful life requires judgments and assumptions regarding the future effects of obsolescence, demand, competition, other economic factors (such as the stability of the industry, legislative action that results in an uncertain or changing regulatory environment and expected changes in distribution channels), the level of required maintenance expenditures and the expected lives of other related groups of assets. (See Note 8 for further discussion of our intangible assets.) Investments in Unconsolidated Affiliates From fiscal 2016 until the Acquisition on October 2, 2019, we held minority equity investments in two restaurant concepts, North Italia and Flower Child, with our percentage of ownership growing to 49% in each concept immediately prior to the Acquisition. Since we held a number of rights with regard to participation in policy-making processes, but did not control these entities prior to the Acquisition, we accounted for these investments under the equity method. Accordingly, we recognized our proportionate share of the reported earnings or losses of these entities on the consolidated statements of income and as an adjustment to our investments on the consolidated balance sheets. We assessed the potential impairment of these equity investments whenever events or changes in circumstances indicated that a decrease in value of the investment had occurred that was other than temporary, in which case we would have recognized the decrease even though it was in excess of what would otherwise be recognized by application of the equity method. No impairment losses were recorded for these assets during fiscal 2019. Revenue Recognition Our revenues consist of sales at our Company-owned restaurants, sales from our bakery operations to our licensees and other third-party customers, royalties from our licensees’ restaurant sales and from consumer packaged goods sales, and licensee development and site fees. Revenues are presented net of sales taxes. Sales tax collected is included in other accrued expenses until the taxes are remitted to the appropriate taxing authorities. Revenues from restaurant sales are recognized when payment is tendered at the point of sale. Revenues from bakery sales are recognized upon transfer of title and risk to customers. Royalty revenues are recognized in the period the related sales occur, utilizing the sale-based royalty exception available under current accounting guidance. Our consumer packaged goods minimum guarantees do not require distinct performance obligations. Therefore, related revenue is recognized on a straight-line basis over the life of the applicable agreements, ranging from one eight We recognize a liability upon the sale of our gift cards and recognize revenue when these gift cards are redeemed in our restaurants. Based on our historical redemption patterns, we can reasonably estimate the amount of gift cards for which redemption is remote, which is referred to as “breakage.” Breakage is recognized over a three-year period in proportion to historical redemption trends and is classified as revenues in our consolidated statements of income. We recognized $6.8 million, $7.6 million and $8.0 million of gift card breakage in fiscal years 2021, 2020 and 2019, respectively. Incremental direct costs related to gift card sales, including commissions and credit card fees, are deferred and recognized in earnings in the same pattern as the related gift card revenue. There were no changes to our accounting for gift card revenue and related costs upon adoption of the new revenue recognition standard. Certain of our promotional programs include multiple element arrangements that incorporate various performance obligations. We allocate revenue using the relative selling price of each performance obligation considering the likelihood of redemption and recognize revenue upon satisfaction of each performance obligation. During fiscal 2021, we deferred revenue of $27.5 million related to promotional programs and recognized $15.2 million of previously deferred revenue related to promotional programs. During fiscal 2020, we deferred revenue of $11.6 million related to promotional programs and recognized $11.2 million of previously deferred revenue related to promotional programs. Leases We currently lease all of our restaurant locations, generally with initial terms of 10 In addition to leases for our restaurant locations, we also lease automobiles and certain equipment that is used in the restaurants, bakeries and corporate office. The leases for our restaurant locations, automobiles and certain restaurant equipment are included in our operating lease assets and liabilities. All other leases are immaterial or qualify for the short-term lease exclusion. The assessment of whether a contract is or contains a lease is performed at contract inception. A lease is defined as a contract that conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined as having both the right to obtain substantially all the economic benefits from the use of the asset and to direct how and for what purpose the asset is used. At lease commencement, we evaluate each material lease and those that don’t qualify for the short-term exclusion to determine its appropriate classification as an operating or finance lease. All of the leases evaluated meet the criteria for classification as operating leases. For restaurant leases that existed as of the adoption of ASC 842, we continued to apply our historical practice of excluding executory costs, and only minimum base rent was factored into the initial operating lease liability and corresponding lease asset. For restaurant leases beginning after adoption of ASC 842, we have elected the single lease component practical expedient. Operating lease assets and liabilities are recorded on the balance sheet at lease commencement based on the present value of minimum base rent and other fixed payments over the reasonably certain lease term. The difference between the amounts we expend for structural costs and the construction contributions received from our landlords is recorded as an adjustment to the operating lease asset. Lease terms include the build-out period for our leases where no rent payments are typically due under the terms of the lease, as well as options to renew when we deem we have significant economic incentive to exercise the extension. When determining if we have a significant economic incentive, we consider relevant factors, such as contractual, asset, entity and market-based considerations. Option periods are included in the lease term for the majority of our leases. Termination rights have not been factored into the lease terms since based on our probability assessment we are reasonably certain we will not terminate our leases. We cannot determine the interest rate implicit in our leases because we do not have access to the lessor’s estimated residual value or the amount of the lessor’s deferred initial direct costs. Therefore, we use our incremental borrowing rate as the discount rate for our leases. Our incremental borrowing rate for a lease is the rate of interest we would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. Because we do not generally borrow on a collateralized basis, we derive an appropriate incremental borrowing rate using the interest rate we pay on our non-collateralized borrowings, adjusted for the amount of the lease payments, the lease term and the effect of designating specific collateral with a value equal to the unpaid lease payments for that lease. We monitor for events or changes in circumstances that require reassessment of our leases. When a reassessment results in the re-measurement of a lease liability, a corresponding adjustment is made to the carrying amount of the operating lease asset. We also assess the potential impairment of our operating lease assets under long-lived asset impairment guidance in ASC 360, Property, Plant, and Equipment: Impairment or disposal on long-lived assets. Rent expense included in our operating lease assets is recognized on a straight-line basis. Contingent rent expense is recorded as incurred to the extent it exceeds minimum base rent per the lease agreement. Variable lease payments, which primarily consist of real estate taxes, common area maintenance charges, insurance cost and other operating expenses, are not included in the operating lease right-of-use asset or operating lease liability balances and are recognized as incurred. The reasonably certain lease term and the incremental borrowing rate for each restaurant location require judgment by management and can impact the classification and accounting for a lease as operating or finance, as well as the value of the operating lease asset and liability. These judgments may produce materially different amounts of rent expense than would be reported if different assumptions were used. Rent expense is included in other operating costs and expenses in the consolidated statements of income. In April 2020, the FASB staff issued interpretive guidance that indicated it would be acceptable for entities to make an election to account for lease concessions related to the effects of the COVID-19 pandemic consistent with how those concessions would be accounted for under Topic 842, as though enforceable rights and obligations for those concessions existed (regardless of whether those enforceable rights and obligations for the concessions explicitly exist in the contract) rather than as a lease modification. Lessees may make the election for any lessor-provided lease concession related to the impact of the COVID-19 pandemic if the concession does not result in a substantial increase in the rights of the lessor or in the obligations of the lessee. During fiscal 2020, we received a number of lease concessions, primarily in the form of rent deferrals or reduction over the period of time when our restaurant business was adversely impacted and have elected to apply the interpretive guidance. This election did not have a material impact on our consolidated financial statements. Three concession agreements did not qualify for this accounting election and were treated as lease modifications. During fiscal 2020, we deferred rent payments of $7.6 million, of which $7.3 million was paid in fiscal 2021. Self-Insurance Liabilities We retain financial responsibility for a significant portion of our risks and associated liabilities with respect to workers’ compensation, general liability, staff member health benefits, employment practices and other insurable risks. The accrued liabilities associated with these programs are based on our estimate of the ultimate costs to settle known claims, as well as claims incurred but not yet reported to us (“IBNR”) as of the balance sheet date and are recorded in other accrued expenses. Our estimated liabilities, which are not discounted, are based on information provided by our insurance brokers and insurers, combined with our judgment regarding a number of assumptions and factors, including the frequency and severity of claims, claims development history, case jurisdiction, applicable legislation and our claims settlement practices. Significant judgment is required to estimate IBNR amounts, as parties have yet to assert such claims. If actual claims trends, including the severity or frequency of claims, differ from our estimates, our financial results could be impacted. Stock-Based Compensation We maintain stock-based incentive plans under which equity awards may be granted to staff members, consultants and non-employee directors. We account for the awards based on fair value measurement guidance and amortize to expense over the vesting period using a straight-line or graded-vesting schedule, as applicable. (See Note 18 for further discussion of our stock-based compensation.) Advertising Costs We expense advertising production costs at the time the advertising first takes place. All other advertising costs are expensed as incurred. Most of our advertising costs are included in other operating costs and expenses and were $18.3 million, $16.0 million and $10.6 million in fiscal 2021, 2020 and 2019, respectively. Preopening Costs Preopening costs include all costs to relocate and compensate restaurant management staff members during the preopening period, costs to recruit and train hourly restaurant staff members, and wages, travel and lodging costs for our opening training team and other support staff members. Also included are expenses for maintaining a roster of trained managers for pending openings, the associated temporary housing and other costs necessary to relocate managers in alignment with future restaurant opening and operating needs, and corporate travel and support activities. We expense preopening costs as incurred. Income Taxes We provide for federal, state and foreign income taxes currently payable and for deferred taxes that result from differences between financial accounting rules and tax laws governing the timing of recognition of various income and expense items. We recognize deferred income tax assets and liabilities for the future tax effects of such temporary differences based on the difference between the financial statement and tax bases of existing assets and liabilities using the statutory rates expected in the years in which the differences are expected to reverse. The effect on deferred taxes of any enacted change in tax rates is recognized in income in the period that includes the enactment date. Income tax credits are recorded as a reduction of tax expense. We routinely evaluate the likelihood of realizing the benefit of our deferred tax assets and record a valuation allowance if, based on all available evidence, we determine that some portion of the tax benefit will not be realized. In evaluating our ability to recover our deferred tax assets within the jurisdictions from which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies (when applicable) and results of recent operations. If we later determine that we would be able to realize our deferred tax assets in excess of their net recorded amount, we adjust the deferred tax asset valuation allowance and reduce income tax expense. We evaluate our exposures associated with our various tax filing positions and recognize a tax benefit from an uncertain tax position only if it is more-likely-than-not that the position will be sustained upon examination by the relevant taxing authorities based solely on its technical merits, taking into account available administrative remedies and litigation. If this threshold is met, we recognize only the portion of the tax benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. We record a liability for any portion of the tax benefit that does not meet these recognition and measurement criteria and we adjust this liability through income tax expense in the period in which the uncertain tax position is effectively settled, when the statute of limitations expires for the relevant taxing authority to examine the tax position or when new information becomes available. We recognize interest and penalties related to uncertain tax positions in income tax expense. Net Income/(Loss) per Share Basic net income/(loss) per share is computed by dividing net income/(loss) available to common stockholders by the weighted-average number of common shares outstanding during the period, reduced by unvested restricted stock awards. At December 28, 2021, December 29, 2020 and December 31, 2019, 2.1 million shares, 2.0 million shares and 1.8 million shares, respectively, of restricted stock issued were unvested and, therefore, excluded from the calculation of basic earnings per share for the fiscal years ended on those dates. Diluted net income/(loss) per share is computed by dividing net income/(loss) available to common stockholders by the weighted-average number of common stock equivalents outstanding for the period. Common stock equivalents for our convertible senior notes due 2026 (“Notes”)are determined by application of the if-converted method, and common stock equivalents for outstanding stock options and restricted stock are determined by the application of the treasury stock method. Holders of our Series A Convertible Preferred Stock, par value $0.01 per share (the “Series A preferred stock”) participated in dividends on an as-converted basis when declared on common stock. As a result, our Series A preferred stock met the definition of a participating security which requires us to apply the two-class method to compute both basic and diluted net income per share. The two-class method is an earnings allocation formula that treats participating securities as having rights to earnings that would otherwise have been available to common stockholders. In addition, as our Series A preferred stock was a participating security, we are required to calculate diluted net income per share under the if-converted method in addition to the two-class method and utilize the most dilutive result. In periods where there is a net loss, no allocation of undistributed net loss to preferred stockholders was performed as the holders of our Series A preferred stock were not contractually obligated to participate in our losses. Fiscal Year 2021 2020 2019 (In thousands, except per share data) Basic net income/(loss) per common share: Net income/(loss) $ 72,373 $ (253,365) $ 127,293 Dividends on Series A preferred stock (18,661) (13,485) — Direct and incremental Series A preferred stock issuance costs — (10,257) — Undistributed earnings allocated to Series A preferred stock (4,581) — — Net income/(loss) available to common stockholders 49,131 (277,107) 127,293 Basic weighted-average shares outstanding 47,529 43,869 43,949 Basic net income/(loss) per common share $ 1.03 $ (6.32) $ 2.90 Diluted net income/(loss) per common share: Net income/(loss) available to common stockholders 49,131 (277,107) 127,293 Reallocation of undistributed earnings to Series A preferred stock 85 — — Net income/(loss) available to common stockholders for diluted EPS 49,216 (277,107) 127,293 Basic weighted-average shares outstanding 47,529 43,869 43,949 Dilutive effect of equity awards (1) 981 — 596 Diluted weighted-average shares outstanding (2) 48,510 43,869 44,545 Diluted net income/(loss) per common share $ 1.01 $ (6.32) $ 2.86 (1) Shares of common stock equivalents of 1.9 million, 4.0 million and 2.3 million for fiscal 2021, 2020 and 2019, respectively, were excluded from the diluted calculation due to their anti-dilutive effect. (2) Our Notes of $345 million were excluded from the diluted calculation due to their anti-dilutive effect. Comprehensive Income/(Loss) Comprehensive income/(loss) includes all changes in equity during a period except those resulting from investment by and distribution to owners. Our comprehensive income consists of net income/(loss), unrealized losses on our interest rate swap and translation gains and losses related to our Canadian restaurant operations. Foreign Currency The Canadian dollar is the functional currency for our Canadian restaurant operations. Revenue and expense accounts are translated into U.S. dollars using the average exchange rates during the reporting period. Assets and liabilities are translated using the exchange rates in effect at the reporting period end date. Equity accounts are translated at historical rates, except for the change in retained earnings which is the result of the income statement translation process. Translation gains and losses are reported as a separate component in our consolidated statements of comprehensive income and would only be realized upon the sale or upon complete or substantially complete liquidation of the business. Gains and losses from foreign currency transactions are recognized in our consolidated statements of income in interest and other expense, net. Recent Accounting Pronouncements In August 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which is intended to simplify the accounting and measurement of convertible instruments and the settlement assessment for contracts in an entity’s own equity. This pronouncement is effective for fiscal years beginning after December 15, 2021 and early adoption is permitted. The guidance allows for either full retrospective adoption or modified retrospective adoption. We adopted this guidance in the first quarter of fiscal 2021 utilizing the modified retrospective method and, accordingly, recorded a $4.8 million cumulative adjustment to retained earnings to reverse previously recorded beneficial conversion features. As further discussed in Note 12, we issued certain Notes during the second quarter of fiscal 2021, and the accounting for these instruments was based on the guidance in ASU 2020-06. Additionally, the impact on diluted earnings per share of the Notes was calculated based on the if-converted method, as further described in Note 1. |
Acquisition Pro Forma Results o
Acquisition Pro Forma Results of Operations | 12 Months Ended |
Dec. 28, 2021 | |
Acquisition Pro Forma Results of Operations | |
Acquisition Pro Forma Results of Operations | 2. Acquisition Pro Forma Results of Operations (unaudited) The following pro forma results of operations for fiscal 2019 give effect to the Acquisition as if it had occurred on January 1, 2019 (in thousands): Revenues $ 2,732,901 Net income 74,949 Net income per share: Basic 1.71 Diluted $ 1.68 The above pro forma information includes combined North Italia and FRC actual revenues and net loss of $92.0 million and $1.5 million, respectively, contributed post acquisition in fiscal 2019. The most significant adjustments included in the pro forma financial information are the elimination of the gain/(loss) on our previously-held equity interests in North Italia and Flower Child, elimination of transaction costs, increased interest expense associated with debt incurred to fund the Acquisition, elimination of historical FRC interest expense and corresponding income tax effects. In the opinion of the Company’s management, the unaudited pro forma financial information includes all significant necessary adjustments that can be factually supported to reflect the effects of the Acquisition and related transactions. The unaudited pro forma financial information is provided for informational purposes only and is not necessarily indicative of what our actual results of operations would have been had the Acquisition and related transactions been completed as of January 1, 2019 or that may be achieved in the future. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 28, 2021 | |
Fair Value Measurements | |
Fair Value Measurements | 3. Fair Value Measurements Fair value measurements are estimated based on valuation techniques and inputs categorized as follows: ● Level 1: Quoted prices in active markets for identical assets or liabilities ● Level 2: Observable inputs other than quoted prices in active markets for identical assets and liabilities ● Level 3: Unobservable inputs in which little or no market activity exists, therefore requiring the Company to develop its own assumptions The following tables present the components and classification of our assets and liabilities that are measured at fair value on a recurring basis (in thousands): December 28, 2021 Level 1 Level 2 Level 3 Assets/(Liabilities) Non-qualified deferred compensation assets $ 92,588 $ — $ — Non-qualified deferred compensation liabilities (92,012) — — Acquisition-related deferred consideration — (21,642) — Acquisition-related contingent consideration and compensation liabilities — — (23,894) December 29, 2020 Level 1 Level 2 Level 3 Assets/(Liabilities) Non-qualified deferred compensation assets $ 83,485 $ — $ — Non-qualified deferred compensation liabilities (83,702) — — Interest rate swap — (4,591) — Acquisition-related deferred consideration — (38,119) — Acquisition-related contingent consideration and compensation liabilities — — (7,465) Changes in the fair value of non-qualified deferred compensation assets and liabilities are recognized in interest and other expense, net in our consolidated statements of income. Changes in the fair value of the acquisition-related deferred and contingent consideration and compensation liabilities are recognized in acquisition-related contingent consideration, compensation and amortization expense/(benefit) in our consolidated statements of income. See Note 14 for information regarding the financial statement classification of fair value changes in our interest rate swap. The following table presents a reconciliation of the beginning and ending amounts of the fair value of the acquisition-related contingent consideration and compensation liabilities categorized as Level 3 (in thousands): Fiscal year ended December 28, 2021 December 29, 2020 Beginning balance $ 7,465 $ 13,218 Change in fair value 16,429 (5,753) Ending balance $ 23,894 $ 7,465 The fair value of the Acquisition-related contingent consideration and compensation liabilities was determined utilizing a Monte Carlo model based on estimated future revenues, margins and volatility factors, among other variables and estimates and has no minimum or maximum payment. The undiscounted range of outcomes per the Monte Carlo model was $0 to $204.0 million at December 28, 2021 and $0 to $32.0 million at December 29, 2020. Results could change materially if different estimates and assumptions were used. The significant increase in the fair value of the contingent consideration and compensation liabilities during fiscal 2021 primarily related to the impact of an amendment to the Acquisition agreement that, among other things, extended the measurement period through fiscal 2026, as well as to an increase in fiscal 2021 revenues and estimated future revenues utilized in the fair value calculation. The fair values of our cash and cash equivalents, accounts receivable, income taxes receivable, other receivables, prepaid expenses, accounts payable, income taxes payable and other accrued expenses approximate their carrying amounts due to their short duration. As of December 28, 2021, we had $345.0 million aggregate principal amount of Notes outstanding. The estimated fair value of the Notes based on a market approach as of December 28, 2021 was approximately $309.8 million and determined based on the estimated or actual bids and offers of the Notes in an over-the-counter market on the last business day of the reporting period. See Note 12 for further discussion of the Notes. |
Accounts and Other Receivables
Accounts and Other Receivables | 12 Months Ended |
Dec. 28, 2021 | |
Accounts and Other Receivables | |
Accounts and Other Receivables | 4. Accounts and Other Receivables Accounts and other receivables consisted of (in thousands): Fiscal year ended December 28, 2021 December 29, 2020 Gift card distributors (1) $ 38,564 $ 26,046 Bakery customers 18,457 16,176 Insurance providers 9,193 8,991 Delivery partner 6,873 8,449 Other (2) 27,417 16,125 Total $ 100,504 $ 75,787 (1) The increase stems from the impact of the COVID-19 pandemic on our business in the prior year . (2) The increase primarily relates to an Employee Retention Credit receivable associated with the CARES Act, as well as timing of tenant improvement and vendor rebate collections. |
Inventories
Inventories | 12 Months Ended |
Dec. 28, 2021 | |
Inventories | |
Inventories | 5. Inventories Inventories consisted of (in thousands): Fiscal year ended December 28, 2021 December 29, 2020 Restaurant food and supplies $ 27,877 $ 24,282 Bakery finished goods and work in progress 7,951 7,861 Bakery raw materials and supplies 7,011 7,145 Total $ 42,839 $ 39,288 |
Prepaid Expenses
Prepaid Expenses | 12 Months Ended |
Dec. 28, 2021 | |
Prepaid Expenses | |
Prepaid Expenses | 6. Prepaid Expenses Prepaid expenses consisted of (in thousands): Fiscal year ended December 28, 2021 December 29, 2020 Gift card contract assets $ 18,468 $ 17,955 Other 17,978 17,355 Total $ 36,446 $ 35,310 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 28, 2021 | |
Property and Equipment | |
Property and Equipment | 7. Property and Equipment Property and equipment consisted of (in thousands): Fiscal year ended December 28, 2021 December 29, 2020 Land and related improvements $ 15,852 $ 15,852 Buildings 44,049 44,049 Leasehold improvements 1,188,848 1,154,400 Furnishings, fixtures and equipment 550,416 530,614 Computer software and equipment 54,853 51,678 Restaurant smallwares 35,285 34,009 Construction in progress 35,071 46,486 Property and equipment, total 1,924,374 1,877,088 Less: Accumulated depreciation (1,182,628) (1,102,951) Property and equipment, net $ 741,746 $ 774,137 Depreciation expenses related to property and equipment for fiscal 2021, 2020 and 2019 were $89.4 million, $91.1 million and $88.0 million, respectively. Repair and maintenance expenses for fiscal 2021, 2020 and 2019 were $71.1 million, $56.6 million and $56.3 million, respectively. Net expense for property and equipment disposals was $1.1 million, $0.6 million and $0.9 million, in fiscal 2021, 2020 and 2019, respectively. |
Intangible Assets, net
Intangible Assets, net | 12 Months Ended |
Dec. 28, 2021 | |
Intangible Assets, net | |
Intangible Assets, net | 8. Intangible Assets, net The following table presents components of intangible assets, net (in thousands): Fiscal year ended December 28, 2021 December 29, 2020 Indefinite-lived intangible assets: Goodwill $ 1,451 $ 1,451 Trade names and trademarks 233,767 233,676 Transferable alcoholic beverage licenses 7,446 7,753 Total indefinite-lived intangible assets 242,664 242,880 Definite-lived intangible assets, net: Licensing agreements 5,690 7,320 Non-transferable alcoholic beverage licenses 3,347 2,960 Total definite-lived intangible assets 9,037 10,280 Total intangible assets, net $ 251,701 $ 253,160 Amortization expenses related to our definite-lived intangible assets were $0.7 million, $0.7 million and $0.3 million for fiscal 2021, 2020 and 2019, respectively. Definite-lived intangible assets will be amortized over one We performed our annual assessment of indefinite-lived intangible assets as of the first day of our fiscal fourth quarter of fiscal 2021 and concluded there was a $1.3 million impairment of our licensing agreements. During the first quarter of fiscal 2020, we determined it was necessary to perform an interim assessment of our goodwill, trade names, trademarks and licensing agreements due to the decrease in our stock price coupled with the dining room closures related to the COVID-19 pandemic and significant decline to the equity value of our peers and overall U.S. stock market. For the goodwill impairment test, the estimated fair value of the reporting units was determined using a blend of the income approach using a discounted cash flow analysis and the market capitalization approach. The fair value of the trade names, trademarks and licensing agreements was estimated using the relief from royalty method. There were a number of estimates and significant judgments made by management in performing these evaluations, such as future unit growth, average unit volumes, cash flows, discount rates and royalty rates. Accordingly, actual results could vary significantly from such estimates. Based on the results of this assessment, we recorded goodwill impairment expense related to the Other FRC, North Italia and Flower Child operating segments of $33.8 million, $27.7 million and $17.9 million, respectively. In addition, we recorded impairment expense of $101.0 million and $2.3 million related to trade names and trademarks, and licensing agreements, respectively. More than half of the total impairment amount was driven by the impact on our market capitalization, with the balance related to lower future cash flow estimates. The reduced projections stemmed primarily from our decision to delay fiscal 2020 unit development, thereby moving our expected unit growth trajectory out by one year. The cash flow estimates assumed that average unit volumes and margins would substantially return to pre-COVID-19 levels by mid-fiscal 2021. We performed our annual assessment of indefinite-lived intangible assets as of the first day of our fiscal fourth quarter of fiscal year 2020 and concluded there was no further impairment of these assets, other than $0.4 million of expense related to transferable alcoholic beverage licenses. |
Other Assets
Other Assets | 12 Months Ended |
Dec. 28, 2021 | |
Other Assets | |
Other Assets | 9. Other Assets Other assets consisted of (in thousands): Fiscal year ended December 28, 2021 December 29, 2020 Non-qualified deferred compensation assets $ 92,588 $ 83,485 Deferred income taxes 57,634 37,885 Other 7,630 6,001 Total $ 157,852 $ 127,371 |
Gift Cards
Gift Cards | 12 Months Ended |
Dec. 28, 2021 | |
Gift Cards | |
Gift Cards | 10. Gift Cards The following tables present information related to gift cards (in thousands): Fiscal year ended December 28, 2021 December 29, 2020 Gift card liabilities: Beginning balance $ 184,655 $ 187,978 Activations 144,892 110,670 Redemptions and breakage (118,365) (113,993) Ending balance $ 211,182 $ 184,655 Fiscal year ended December 28, 2021 December 29, 2020 Gift card contract assets: (1) Beginning balance $ 17,955 $ 23,172 Deferrals 15,852 12,348 Amortization (15,339) (17,565) Ending balance $ 18,468 $ 17,955 (1) Included in prepaid expenses on the consolidated balance sheets. The significant increases in activations, redemptions and breakage during fiscal 2021 compared to fiscal 2020 stem from the impact of the COVID-19 pandemic on our business in the prior year. |
Other Accrued Expenses
Other Accrued Expenses | 12 Months Ended |
Dec. 28, 2021 | |
Other Accrued Expenses | |
Other Accrued Expenses | 11. Other Accrued Expenses Other accrued expenses consisted of (in thousands): Fiscal year ended December 28, 2021 December 29, 2020 Self-insurance $ 67,649 $ 62,567 Salaries and wages (1) 67,489 37,124 Staff member benefits 28,489 26,686 Payroll and sales taxes (2) 22,944 24,316 Deferred consideration (3) 11,250 16,740 Other 41,366 43,028 Total $ 239,187 $ 210,461 (1) The increase in accrued salaries and wages is primarily due to lower labor expenses in the prior year due to impact of the COVID-19 pandemic. (2) The decrease in accrued payroll and sales taxes represents the repayment of certain payroll taxes that were deferred in fiscal 2020 under the CARES Act, partially offset by increased payroll and sales tax accruals due to lower labor and revenues, respectively, in fiscal 2020 due to the impact of the COVID-19 pandemic. (3) The decrease during fiscal 2021 represents payment of deferred consideration per the Acquisition agreement. |
Long-Term Debt
Long-Term Debt | 12 Months Ended |
Dec. 28, 2021 | |
Long-Term Debt | |
Long-Term Debt | 12. Long-Term Debt Revolving Credit Facility On March 30, 2021, we entered into a Second Amendment (the “Second Amendment”) to our existing Third Amended and Restated Loan Agreement, dated July 30, 2019 (as amended by that certain First Amendment, dated as of May 1, 2020 and by the Second Amendment, collectively, the “Amended Credit Agreement”). The Amended Credit Agreement, which terminates on July 30, 2024, consists of a $400 million revolving loan facility (the “Revolving Facility”), including a $40 million sublimit for letters of credit. The Amended Credit Agreement also provides the ability to increase the Revolving Facility in an amount not to exceed (a) during the Covenant Relief Period (as defined below) $125 million and (b) thereafter, $200 million. The funding of any such increases are subject to receipt of lender commitments and satisfaction of customary conditions precedent. Certain of our material subsidiaries have guaranteed our obligations under the Amended Credit Agreement. The Second Amendment, among other things, (i) extended the prior covenant relief period during which the testing of the net adjusted debt to EBITDAR ratio covenant (the “Net Adjusted Leverage Ratio”) and the EBITDAR to interest and rent expense ratio covenant (the “EBITDAR Ratio”) was suspended until the quarter ending December 28, 2021 (the “Covenant Relief Period”), (ii) continued to impose a monthly Liquidity covenant of $100 million (with Liquidity being the sum of (a) unrestricted cash and cash equivalents and (b) the unused portion of the Revolving Facility) until the Company demonstrated compliance with the financial covenants as of the quarter ending December 28, 2021, (iii) provided that the obligations thereunder be secured by a first priority security interest in substantially all of our and any guarantor’s property, with such property to be released upon (a) the termination of the Covenant Relief Period, (b) the Company’s compliance with the Net Adjusted Leverage Ratio and the EBITDAR Ratio as of the quarter ending on March 29, 2022, (c) neither the Company nor any of the guarantors having incurred unsecured debt using certain debt baskets under the Revolving Facility unless such debt is convertible debt or subordinated on customary debt subordination terms reasonably acceptable to the administrative agent and (d) no default or event of default having occurred or continuing, (iv) amended certain negative covenants during the Covenant Relief Period, including certain restrictions on capital expenditures, restricted payments, investments and indebtedness, and (v) permitted the payment of cash dividends with respect to our Series A Convertible Preferred Stock, par value $0.01 per share (“Series A preferred stock”) for each fiscal quarter of 2021 in an amount not to exceed $5.25 million per quarter. Subsequent to the Covenant Relief Period, we are required to maintain (i) a maximum Net Adjusted Leverage Ratio of 4.75 and (ii) a minimum EBITDAR Ratio of 1.9. Borrowings under the Amended Credit Agreement during the Covenant Relief Period bear interest, at our option, at a rate equal to either: (i) the adjusted LIBO Rate (as customarily defined, the “Adjusted LIBO Rate”) plus 2.5%, or (ii) the sum of (a) the highest of (1) the rate of interest last quoted by The Wall Street Journal as the prime rate in effect in the United States, (2) the greater of the rate calculated by the Federal Reserve Bank of New York as the effective federal funds rate or the rate that is published by the Federal Reserve Bank of New York as an overnight bank funding rate, in either case plus 0.5%, and (3) the one-month Adjusted LIBO Rate plus 1.0%, plus (b) 1.5%. During the Covenant Relief Period, we also incurred a fee of 0.4% on the daily amount of unused commitments. Subsequent to the Covenant Relief Period, borrowings under the Amended Credit Agreement will bear interest, at our option, at a rate equal to either: (i) the Adjusted LIBO Rate plus a margin that is based on our net adjusted leverage ratio, or (ii) the sum of (a) the highest of (1) the rate of interest last quoted by The Wall Street Journal as the prime rate in effect in the United States, (2) the greater of the rate calculated by the Federal Reserve Bank of New York as the effective federal funds rate or the rate that is published by the Federal Reserve Bank of New York as an overnight bank funding rate, in either case plus 0.5%, and (3) the one-month Adjusted LIBO Rate plus 1.0%, plus (b) a margin that is based on our net adjusted leverage ratio. Subsequent to the Covenant Relief Period, we will also incur a fee of 0.1% to 0.2% on the daily amount of unused commitments. Letters of credit bear fees that are equivalent to the interest rate margin that is applicable to revolving loans that bear interest at the adjusted LIBO Rate plus other customary fees charged by the issuing bank. We paid certain customary loan origination fees in conjunction with the Amended Credit Agreement. At December 28, 2021, we had net availability for borrowings of $240.1 million, based on a $130.0 million outstanding debt balance and $29.9 million in standby letters of credit. Our Liquidity balance at December 28, 2021 was $443.7 million, and we were in compliance with all covenants under the Amended Credit Agreement in effect at that date. The Amended Credit Agreement contains customary affirmative and negative covenants, including limits on cash dividends and share repurchases with respect to our equity interests, and restrictions on indebtedness, liens, investments, sales of assets, fundamental changes and other matters. The Amended Credit Agreement also contains customary events of default that include, among others, non-payment of principal, interest or fees, violation of covenants, inaccuracy of representations and warranties, bankruptcy and insolvency events, material judgements, cross defaults to material indebtedness and events constituting a change of control. The occurrence of an event of default could result in the termination of commitments under the Revolving Facility, the declaration that all outstanding loans are immediately due and payable in whole or in part and the requirement of cash collateral deposits in respect of outstanding letters of credit. Convertible Senior Notes On June 15, 2021, we issued $345.0 million aggregate principal amount of convertible senior notes due 2026 (“Notes”). The net proceeds from the sale of the Notes were approximately $334.9 million after deducting issuance costs related to the Notes. The Notes are senior, unsecured obligations and are (i) equal in right of payment with our existing and future senior, unsecured indebtedness; (ii) senior in right of payment to our existing and future indebtedness that is expressly subordinated to the Notes; (iii) effectively subordinated to our existing and future secured indebtedness, to the extent of the value of the collateral securing that indebtedness; and (iv) structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables, and (to the extent we are not a holder thereof) preferred equity, if any, of our subsidiaries. The Notes were issued pursuant to, and are governed by, an indenture (the “Base Indenture”) between us and a trustee (“Trustee”), dated as of June 15, 2021, as supplemented by a first supplemental indenture (the “Supplemental Indenture,” and the Base Indenture, as supplemented by the Supplemental Indenture, the “Indenture”), dated as of June 15, 2021, between the Company and the Trustee. The Notes accrue interest at a rate of 0.375% per annum, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2021. The Notes will mature on June 15, 2026, unless earlier repurchased, redeemed or converted. Before February 17, 2026, noteholders will have the right to convert their Notes only upon the occurrence of certain events. From and after February 17, 2026, noteholders may convert their Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date. We will have the right to elect to settle conversions either entirely in cash or in a combination of cash and shares of our common stock. However, upon conversion of any Notes, the conversion value, which will be determined over an “Observation Period” (as defined in the Indenture) consisting of 30 trading days, will be paid in cash up to at least the principal amount of the Notes being converted. The initial conversion rate The Notes are redeemable, in whole or in part (subject to certain limitations described below), at our option at any time, and from time to time, on or after June 20, 2024 and on or before the 30th scheduled trading day immediately before the maturity date, at a cash redemption price equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, but only if the last reported sale price per share of our common stock exceeds 130% of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date we send the related redemption notice; and (ii) the trading day immediately before the date we send such notice. However, we may not redeem less than all of the outstanding Notes unless at least $150.0 million aggregate principal amount of Notes are outstanding and not called for redemption as of the time we send the related redemption notice. In addition, calling any Note for redemption will constitute a Make-Whole Fundamental Change with respect to that Note, in which case the conversion rate applicable to the conversion of that Note will be increased in certain circumstances if it is converted after it is called for redemption. If certain corporate events that constitute a “Fundamental Change” (as defined in the Indenture) occur, then, subject to a limited exception for certain cash mergers, noteholders may require us to repurchase their Notes at a cash repurchase price equal to the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. The definition of Fundamental Change includes certain business combination transactions involving us and certain de-listing events with respect to our common stock. The Notes will have customary provisions relating to the occurrence of “Events of Default” (as defined in the Indenture), which include the following: (i) certain payment defaults on the Notes (which, in the case of a default in the payment of interest on the Notes, will be subject to a 30-day cure period); (ii) our failure to send certain notices under the Indenture within specified periods of time; (iii) our failure to comply with certain covenants in the Indenture relating to our ability to consolidate with or merge with or into, or sell, lease or otherwise transfer, in one transaction or a series of transactions, all or substantially all of our assets and our subsidiaries, taken as a whole, to another person; (iv) a default by us in our other obligations or agreements under the Indenture or the Notes if such default is not cured or waived within 60 days after notice is given in accordance with the Indenture; (v) certain defaults by us or any of our significant subsidiaries with respect to indebtedness for borrowed money of at least $20,000,000; (vi) the rendering of certain judgments against us or any of our significant subsidiaries for the payment of at least $25,000,000, where such judgments are not discharged or stayed within 60 days after the date on which the right to appeal has expired or on which all rights to appeal have been extinguished; and (vii) certain events of bankruptcy, insolvency and reorganization involving us or any of our significant subsidiaries. If an Event of Default involving bankruptcy, insolvency or reorganization events with respect to us (and not solely with respect to a significant subsidiary of ours) occurs, then the principal amount of, and all accrued and unpaid interest on, all of the Notes then outstanding will immediately become due and payable without any further action or notice by any person. If any other Event of Default occurs and is continuing, then, the Trustee, by notice to us, or noteholders of at least 25% of the aggregate principal amount of Notes then outstanding, by notice to us and the Trustee, may declare the principal amount of, and all accrued and unpaid interest on, all of the Notes then outstanding to become due and payable immediately. However, notwithstanding the foregoing, we may elect, at our option, that the sole remedy for an Event of Default relating to certain failures by us to comply with certain reporting covenants in the Indenture consists exclusively of the right of the noteholders to receive special interest on the Notes for up to 180 days at a specified rate per annum not exceeding 0.50% on the principal amount of the Notes. As of December 28, 2021, the Notes had a gross principal balance of $345.0 million and a balance of $336.0 million, net of unamortized issuance costs of $9.0 million. The unamortized balance of issuance costs was recorded as a contra-liability and netted with long-term debt on our condensed consolidated balance sheets. Total amortization expense was $1.1 million fiscal 2021 and was included in interest expense in the consolidated statements of income/(loss). The effective interest rate for the Notes was 0.96% as of December 28, 2021. |
Leases
Leases | 12 Months Ended |
Dec. 28, 2021 | |
Leases | |
Leases | 13. Leases Components of lease expense were as follows (in thousands): Fiscal year 2021 2020 2019 Operating $ 131,834 $ 129,431 $ 112,048 Variable 73,909 58,863 66,689 Short-term 283 414 368 Total $ 206,026 $ 188,708 $ 179,105 Supplemental information related to leases (in thousands, except percentages): Fiscal Year 2021 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 138,715 $ 115,273 Right-of-use assets obtained in exchange for new operating lease liabilities 50,953 46,068 Weighted-average remaining lease term — operating leases (in years) 15.6 16.2 Weighted-average discount rate — operating leases 5.1 % 5.1 % As of December 28, 2021, the maturities of our operating lease liabilities were as follows (in thousands): 2022 $ 135,191 2023 134,044 2024 131,861 2025 131,286 2026 129,088 Thereafter 1,343,279 Total future lease payments 2,004,749 Less: Interest (654,662) Present value of lease liabilities $ 1,350,087 Operating lease liabilities include $816.0 million related to options to extend lease terms that are reasonably certain of being exercised and exclude $151.6 million of legally binding minimum lease payments for leases signed but not yet commenced. |
Derivative
Derivative | 12 Months Ended |
Dec. 28, 2021 | |
Derivative | |
Derivative | 14. Derivative On June 22, 2021, we terminated our interest rate swap agreement at a cost of $2.4 million. This interest rate swap, which would have matured on April 1, 2025, was established to manage our exposure to interest rate movements on our Revolving Facility. The interest rate swap entitled us to receive a variable rate of interest based on the one-month LIBO rate in exchange for the payment of a fixed interest rate of 0.802%. The notional amount of the swap agreement was $280.0 million through March 31, 2023 and $140.0 million from April 1, 2023 through April 1, 2025. The differences between the variable LIBO rate and the interest rate swap rate were settled monthly. Prior to termination, the interest rate swap was determined to be an effective hedging agreement. Our only derivative is the aforementioned interest rate swap, which is designated as a cash flow hedge. Therefore, changes in fair value are initially included as a component of accumulated other comprehensive loss (AOCL) and subsequently reclassified to earnings as interest expense when the hedged forecasted transaction occurs. Any ineffective portion of changes in the fair value are immediately recognized in earnings as interest expense. We classify cash inflows and outflows from derivatives within operating activities on the consolidated statements of cash flows. No gains or losses representing amounts excluded from the assessment of effectiveness were recognized in earnings in fiscal 2021 or fiscal 2020. The following table summarizes the changes in AOCL, net of tax, related to the interest rate swap (in thousands): Fiscal year ended December 28, 2021 December 29, 2020 Beginning balance $ (3,464) $ — Other comprehensive loss before reclassifications 2,514 (4,612) Amounts reclassified from AOCI 950 1,148 Other comprehensive loss, net of tax 3,464 (3,464) Ending balance $ — $ (3,464) We classified this interest rate swap within Level 2 of the valuation hierarchy described in Note 3. Our counterparty under this arrangement provided monthly statements of the market values of this instrument based on significant inputs that were observable or could be derived principally from, or corroborated by, observable market data for substantially the full term of the asset or liability. The impact on the derivative liability for our and the counterparty’s non-performance risk to the derivative trade was considered when measuring the fair value of derivative liability. |
Other Noncurrent Liabilities
Other Noncurrent Liabilities | 12 Months Ended |
Dec. 28, 2021 | |
Other Noncurrent Liabilities | |
Other Noncurrent Liabilities | 15. Other Noncurrent Liabilities Other noncurrent liabilities consisted of (in thousands): Fiscal year ended December 28, 2021 December 29, 2020 Non-qualified deferred compensation liabilities $ 92,012 $ 83,702 Deferred consideration (1) 10,392 21,379 Contingent consideration and compensation liabilities (2) 23,894 7,465 Payroll taxes (3) — 18,308 Other 21,102 18,871 Total $ 147,400 $ 149,725 (1) The decrease during fiscal 2021 represents payment of deferred consideration per the Acquisition agreement. (2) The increase during fiscal 2021 primarily relates to the impact of an amendment to the Acquisition agreement, as well as to an increase in revenues utilized in the fair value calculation. (3) The decrease represents the repayment in fiscal 2021 of certain payroll taxes that were deferred in fiscal 2020 under the CARES Act. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 28, 2021 | |
Commitments and Contingencies | |
Commitments and Contingencies | 16. Commitments and Contingencies Purchase obligations, which include inventory purchases, equipment purchases, information technology and other miscellaneous commitments, were $139.5 million and $91.6 million at December 28, 2021 and December 29, 2020, respectively. These purchase obligations are primarily due within three years and recorded as liabilities when goods are received or services rendered. Real estate obligations, which include construction commitments, net of up-front landlord construction contributions, and legally binding minimum lease payments for leases signed but not yet commenced, were $151.6 million and $130.5 million at December 28, 2021 and December 29, 2020, respectively. The Acquisition agreement included a deferred consideration provision, of which the remaining balance is due in two equal payments of $11.3 million during fiscal 2022 and 2023. This balance includes an indemnity escrow amount of $13.0 million specifically related to the acquired businesses other than North Italia. The Acquisition agreement also included a contingent consideration provision which is payable annually from 2022 through 2027 and is based on achievement of revenue and profitability targets for the FRC brands other than North Italia and Flower Child with considerations made in the event we undergo a change in control or divest any FRC brand (other than North Italia and Flower Child) during the five years after Closing. The liability for this contingent consideration provision was $23.9 million at December 28, 2021. See Note 3 for discussion of the fair value measurement of this liability. We are also required to provide financing to FRC in an amount sufficient to support achievement of these targets during the five years after Closing. As credit guarantees to insurers, we had $29.9 million and $23.4 million at December 28, 2021 and December 29, 2020, respectively, in standby letters of credit related to our self-insurance liabilities. All standby letters of credit are renewable annually. We retain the financial responsibility for a significant portion of our risks and associated liabilities with respect to workers’ compensation, general liability, staff member health benefits, employment practices and other insurable risks. The accrued liabilities associated with these programs are based on our estimate of the ultimate costs to settle known claims, as well as claims incurred but not yet reported to us (“IBNR”) as of the balance sheet date. The total accrued liability for our self-insured plans was $67.6 million and $62.6 million at December 28, 2021 and December 29, 2020, respectively. On June 7, 2018, the California Department of Industrial Relations issued a $4.2 million wage citation jointly against the Company and our vendor that provides janitorial services to eight of our Southern California restaurants, alleging that the janitorial vendor or its subcontractor failed to comply with various provisions of the California Labor Code (Wage Citation Case No. 35-CM-188798-16). The wage citation seeks to recover penalties and other monetary payments on behalf of the employees that worked for this vendor or its subcontractor. On June 28, 2018, we filed an appeal of the wage citation. On June 11, 2020, the DLSE postponed the hearing on the Company’s appeal due to safety concerns related to the COVID-19 pandemic. It is not possible at this time to reasonably estimate the outcome of or any potential liability from this matter and, accordingly, we have not reserved for any potential future payments. On June 22, 2018, the Internal Revenue Service issued a Notice of Deficiency in which they disallowed $8.0 million of our §199 Domestic Production Activities Deduction for tax years 2010, 2011 and 2012. On September 11, 2018 we petitioned the United States Tax Court for a redetermination of the deficiency. The tax court has assigned docket number 18150-18 to our case. On June 30, 2021, the judge issued a ruling on certain procedural motions filed by the parties and set a timeline to conclude discovery and determine if the matter will proceed to trial. The parties have entered into discussions to resolve the matter without trial, and we have reserved an immaterial amount in anticipation of settlement. Within the ordinary course of our business, we are subject to private lawsuits, government audits and investigations, administrative proceedings and other claims. These matters typically involve claims from customers, staff members and others related to operational and employment issues common to the foodservice industry. A number of these claims may exist at any given time, and some of the claims may be pled as class actions. From time to time, we are also involved in lawsuits with respect to infringements of, or challenges to, our registered trademarks and other intellectual property, both domestically and abroad. We could be affected by adverse publicity and litigation costs resulting from such allegations, regardless of whether they are valid or whether we are legally determined to be liable. At this time, we believe that the amount of reasonably possible losses resulting from final disposition of any pending lawsuits, audits, investigations, proceedings and claims will not have a material adverse effect individually or in the aggregate on our financial position, results of operations or liquidity. It is possible, however, that our future results of operations for a particular quarter or fiscal year could be impacted by changes in circumstances relating to lawsuits, audits, proceedings or claims. Legal costs related to such claims are expensed as incurred. We have employment agreements with certain of our executive officers that provide for payments to those officers in the event of an actual or constructive termination of their employment, including in the event of a termination without cause, an acquirer failure to assume or continue equity awards following a change in control of the Company or, otherwise, in the event of death or disability as defined in those agreements. Aggregate payments totaling approximately $3.2 million, excluding accrued potential bonuses of $3.0 million, which are subject to approval by the Compensation Committee, would have been required by those agreements had all such officers terminated their employment for reasons requiring such payments as of December 28, 2021. In addition, the employment agreement with our Chief Executive Officer specifies an annual founder’s retirement benefit of $650,000 for ten years , commencing six months after termination of his full-time employment. |
Stockholders' Equity and Series
Stockholders' Equity and Series A Convertible Preferred Stock | 12 Months Ended |
Dec. 28, 2021 | |
Stockholders' Equity and Series A Convertible Preferred Stock | |
Stockholders' Equity and Series A Convertible Preferred Stock | 17. Stockholders’ Equity and Series A Convertible Preferred Stock Common Stock Issuance On June 15, 2021, we issued 3.125 million shares of our common stock for $175.0 million. In connection with the issuance, we incurred direct and incremental costs of $8.0 million. Common Stock - Dividends and Share Repurchases To preserve liquidity during the COVID-19 pandemic and in conjunction with the terms of our Amended Credit Agreement, in March 2020, our Board suspended the quarterly dividend on our common stock, as well as share repurchases. Prior to this suspension, our Board declared cash dividends of $0.36 per common share for the first quarter of fiscal 2020. Cash dividends of $1.38 per common share were declared during fiscal 2019. Future decisions to pay or to increase or decrease dividends are at the discretion of the Board and will be dependent on our operating performance, financial condition, capital expenditure requirements, limitations on cash distributions pursuant to the terms and conditions of the Amended Credit Agreement and applicable law, and such other factors that the Board considers relevant. (See Note 12 for further discussion of our long-term debt.) Under authorization by our Board to repurchase up to 56.0 million shares of our common stock, we have cumulatively repurchased 53.1 million shares at a total cost of $1,702.5 million through December 28, 2021. During fiscal 2021, 2020 and 2019, we repurchased 0.1 million, 0.1 million and 1.1 million shares of our common stock at a cost of $5.8 million, $3.6 million and $51.0 million, respectively. The share repurchases in fiscal 2021 and 2020 were solely in conjunction with satisfying tax withholding obligations on vested restricted share awards. Our objectives with regard to share repurchases have been to offset the dilution to our shares outstanding that results from equity compensation grants and to supplement our earnings per share growth. Repurchased common stock is reflected as a reduction of stockholders’ equity in treasury stock. Our share repurchase authorization does not have an expiration date, does not require us to purchase a specific number of shares and may be modified, suspended or terminated at any time. Shares may be repurchased in the open market or through privately negotiated transactions at times and prices considered appropriate by us. Future decisions to repurchase shares are at the discretion of the Board and are based on several factors, including current and forecasted operating cash flows, capital needs associated with new restaurant development and maintenance of existing locations, dividend payments, debt levels and cost of borrowing, obligations associated with the Acquisition, our share price and current market conditions. The timing and number of shares repurchased are also subject to legal constraints and financial covenants under the Amended Facility that limit share repurchases based on a defined ratio. (See Note 12 for further discussion of our long-term debt.) Series A Convertible Preferred Stock On April 20, 2020, we issued 200,000 shares of Series A Convertible Preferred Stock, par value $0.01 per share (the “Series A preferred stock”) for an aggregate purchase price of $200 million, or $1,000 per share. In connection with the issuance, we incurred direct and incremental costs of $10.3 million, including financial advisory fees, closing costs, legal expenses, a commitment fee and other offering-related expenses. These direct and incremental costs reduced the Series A preferred stock balance at the issuance date and were recognized through retained earnings on June 30, 2020, the first measurement date. Upon adoption of ASU 2020-06 in the first quarter of fiscal 2021, we recorded a $4.8 million cumulative adjustment to retained earnings to reverse beneficial conversion features recorded during fiscal 2020. The Series A preferred stock ranked senior to our common stock with respect to dividends and distributions on liquidation, winding-up and dissolution upon which each share of Series A preferred stock would be entitled to receive an amount per share equal to the greater of (i) the purchase price (without giving effect to the commitment fee), plus all accrued and unpaid dividends (the “Liquidation Preference”) and (ii) the amount that the holder of the Series A preferred stock would have been entitled to receive at such time if the Series A preferred stock were converted into common stock. On June 15, 2021, we paid $443.8 million in connection with the cash-settled conversion of 150,000 shares of our outstanding Series A preferred stock (effected through a repurchase agreement), which was recognized through additional paid in capital. We also share-settled the conversion of the remaining 50,000 shares of our outstanding Series A convertible preferred stock into 2,400,864 shares of our common stock. These are both based on the then current Liquidation Preference per share of $1,067.42 and conversion price of $22.23. During the first quarter of fiscal 2021, we declared a cash dividend of $5.1 million, or $25.35 per share, on the Series A preferred stock. During the second quarter of fiscal 2021, $13.6 million in payments were made in connection with the conversion of the Series A preferred stock, consisting of $3.9 million, or $19.72 per share of accrued dividends and $9.7 million of an inducement, which is also deemed to be a dividend. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 28, 2021 | |
Stock-Based Compensation | |
Stock-Based Compensation | 18. Stock-Based Compensation We maintain stock-based incentive plans under which incentive stock options, non-qualified stock options, stock appreciation rights, restricted shares and restricted share units may be granted to staff members, consultants and non-employee directors. Our current practice is to issue new shares, rather than treasury shares, upon stock option exercises, for restricted share grants and upon vesting of restricted share units. To date, we have only granted non-qualified stock options, restricted shares and restricted share units of common stock under these plans. On April 5, 2017, our Board approved an amendment to our 2010 Stock Incentive Plan to increase the number of shares of common stock reserved for grant under the plan to 12.7 million shares from 9.2 million shares. This amendment was approved by our stockholders at our annual meeting held on June 8, 2017. On April 4, 2019, our Board adopted The Cheesecake Factory Incorporated Stock Incentive Plan. This plan was approved by our stockholders at our annual meeting held on May 30, 2019. The maximum number of shares of common stock available for grant under this plan is 4.8 million shares plus 1.8 million shares, which, as of May 30, 2019, were available for issuance under our 2010 Stock Incentive Plan, plus 1.9 million shares which may become available for issuance under The Cheesecake Factory Incorporated Stock Incentive Plan due to forfeiture or lapse of awards under our 2010 Stock Incentive Plan following May 30, 2019. Approximately 4.0 million of these shares were available for grant as of December 28, 2021. Stock options generally vest at 20% per year and expire eight three from the date of grant and require that the staff member remains employed in good standing with the Company as of the vesting date. Certain restricted share units granted to executive officers contain performance-based vesting conditions. Performance goals are determined by the Board of Directors. The quantity of units that will vest ranges from 0% to 150% based on the level of achievement of the performance conditions. Equity awards for certain executive officers may vest earlier in the event of a change of control in which the acquirer fails to assume or continue such awards, as defined in the plan, or under certain circumstances described in such executive officers’ respective employment agreements. Compensation expense is recognized only for those options, restricted shares and restricted share units expected to vest, with forfeitures estimated based on our historical experience and future expectations. The following table presents information related to stock-based compensation, net of forfeitures (in thousands): Fiscal Year 2021 2020 2019 Labor expenses $ 8,856 $ 7,753 $ 6,233 Other operating costs and expenses 311 309 274 General and administrative expenses 13,821 13,288 12,866 Total stock-based compensation 22,988 21,350 19,373 Income tax benefit 5,646 5,245 4,760 Total stock-based compensation, net of taxes $ 17,342 $ 16,105 $ 14,613 Capitalized stock-based compensation (1) $ 194 $ 207 $ 226 (1) It is our policy to capitalize the portion of stock-based compensation costs for our internal development department that relates to capitalizable activities such as the design and construction of new restaurants, remodeling existing locations and equipment installation. Capitalized stock-based compensation is included in property and equipment, net on the consolidated balance sheets. Stock Options We did not issue any stock options during fiscal 2021. The weighted-average fair value at the grant date for options issued during fiscal 2020 and 2019 was $6.66 and $9.84 per share, respectively. The fair value of options was estimated utilizing the Black-Scholes valuation model with the following weighted-average assumptions for fiscal 2020 and 2019, respectively: (a) an expected option term of 6.9 years in all fiscal years presented, (b) expected stock price volatility of 25.7% and 26.3%, (c) a risk-free interest rate of 1.5% and 2.6%, and (d) a dividend yield on our stock of 3.6% and 2.9%. The expected option term represents the estimated period of time until exercise and is based on historical experience of similar options, giving consideration to the contractual terms, vesting schedules and expectations of future staff member behavior. Expected stock price volatility is based on a combination of the historical volatility of our stock and the implied volatility of actively traded options on our common stock. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant with an equivalent remaining term. The dividend yield is based on anticipated cash dividend payouts. Stock option activity during fiscal 2021 was as follows: Weighted- Average Weighted- Remaining Average Contractual Aggregate Shares Exercise Price Term Intrinsic Value (1) (In thousands) (Per share) (In years) (In thousands) Outstanding at beginning of year 2,294 $ 45.35 5.0 $ 307 Granted — $ — Exercised (577) $ 42.97 Forfeited or cancelled (1) $ 61.50 Outstanding at end of year 1,716 $ 46.14 5.1 $ — Exercisable at end of year 864 $ 48.97 3.5 $ — (1) Aggregate intrinsic value is calculated as the difference between our closing stock price at fiscal year end and the exercise price, multiplied by the number of in-the-money options and represents the pre-tax amount that would have been received by the option holders, had they all exercised their options on the fiscal year-end date. The total intrinsic value of options exercised during fiscal 2021, 2020 and 2019 was $7.1 million, $0.1 million and $4.3 million, respectively. As of December 28, 2021, total unrecognized stock-based compensation expense related to unvested stock options was $4.7 million, which we expect to recognize over a weighted-average period of approximately 2.5 years. Restricted Shares and Restricted Share Units Restricted share and restricted share unit activity during fiscal 2021 was as follows: Weighted- Average Shares Fair Value (In thousands) (Per share) Outstanding at beginning of year 2,008 $ 43.70 Granted 661 $ 49.57 Vested (320) $ 48.12 Forfeited (226) $ 44.06 Outstanding at end of year 2,123 $ 44.82 Fair value of our restricted shares and restricted share units is based on our closing stock price on the date of grant. The weighted-average fair value for restricted shares and restricted share units issued during fiscal 2021, 2020 and 2019 was $49.57, $37.94 and $45.02 , respectively. The fair value of shares that vested during fiscal 2021, 2020 and 2019 was $15.4 million, $15.6 million and $15.8 million, respectively. As of December 28, 2021, total unrecognized stock-based compensation expense related to unvested restricted shares and restricted share units was $44.0 million, which we expect to recognize over a weighted-average period of approximately 2.9 years. |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 28, 2021 | |
Employee Benefit Plans | |
Employee Benefit Plans | 19. Employee Benefit Plans We have defined contribution benefit plans in accordance with section 401(k) of the Internal Revenue Code (“401(k) Plans”) that are open to our staff members who meet certain compensation and eligibility requirements. Participation in the 401(k) Plans is currently open to staff members from our restaurant concepts, bakery facilities, corporate office and FRC headquarters. The 401(k) Plans allow participating staff members to defer the receipt of a portion of their compensation and contribute such amount to one or more investment options. Our executive officers and a select group of management and/or highly compensated staff members are not eligible to participate in the 401(k) Plans. We currently match in cash a certain percentage of the staff member contributions to the 401(k) Plans and also pay a portion of the administrative costs. Expense recognized in fiscal 2021, 2020 and 2019 was $2.1 million, $1.8 million and $1.2 million, respectively. We have also established non-qualified deferred compensation plans (“Non-Qualified Plans”) for our executive officers and a select group of management and/or highly compensated staff members. The Non-Qualified Plans allow participating staff members to defer the receipt of a portion of their base compensation and bonuses. Non-employee directors may also participate in the Non-Qualified Plans and defer the receipt of their earned director fees. We currently match in cash a certain percentage of the staff member contributions to the Non-Qualified Plans and also pay for the administrative costs. We do not match any contributions made by non-employee directors. Expense recognized in fiscal 2021, 2020 and 2019 was $1.2 million, $1.3 million and $1.2 million, respectively. While we are under no obligation to fund Non-Qualified Plan liabilities (in whole or in part), our current practice is to maintain company-owned life insurance contracts and other investments that are specifically designed to informally fund savings plans of this nature. These contracts are recorded at their cash surrender value as determined by the insurance carrier. Our consolidated balance sheets reflect investments in other assets and our obligation to participants in the Non-Qualified Plans in other noncurrent liabilities. All gains and losses related to our non-qualified deferred compensation assets and liabilities are reflected in interest and other expense, net in our consolidated statements of income. We maintain self-insured medical and dental benefit plans for our staff members. The accrued liabilities associated with these programs are based on our estimate of the ultimate costs to settle known claims as well as claims incurred but not yet reported to us as of the balance sheet date. The accrued liability for our self-insured benefit plans, which is included in other accrued expenses, was $15.3 million and $14.8 million as of December 28, 2021 and December 29, 2020, respectively. (See Note 1 for further discussion of accounting for our self-insurance liabilities.) |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 28, 2021 | |
Income Taxes | |
Income Taxes | 20. Income Taxes The provision for income taxes consisted of the following (in thousands): Fiscal Year 2021 2020 2019 Income/(Loss) before income taxes $ 71,620 $ (356,036) $ 140,334 Income tax (benefit)/provision: Current: Federal $ 15,746 $ (38,414) $ 8,211 State 4,350 2,971 7,027 Total current 20,096 (35,443) 15,238 Deferred: Federal (20,434) (52,607) (3,695) State (415) (14,621) 1,498 Total deferred (20,849) (67,228) (2,197) Total (benefit)/provision $ (753) $ (102,671) $ 13,041 The following reconciles the U.S. federal statutory rate to the effective tax rate: Fiscal Year 2021 2020 2019 U.S. federal statutory rate 21.0 % 21.0 % 21.0 % State and district income taxes, net of federal benefit 4.2 2.6 4.9 Credit for FICA taxes paid on tips (24.2) 2.1 (12.8) Other credits and incentives (4.2) 0.3 (1.4) Impact of net operating loss carryback (6.3) 3.4 — Deferred compensation (2.9) 0.6 (1.7) Equity compensation 0.0 (0.4) (0.2) Uncertain tax positions 10.3 0.0 0.0 Other 1.0 (0.8) (0.5) Effective tax rate (1.1) % 28.8 % 9.3 % On March 27, 2020, the CARES Act was signed into law. Intended to provide economic relief to those impacted by the COVID-19 pandemic, the CARES Act includes provisions allowing for the carryback of net operating losses generated in fiscal years 2018, 2019 and 2020 and technical amendments regarding the expensing of qualified improvement property (“QIP”). During fiscal 2021, we filed a refund claim in the amount of $18.4 million for our fiscal 2020 net operating loss carryback and in January 2022, we filed amended returns for tax years 2018 and 2019 requesting total refunds of $21.3 million for credits released by our fiscal 2020 loss carryback. The effects of these claims were primarily included in our fiscal 2020 provision for income taxes, using estimates based on the best information available at the time we prepared our fiscal 2020 consolidated financial statements, and were adjusted to as-filed actual amounts in our fiscal 2021 provision for income taxes. Except for the increase to our loss carryback resulting from the remittance of all of our deferred FICA taxes as discussed below, these adjustments had a minor effect on our fiscal 2021 provision for income taxes. The CARES Act also allowed eligible employers to defer the remittance of certain FICA taxes otherwise payable during calendar year 2020 and remit half of such deferred amounts on or before December 31, 2021 and half on or before December 31, 2022. We deferred approximately $36.6 million of FICA tax remittances under this provision. We previously planned to remit the first half of the deferred FICA taxes within 8.5 months of year-end 2020 to secure a fiscal 2020 tax deduction and we recorded the effects of that planned remittance in our fiscal 2020 provision for income taxes. Prior to filing our 2020 federal tax return and within 8.5 months of year-end 2020, we remitted all of the deferred FICA taxes, which increased the value of our fiscal 2020 loss carryback by $4.3 million. We recorded the effects of this increased remittance in our fiscal 2021 provision for income taxes. Following are the temporary differences that created our deferred tax assets and liabilities (in thousands): December 28, 2021 December 29, 2020 Deferred tax assets: Staff member benefits $ 36,295 $ 33,419 Insurance reserves 12,897 11,460 Operating lease liability 315,403 319,274 Deferred income 33,075 31,119 Tax credit carryforwards 34,871 37,107 Goodwill 19,103 15,632 Stock-based compensation 10,122 9,937 State and foreign net operating loss carryforwards 3,005 3,536 Derivative asset — 1,409 Other 1,063 1,466 Subtotal 465,834 464,359 Less: Valuation allowance (1,036) (1,041) Total $ 464,798 $ 463,318 Deferred tax liabilities: Property and equipment $ (109,019) $ (124,634) Prepaid expenses (7,312) (7,027) Inventory (7,802) (7,766) Accrued rent (5,087) (4,947) Operating lease asset (277,220) (280,845) Other (724) (214) Total $ (407,164) $ (425,433) Net deferred tax asset/(liability) $ 57,634 $ 37,885 At December 28, 2021 and December 29, 2020, we had $33.6 million and $35.6 million, respectively of U.S. federal credit carryforwards which begin to expire in 2038 and $64.6 million and $79.5 million, respectively, of state net operating loss carryforwards with statutory carryforward periods ranging from 5 years to no expiration period. The earliest year that a material state net operating loss will expire is 2032. At December 28, 2021 and December 29, 2020, we had $1.7 million and $1.9 million, respectively, of state hiring and investment credits which begin to expire in 2024. At both December 28, 2021 and December 29, 2020, we had $2.7 million of foreign net operating loss carryforwards which begin to expire in 2038. We assess the available evidence to estimate if these carryforwards and our other deferred tax assets will be realized. We concluded that a substantial portion of our deferred tax assets are more likely than not to be realized by reversals of existing taxable temporary differences and that forecasted future taxable income, exclusive of reversing temporary differences, will result in realization of a substantial portion of the remainder. We did not need to consider tax planning strategies in this analysis. Based on this evaluation, at both December 28, 2021 and December 29, 2020 we carried a valuation allowance of $1.0 million to reflect the amount that we will likely not realize. This assessment could change if estimates of future taxable income during the carryforward period are revised. The earliest tax year still subject to examination by a significant taxing jurisdiction is 2010. At December 28, 2021, we had a reserve of $4.8 million for uncertain tax positions, all of which would favorably impact our effective income tax rate if resolved in our favor. A reconciliation of the beginning and ending amount of our uncertain tax positions is as follows (in thousands): Fiscal Year 2021 2020 2019 Balance at beginning of year $ 655 $ 704 $ 830 Additions related to prior year tax positions 4,157 — — Additions related to current period tax positions (13) (49) 13 Reductions related to settlements with taxing authorities and lapses of statutes of limitations — — (139) Balance at end of year $ 4,799 $ 655 $ 704 At December 28, 2021 and December 29, 2020, we had $3.6 million and $0.3 million, respectively of accrued interest and penalties related to uncertain tax positions. We believe it is reasonably possible that the balance of uncertain tax positions at December 28, 2021 will decrease by $1.8 million during the next twelve months as a result of an anticipated settlement of our litigation regarding Section 199 deductions. |
Segment Information
Segment Information | 12 Months Ended |
Dec. 28, 2021 | |
Segment Information | |
Segment Information | 21. Segment Information Our operating segments, the businesses for which our management reviews discrete financial information for decision-making purposes, are comprised of The Cheesecake Factory, North Italia, Flower Child, the other FRC brands, our bakery division and Grand Lux Cafe. Based on quantitative thresholds set forth in ASC 280, “Segment Reporting,” The Cheesecake Factory, North Italia and the other FRC brands are the only businesses that meet the criteria of a reportable operating segment. The remaining operating segments (Flower Child, our bakery division and Grand Lux Cafe) along with our businesses that don’t qualify as operating segments (RockSugar Southeast Asian Kitchen and Social Monk Asian Kitchen) are combined in Other. Unallocated corporate expenses, capital expenditures and assets are also combined in Other. Segment information is presented below (in thousands): Fiscal Year (1) 2021 2020 2019 Revenues: The Cheesecake Factory restaurants $ 2,293,225 $ 1,585,008 $ 2,180,882 North Italia 171,901 102,585 35,268 Other FRC 182,175 96,856 39,335 Other 280,239 198,776 227,207 Total $ 2,927,540 $ 1,983,225 $ 2,482,692 Income/(loss) from operations: The Cheesecake Factory restaurants $ 242,599 $ 45,540 $ 258,374 North Italia 8,624 (77,371) 1,608 Other FRC 16,323 (77,026) 5,309 Other (2) (185,228) (238,580) (161,693) Total $ 82,318 $ (347,437) $ 103,598 Depreciation and amortization: The Cheesecake Factory restaurants $ 65,987 $ 67,514 $ 70,971 North Italia 4,078 3,608 829 Other FRC 4,802 4,090 1,037 Other 14,787 16,203 15,296 Total $ 89,654 $ 91,415 $ 88,133 Impairment of assets and lease termination expenses: The Cheesecake Factory restaurants $ 11,904 $ 3,261 $ 8,888 North Italia — 71,782 — Other FRC 1,305 73,049 — Other 4,930 71,241 9,359 Total $ 18,139 $ 219,333 $ 18,247 Preopening costs: The Cheesecake Factory restaurants $ 4,868 $ 4,206 $ 9,967 North Italia 4,510 2,578 1,297 Other FRC 3,188 1,324 49 Other 1,145 2,348 1,836 Total $ 13,711 $ 10,456 $ 13,149 Capital expenditures: The Cheesecake Factory restaurants $ 31,832 $ 33,154 $ 59,045 North Italia 12,539 8,436 2,318 Other FRC 13,524 3,754 5,072 Other 9,048 4,985 7,330 Total $ 66,943 $ 50,329 $ 73,765 Total assets: The Cheesecake Factory restaurants $ 1,653,161 $ 1,671,733 $ 1,701,418 North Italia 270,029 270,218 297,840 Other FRC 276,369 308,866 310,414 Other 598,566 496,237 530,921 Total $ 2,798,125 $ 2,747,054 $ 2,840,593 (1) We completed the acquisition of North Italia and the remaining business of FRC on October 2, 2019. The results of the acquired businesses are included in our consolidated financial statements as of the acquisition date. (2) Fiscal 2021, 2020 and fiscal 2019 include $19.5 million, ($1.2) million and $6.3 million, respectively, of acquisition-related expense/(benefit). These amounts were recorded in acquisition-related costs and acquisition-related contingent consideration, compensation and amortization expense/(benefit) in the consolidated statements of income. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 28, 2021 | |
Subsequent Events | |
Subsequent Events | 22. Subsequent Events None. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 28, 2021 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements include the accounts of The Cheesecake Factory Incorporated and its wholly owned subsidiaries (referred to herein collectively as the “Company,” “we,” “us” and “our”) and are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All intercompany accounts and transactions for the periods presented have been eliminated in consolidation. On October 2, 2019, we completed the acquisition of North Italia and the remaining business of FRC, including Flower Child and all other FRC brands (the “Acquisition”). The results of operations, financial position and cash flows of the acquired businesses are included in our consolidated financial statements as of the acquisition date. We utilize a 52/53-week fiscal year ending on the Tuesday closest to December 31 for financial reporting purposes. Fiscal years 2021, 2020 and 2019 each consisted of 52 weeks and fiscal year 2022 will consist of 53 weeks. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions for the reporting periods covered by the financial statements. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent liabilities. Actual results could differ from these estimates. |
COVID-19 Pandemic | COVID-19 Pandemic Beginning in March 2020, COVID-19 and measures to prevent its spread led to significant disruptions to our business as suggested and mandated social distancing and shelter-in-place orders led to the temporary closure of a number of restaurants across our portfolio while our remaining locations shifted to an off-premise only operating model on an interim basis. Reopening of restaurant dining rooms resumed, generally at reduced capacity, at various points since May 2020. While restrictions on the type of permitted operating model and occupancy capacity may continue to change, currently nearly all of our restaurants are operating with no capacity restrictions on indoor dining. The ongoing effects of COVID-19 and its variants, including, but not limited to, consumer behavior, capacity restrictions, mask and vaccination mandates, wage inflation, our ability to continue to staff our restaurants and disruptions in the supply chain, will determine the impact to our operating results and financial position. The impact to our operations has been most notable during the periods of greatest accelerating COVID-19 case counts. We have incurred and will continue to incur additional costs to address government regulations and the safety of our staff members and customers. |
Cash and Cash Equivalents | Cash and Cash Equivalents Amounts receivable from credit card processors, totaling $17.5 million and $9.1 million at December 28, 2021 and December 29, 2020, respectively, are considered cash equivalents because they are both short-term and highly liquid in nature and are typically converted to cash within three days of the sales transaction. During the last week of fiscal 2020, almost all of our restaurants were operating under capacity restrictions or in an off-premise-only model. Therefore, we processed less sales through credit cards causing a lower receivable in fiscal 2020. Our cash management system provides for the funding of all major bank disbursement accounts on a daily basis as checks are presented for payment. Under this system, outstanding checks are in excess of the cash balances at certain banks, which creates book overdrafts. Book overdrafts are presented as a current liability in other accrued expenses on our consolidated balance sheet. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially subject us to a concentration of credit risk are cash and cash equivalents and receivables. We maintain our day-to-day operating cash balances in non-interest-bearing transaction accounts, which are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. We invest our excess cash in a money market deposit account, which is insured by the FDIC up to $250,000. Although we maintain balances that exceed the federally insured limit, we have not experienced any losses related to this balance, and we believe credit risk to be minimal. We consider the concentration of credit risk for accounts receivable from our bakery customers to be minimal due to the payment histories and general financial condition of our larger bakery accounts. Concentration of credit risk related to other receivables is limited as this balance is comprised primarily of amounts due from our gift card distributors, insurance providers and delivery partner. |
Inventories | Inventories Inventories consist of restaurant food and other supplies, bakery raw materials and bakery finished goods and are stated at the lower of cost or net realizable value on an average cost basis at the restaurants and on a first-in, first-out basis at the bakeries. |
Property and Equipment | Property and Equipment We record property and equipment at cost less accumulated depreciation. Improvements are capitalized while repairs and maintenance costs are expensed as incurred. Depreciation and amortization are calculated using the straight-line method over the estimated useful life of the assets or the reasonably certain lease term, whichever is shorter. Leasehold improvements include the cost of our internal development and construction department. Depreciation and amortization periods are as follows: Buildings and land improvements 30 years Leasehold improvements 10 Furnishings, fixtures and equipment 3 (1) Computer software and equipment 5 years (1) Other than certain types of restaurant equipment with estimated useful lives that equal or exceed the reasonably certain lease term, in which case the reasonably certain lease term is utilized. Gains and losses related to property and equipment disposals are recorded in depreciation and amortization expenses. |
Impairment of Long-Lived Assets and Lease Termination Expenses | Impairment of Long-Lived Assets and Lease Termination Expenses We assess the potential impairment of our long-lived assets on an annual basis or whenever events or changes in circumstances indicate the carrying value of the assets or asset group may not be recoverable. Factors considered include, but are not limited to, negative cash flow, significant underperformance relative to historical or projected future operating results, significant changes in the manner in which an asset is being used, an expectation that an asset will be disposed of significantly before the end of its previously estimated useful life and significant negative industry or economic trends. At any given time, we may be monitoring a number of locations, and future impairment charges could be required if individual restaurant performance does not improve or we make the decision to close or relocate a restaurant. Long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Impairment testing is performed at the individual restaurant asset group level, which is inclusive of property and equipment and lease right-of-use assets. Recoverability is assessed by comparing the carrying value of the assets to the undiscounted cash flows expected to be generated by those assets. Impairment losses are measured as the amount by which the carrying values of the assets exceed their fair value, which is determined based on discounted future net cash flows expected to be generated by the assets. In fiscal 2021, we recorded $16.3 million of expense primarily related to the impairment of long-lived assets for three The Cheesecake Factory and two Other restaurants. In fiscal 2020, we recorded $36.2 million of expense primarily related to the impairment of one The Cheesecake Factory, one North Italia, two Other FRC and six Other restaurants, as well as lease termination costs and accelerated depreciation for one The Cheesecake Factory and seven Other restaurants. In fiscal 2019, we recorded $18.2 million of expense related to the impairment of two The Cheesecake Factory and two Other restaurants, as well as lease termination costs and accelerated depreciation for two Other restaurants. These amounts are recorded in impairment of assets and lease terminations on the consolidated statements of income. |
Intangible Assets | Intangible Assets Our intangible assets consist of goodwill, indefinite-lived trade names, trademarks and transferable alcoholic beverage licenses and definite-lived licensing agreements and non-transferable alcoholic beverage licenses. Definite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives and reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable based on estimated undiscounted future cash flows. If impaired, the asset or asset group is written down to fair value based on discounted future cash flows. Goodwill and other indefinite-lived intangible assets are not amortized and are tested for impairment annually as of the first day of our fiscal fourth quarter or on an interim basis if events or changes in circumstances between annual tests indicate a potential impairment. First, we determine if, based on qualitative factors, it is more likely than not that an impairment exists. Factors considered include, but are not limited to, historical financial performance, a significant decline in expected future cash flows, unanticipated competition, changes in management or key personnel, macroeconomic and industry conditions and the legal and regulatory environment. If the qualitative assessment indicates that it is more likely than not that an impairment exists, then a quantitative assessment is performed. The quantitative assessments require the use of estimates and assumptions regarding future cash flows and asset fair values. For the goodwill impairment test, the estimated fair value of the reporting units is determined using a blend of the income approach using a discounted cash flow analysis and the market capitalization approach. The fair value of the trade names, trademarks and licensing agreements is estimated using the relief from royalty method. These fair value assessments could change materially if different estimates and assumptions were used. We evaluate the useful lives of our intangible assets, other than goodwill, at each reporting period to determine if they are definite or indefinite-lived. A determination on useful life requires judgments and assumptions regarding the future effects of obsolescence, demand, competition, other economic factors (such as the stability of the industry, legislative action that results in an uncertain or changing regulatory environment and expected changes in distribution channels), the level of required maintenance expenditures and the expected lives of other related groups of assets. (See Note 8 for further discussion of our intangible assets.) |
Investments in Unconsolidated Affiliates | Investments in Unconsolidated Affiliates From fiscal 2016 until the Acquisition on October 2, 2019, we held minority equity investments in two restaurant concepts, North Italia and Flower Child, with our percentage of ownership growing to 49% in each concept immediately prior to the Acquisition. Since we held a number of rights with regard to participation in policy-making processes, but did not control these entities prior to the Acquisition, we accounted for these investments under the equity method. Accordingly, we recognized our proportionate share of the reported earnings or losses of these entities on the consolidated statements of income and as an adjustment to our investments on the consolidated balance sheets. We assessed the potential impairment of these equity investments whenever events or changes in circumstances indicated that a decrease in value of the investment had occurred that was other than temporary, in which case we would have recognized the decrease even though it was in excess of what would otherwise be recognized by application of the equity method. No impairment losses were recorded for these assets during fiscal 2019. |
Revenue Recognition | Revenue Recognition Our revenues consist of sales at our Company-owned restaurants, sales from our bakery operations to our licensees and other third-party customers, royalties from our licensees’ restaurant sales and from consumer packaged goods sales, and licensee development and site fees. Revenues are presented net of sales taxes. Sales tax collected is included in other accrued expenses until the taxes are remitted to the appropriate taxing authorities. Revenues from restaurant sales are recognized when payment is tendered at the point of sale. Revenues from bakery sales are recognized upon transfer of title and risk to customers. Royalty revenues are recognized in the period the related sales occur, utilizing the sale-based royalty exception available under current accounting guidance. Our consumer packaged goods minimum guarantees do not require distinct performance obligations. Therefore, related revenue is recognized on a straight-line basis over the life of the applicable agreements, ranging from one eight We recognize a liability upon the sale of our gift cards and recognize revenue when these gift cards are redeemed in our restaurants. Based on our historical redemption patterns, we can reasonably estimate the amount of gift cards for which redemption is remote, which is referred to as “breakage.” Breakage is recognized over a three-year period in proportion to historical redemption trends and is classified as revenues in our consolidated statements of income. We recognized $6.8 million, $7.6 million and $8.0 million of gift card breakage in fiscal years 2021, 2020 and 2019, respectively. Incremental direct costs related to gift card sales, including commissions and credit card fees, are deferred and recognized in earnings in the same pattern as the related gift card revenue. There were no changes to our accounting for gift card revenue and related costs upon adoption of the new revenue recognition standard. Certain of our promotional programs include multiple element arrangements that incorporate various performance obligations. We allocate revenue using the relative selling price of each performance obligation considering the likelihood of redemption and recognize revenue upon satisfaction of each performance obligation. During fiscal 2021, we deferred revenue of $27.5 million related to promotional programs and recognized $15.2 million of previously deferred revenue related to promotional programs. During fiscal 2020, we deferred revenue of $11.6 million related to promotional programs and recognized $11.2 million of previously deferred revenue related to promotional programs. |
Leases | Leases We currently lease all of our restaurant locations, generally with initial terms of 10 In addition to leases for our restaurant locations, we also lease automobiles and certain equipment that is used in the restaurants, bakeries and corporate office. The leases for our restaurant locations, automobiles and certain restaurant equipment are included in our operating lease assets and liabilities. All other leases are immaterial or qualify for the short-term lease exclusion. The assessment of whether a contract is or contains a lease is performed at contract inception. A lease is defined as a contract that conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined as having both the right to obtain substantially all the economic benefits from the use of the asset and to direct how and for what purpose the asset is used. At lease commencement, we evaluate each material lease and those that don’t qualify for the short-term exclusion to determine its appropriate classification as an operating or finance lease. All of the leases evaluated meet the criteria for classification as operating leases. For restaurant leases that existed as of the adoption of ASC 842, we continued to apply our historical practice of excluding executory costs, and only minimum base rent was factored into the initial operating lease liability and corresponding lease asset. For restaurant leases beginning after adoption of ASC 842, we have elected the single lease component practical expedient. Operating lease assets and liabilities are recorded on the balance sheet at lease commencement based on the present value of minimum base rent and other fixed payments over the reasonably certain lease term. The difference between the amounts we expend for structural costs and the construction contributions received from our landlords is recorded as an adjustment to the operating lease asset. Lease terms include the build-out period for our leases where no rent payments are typically due under the terms of the lease, as well as options to renew when we deem we have significant economic incentive to exercise the extension. When determining if we have a significant economic incentive, we consider relevant factors, such as contractual, asset, entity and market-based considerations. Option periods are included in the lease term for the majority of our leases. Termination rights have not been factored into the lease terms since based on our probability assessment we are reasonably certain we will not terminate our leases. We cannot determine the interest rate implicit in our leases because we do not have access to the lessor’s estimated residual value or the amount of the lessor’s deferred initial direct costs. Therefore, we use our incremental borrowing rate as the discount rate for our leases. Our incremental borrowing rate for a lease is the rate of interest we would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. Because we do not generally borrow on a collateralized basis, we derive an appropriate incremental borrowing rate using the interest rate we pay on our non-collateralized borrowings, adjusted for the amount of the lease payments, the lease term and the effect of designating specific collateral with a value equal to the unpaid lease payments for that lease. We monitor for events or changes in circumstances that require reassessment of our leases. When a reassessment results in the re-measurement of a lease liability, a corresponding adjustment is made to the carrying amount of the operating lease asset. We also assess the potential impairment of our operating lease assets under long-lived asset impairment guidance in ASC 360, Property, Plant, and Equipment: Impairment or disposal on long-lived assets. Rent expense included in our operating lease assets is recognized on a straight-line basis. Contingent rent expense is recorded as incurred to the extent it exceeds minimum base rent per the lease agreement. Variable lease payments, which primarily consist of real estate taxes, common area maintenance charges, insurance cost and other operating expenses, are not included in the operating lease right-of-use asset or operating lease liability balances and are recognized as incurred. The reasonably certain lease term and the incremental borrowing rate for each restaurant location require judgment by management and can impact the classification and accounting for a lease as operating or finance, as well as the value of the operating lease asset and liability. These judgments may produce materially different amounts of rent expense than would be reported if different assumptions were used. Rent expense is included in other operating costs and expenses in the consolidated statements of income. In April 2020, the FASB staff issued interpretive guidance that indicated it would be acceptable for entities to make an election to account for lease concessions related to the effects of the COVID-19 pandemic consistent with how those concessions would be accounted for under Topic 842, as though enforceable rights and obligations for those concessions existed (regardless of whether those enforceable rights and obligations for the concessions explicitly exist in the contract) rather than as a lease modification. Lessees may make the election for any lessor-provided lease concession related to the impact of the COVID-19 pandemic if the concession does not result in a substantial increase in the rights of the lessor or in the obligations of the lessee. During fiscal 2020, we received a number of lease concessions, primarily in the form of rent deferrals or reduction over the period of time when our restaurant business was adversely impacted and have elected to apply the interpretive guidance. This election did not have a material impact on our consolidated financial statements. Three concession agreements did not qualify for this accounting election and were treated as lease modifications. During fiscal 2020, we deferred rent payments of $7.6 million, of which $7.3 million was paid in fiscal 2021. |
Self-Insurance Liabilities | Self-Insurance Liabilities We retain financial responsibility for a significant portion of our risks and associated liabilities with respect to workers’ compensation, general liability, staff member health benefits, employment practices and other insurable risks. The accrued liabilities associated with these programs are based on our estimate of the ultimate costs to settle known claims, as well as claims incurred but not yet reported to us (“IBNR”) as of the balance sheet date and are recorded in other accrued expenses. Our estimated liabilities, which are not discounted, are based on information provided by our insurance brokers and insurers, combined with our judgment regarding a number of assumptions and factors, including the frequency and severity of claims, claims development history, case jurisdiction, applicable legislation and our claims settlement practices. Significant judgment is required to estimate IBNR amounts, as parties have yet to assert such claims. If actual claims trends, including the severity or frequency of claims, differ from our estimates, our financial results could be impacted. |
Stock-Based Compensation | Stock-Based Compensation We maintain stock-based incentive plans under which equity awards may be granted to staff members, consultants and non-employee directors. We account for the awards based on fair value measurement guidance and amortize to expense over the vesting period using a straight-line or graded-vesting schedule, as applicable. (See Note 18 for further discussion of our stock-based compensation.) |
Advertising Costs | Advertising Costs We expense advertising production costs at the time the advertising first takes place. All other advertising costs are expensed as incurred. Most of our advertising costs are included in other operating costs and expenses and were $18.3 million, $16.0 million and $10.6 million in fiscal 2021, 2020 and 2019, respectively. |
Preopening Costs | Preopening Costs Preopening costs include all costs to relocate and compensate restaurant management staff members during the preopening period, costs to recruit and train hourly restaurant staff members, and wages, travel and lodging costs for our opening training team and other support staff members. Also included are expenses for maintaining a roster of trained managers for pending openings, the associated temporary housing and other costs necessary to relocate managers in alignment with future restaurant opening and operating needs, and corporate travel and support activities. We expense preopening costs as incurred. |
Income Taxes | Income Taxes We provide for federal, state and foreign income taxes currently payable and for deferred taxes that result from differences between financial accounting rules and tax laws governing the timing of recognition of various income and expense items. We recognize deferred income tax assets and liabilities for the future tax effects of such temporary differences based on the difference between the financial statement and tax bases of existing assets and liabilities using the statutory rates expected in the years in which the differences are expected to reverse. The effect on deferred taxes of any enacted change in tax rates is recognized in income in the period that includes the enactment date. Income tax credits are recorded as a reduction of tax expense. We routinely evaluate the likelihood of realizing the benefit of our deferred tax assets and record a valuation allowance if, based on all available evidence, we determine that some portion of the tax benefit will not be realized. In evaluating our ability to recover our deferred tax assets within the jurisdictions from which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies (when applicable) and results of recent operations. If we later determine that we would be able to realize our deferred tax assets in excess of their net recorded amount, we adjust the deferred tax asset valuation allowance and reduce income tax expense. We evaluate our exposures associated with our various tax filing positions and recognize a tax benefit from an uncertain tax position only if it is more-likely-than-not that the position will be sustained upon examination by the relevant taxing authorities based solely on its technical merits, taking into account available administrative remedies and litigation. If this threshold is met, we recognize only the portion of the tax benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. We record a liability for any portion of the tax benefit that does not meet these recognition and measurement criteria and we adjust this liability through income tax expense in the period in which the uncertain tax position is effectively settled, when the statute of limitations expires for the relevant taxing authority to examine the tax position or when new information becomes available. We recognize interest and penalties related to uncertain tax positions in income tax expense. |
Net Income/(Loss) per Share | Net Income/(Loss) per Share Basic net income/(loss) per share is computed by dividing net income/(loss) available to common stockholders by the weighted-average number of common shares outstanding during the period, reduced by unvested restricted stock awards. At December 28, 2021, December 29, 2020 and December 31, 2019, 2.1 million shares, 2.0 million shares and 1.8 million shares, respectively, of restricted stock issued were unvested and, therefore, excluded from the calculation of basic earnings per share for the fiscal years ended on those dates. Diluted net income/(loss) per share is computed by dividing net income/(loss) available to common stockholders by the weighted-average number of common stock equivalents outstanding for the period. Common stock equivalents for our convertible senior notes due 2026 (“Notes”)are determined by application of the if-converted method, and common stock equivalents for outstanding stock options and restricted stock are determined by the application of the treasury stock method. Holders of our Series A Convertible Preferred Stock, par value $0.01 per share (the “Series A preferred stock”) participated in dividends on an as-converted basis when declared on common stock. As a result, our Series A preferred stock met the definition of a participating security which requires us to apply the two-class method to compute both basic and diluted net income per share. The two-class method is an earnings allocation formula that treats participating securities as having rights to earnings that would otherwise have been available to common stockholders. In addition, as our Series A preferred stock was a participating security, we are required to calculate diluted net income per share under the if-converted method in addition to the two-class method and utilize the most dilutive result. In periods where there is a net loss, no allocation of undistributed net loss to preferred stockholders was performed as the holders of our Series A preferred stock were not contractually obligated to participate in our losses. Fiscal Year 2021 2020 2019 (In thousands, except per share data) Basic net income/(loss) per common share: Net income/(loss) $ 72,373 $ (253,365) $ 127,293 Dividends on Series A preferred stock (18,661) (13,485) — Direct and incremental Series A preferred stock issuance costs — (10,257) — Undistributed earnings allocated to Series A preferred stock (4,581) — — Net income/(loss) available to common stockholders 49,131 (277,107) 127,293 Basic weighted-average shares outstanding 47,529 43,869 43,949 Basic net income/(loss) per common share $ 1.03 $ (6.32) $ 2.90 Diluted net income/(loss) per common share: Net income/(loss) available to common stockholders 49,131 (277,107) 127,293 Reallocation of undistributed earnings to Series A preferred stock 85 — — Net income/(loss) available to common stockholders for diluted EPS 49,216 (277,107) 127,293 Basic weighted-average shares outstanding 47,529 43,869 43,949 Dilutive effect of equity awards (1) 981 — 596 Diluted weighted-average shares outstanding (2) 48,510 43,869 44,545 Diluted net income/(loss) per common share $ 1.01 $ (6.32) $ 2.86 (1) Shares of common stock equivalents of 1.9 million, 4.0 million and 2.3 million for fiscal 2021, 2020 and 2019, respectively, were excluded from the diluted calculation due to their anti-dilutive effect. (2) Our Notes of $345 million were excluded from the diluted calculation due to their anti-dilutive effect. |
Comprehensive Income/(Loss) | Comprehensive Income/(Loss) Comprehensive income/(loss) includes all changes in equity during a period except those resulting from investment by and distribution to owners. Our comprehensive income consists of net income/(loss), unrealized losses on our interest rate swap and translation gains and losses related to our Canadian restaurant operations. |
Foreign Currency | Foreign Currency The Canadian dollar is the functional currency for our Canadian restaurant operations. Revenue and expense accounts are translated into U.S. dollars using the average exchange rates during the reporting period. Assets and liabilities are translated using the exchange rates in effect at the reporting period end date. Equity accounts are translated at historical rates, except for the change in retained earnings which is the result of the income statement translation process. Translation gains and losses are reported as a separate component in our consolidated statements of comprehensive income and would only be realized upon the sale or upon complete or substantially complete liquidation of the business. Gains and losses from foreign currency transactions are recognized in our consolidated statements of income in interest and other expense, net. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which is intended to simplify the accounting and measurement of convertible instruments and the settlement assessment for contracts in an entity’s own equity. This pronouncement is effective for fiscal years beginning after December 15, 2021 and early adoption is permitted. The guidance allows for either full retrospective adoption or modified retrospective adoption. We adopted this guidance in the first quarter of fiscal 2021 utilizing the modified retrospective method and, accordingly, recorded a $4.8 million cumulative adjustment to retained earnings to reverse previously recorded beneficial conversion features. As further discussed in Note 12, we issued certain Notes during the second quarter of fiscal 2021, and the accounting for these instruments was based on the guidance in ASU 2020-06. Additionally, the impact on diluted earnings per share of the Notes was calculated based on the if-converted method, as further described in Note 1. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 28, 2021 | |
Summary of Significant Accounting Policies | |
Schedule of depreciation and amortization periods | Buildings and land improvements 30 years Leasehold improvements 10 Furnishings, fixtures and equipment 3 (1) Computer software and equipment 5 years (1) Other than certain types of restaurant equipment with estimated useful lives that equal or exceed the reasonably certain lease term, in which case the reasonably certain lease term is utilized. |
Schedule of basic and diluted net income per share | Fiscal Year 2021 2020 2019 (In thousands, except per share data) Basic net income/(loss) per common share: Net income/(loss) $ 72,373 $ (253,365) $ 127,293 Dividends on Series A preferred stock (18,661) (13,485) — Direct and incremental Series A preferred stock issuance costs — (10,257) — Undistributed earnings allocated to Series A preferred stock (4,581) — — Net income/(loss) available to common stockholders 49,131 (277,107) 127,293 Basic weighted-average shares outstanding 47,529 43,869 43,949 Basic net income/(loss) per common share $ 1.03 $ (6.32) $ 2.90 Diluted net income/(loss) per common share: Net income/(loss) available to common stockholders 49,131 (277,107) 127,293 Reallocation of undistributed earnings to Series A preferred stock 85 — — Net income/(loss) available to common stockholders for diluted EPS 49,216 (277,107) 127,293 Basic weighted-average shares outstanding 47,529 43,869 43,949 Dilutive effect of equity awards (1) 981 — 596 Diluted weighted-average shares outstanding (2) 48,510 43,869 44,545 Diluted net income/(loss) per common share $ 1.01 $ (6.32) $ 2.86 (1) Shares of common stock equivalents of 1.9 million, 4.0 million and 2.3 million for fiscal 2021, 2020 and 2019, respectively, were excluded from the diluted calculation due to their anti-dilutive effect. (2) Our Notes of $345 million were excluded from the diluted calculation due to their anti-dilutive effect. |
Acquisition Pro Forma Results_2
Acquisition Pro Forma Results of Operations (Tables) | 12 Months Ended |
Dec. 28, 2021 | |
Acquisition Pro Forma Results of Operations | |
Schedule of Pro Forma Results of Operations (unaudited) | The following pro forma results of operations for fiscal 2019 give effect to the Acquisition as if it had occurred on January 1, 2019 (in thousands): Revenues $ 2,732,901 Net income 74,949 Net income per share: Basic 1.71 Diluted $ 1.68 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 28, 2021 | |
Fair Value Measurements | |
Schedule of fair value of assets and liabilities measured on recurring basis | The following tables present the components and classification of our assets and liabilities that are measured at fair value on a recurring basis (in thousands): December 28, 2021 Level 1 Level 2 Level 3 Assets/(Liabilities) Non-qualified deferred compensation assets $ 92,588 $ — $ — Non-qualified deferred compensation liabilities (92,012) — — Acquisition-related deferred consideration — (21,642) — Acquisition-related contingent consideration and compensation liabilities — — (23,894) December 29, 2020 Level 1 Level 2 Level 3 Assets/(Liabilities) Non-qualified deferred compensation assets $ 83,485 $ — $ — Non-qualified deferred compensation liabilities (83,702) — — Interest rate swap — (4,591) — Acquisition-related deferred consideration — (38,119) — Acquisition-related contingent consideration and compensation liabilities — — (7,465) |
Schedule of fair value of the acquisition-related contingent consideration | The following table presents a reconciliation of the beginning and ending amounts of the fair value of the acquisition-related contingent consideration and compensation liabilities categorized as Level 3 (in thousands): Fiscal year ended December 28, 2021 December 29, 2020 Beginning balance $ 7,465 $ 13,218 Change in fair value 16,429 (5,753) Ending balance $ 23,894 $ 7,465 |
Accounts and Other Receivables
Accounts and Other Receivables (Tables) | 12 Months Ended |
Dec. 28, 2021 | |
Accounts and Other Receivables | |
Schedule of accounts and other receivables | Accounts and other receivables consisted of (in thousands): Fiscal year ended December 28, 2021 December 29, 2020 Gift card distributors (1) $ 38,564 $ 26,046 Bakery customers 18,457 16,176 Insurance providers 9,193 8,991 Delivery partner 6,873 8,449 Other (2) 27,417 16,125 Total $ 100,504 $ 75,787 (1) The increase stems from the impact of the COVID-19 pandemic on our business in the prior year . (2) The increase primarily relates to an Employee Retention Credit receivable associated with the CARES Act, as well as timing of tenant improvement and vendor rebate collections. |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 28, 2021 | |
Inventories | |
Schedule of inventories | Inventories consisted of (in thousands): Fiscal year ended December 28, 2021 December 29, 2020 Restaurant food and supplies $ 27,877 $ 24,282 Bakery finished goods and work in progress 7,951 7,861 Bakery raw materials and supplies 7,011 7,145 Total $ 42,839 $ 39,288 |
Prepaid Expenses (Tables)
Prepaid Expenses (Tables) | 12 Months Ended |
Dec. 28, 2021 | |
Prepaid Expenses | |
Schedule of prepaid expenses | Prepaid expenses consisted of (in thousands): Fiscal year ended December 28, 2021 December 29, 2020 Gift card contract assets $ 18,468 $ 17,955 Other 17,978 17,355 Total $ 36,446 $ 35,310 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 28, 2021 | |
Property and Equipment | |
Schedule of property and equipment | Property and equipment consisted of (in thousands): Fiscal year ended December 28, 2021 December 29, 2020 Land and related improvements $ 15,852 $ 15,852 Buildings 44,049 44,049 Leasehold improvements 1,188,848 1,154,400 Furnishings, fixtures and equipment 550,416 530,614 Computer software and equipment 54,853 51,678 Restaurant smallwares 35,285 34,009 Construction in progress 35,071 46,486 Property and equipment, total 1,924,374 1,877,088 Less: Accumulated depreciation (1,182,628) (1,102,951) Property and equipment, net $ 741,746 $ 774,137 |
Intangible Assets, net (Tables)
Intangible Assets, net (Tables) | 12 Months Ended |
Dec. 28, 2021 | |
Intangible Assets, net | |
Schedule of components of intangible assets, net | The following table presents components of intangible assets, net (in thousands): Fiscal year ended December 28, 2021 December 29, 2020 Indefinite-lived intangible assets: Goodwill $ 1,451 $ 1,451 Trade names and trademarks 233,767 233,676 Transferable alcoholic beverage licenses 7,446 7,753 Total indefinite-lived intangible assets 242,664 242,880 Definite-lived intangible assets, net: Licensing agreements 5,690 7,320 Non-transferable alcoholic beverage licenses 3,347 2,960 Total definite-lived intangible assets 9,037 10,280 Total intangible assets, net $ 251,701 $ 253,160 |
Other Assets (Tables)
Other Assets (Tables) | 12 Months Ended |
Dec. 28, 2021 | |
Other Assets | |
Schedule of other assets | Other assets consisted of (in thousands): Fiscal year ended December 28, 2021 December 29, 2020 Non-qualified deferred compensation assets $ 92,588 $ 83,485 Deferred income taxes 57,634 37,885 Other 7,630 6,001 Total $ 157,852 $ 127,371 |
Gift Cards (Tables)
Gift Cards (Tables) | 12 Months Ended |
Dec. 28, 2021 | |
Gift Cards | |
Schedule of gift card liabilities | The following tables present information related to gift cards (in thousands): Fiscal year ended December 28, 2021 December 29, 2020 Gift card liabilities: Beginning balance $ 184,655 $ 187,978 Activations 144,892 110,670 Redemptions and breakage (118,365) (113,993) Ending balance $ 211,182 $ 184,655 |
Schedule of gift card contract assets | Fiscal year ended December 28, 2021 December 29, 2020 Gift card contract assets: (1) Beginning balance $ 17,955 $ 23,172 Deferrals 15,852 12,348 Amortization (15,339) (17,565) Ending balance $ 18,468 $ 17,955 (1) Included in prepaid expenses on the consolidated balance sheets. |
Other Accrued Expenses (Tables)
Other Accrued Expenses (Tables) | 12 Months Ended |
Dec. 28, 2021 | |
Other Accrued Expenses | |
Schedule of other accrued expenses | Other accrued expenses consisted of (in thousands): Fiscal year ended December 28, 2021 December 29, 2020 Self-insurance $ 67,649 $ 62,567 Salaries and wages (1) 67,489 37,124 Staff member benefits 28,489 26,686 Payroll and sales taxes (2) 22,944 24,316 Deferred consideration (3) 11,250 16,740 Other 41,366 43,028 Total $ 239,187 $ 210,461 (1) The increase in accrued salaries and wages is primarily due to lower labor expenses in the prior year due to impact of the COVID-19 pandemic. (2) The decrease in accrued payroll and sales taxes represents the repayment of certain payroll taxes that were deferred in fiscal 2020 under the CARES Act, partially offset by increased payroll and sales tax accruals due to lower labor and revenues, respectively, in fiscal 2020 due to the impact of the COVID-19 pandemic. (3) The decrease during fiscal 2021 represents payment of deferred consideration per the Acquisition agreement. |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 28, 2021 | |
Leases | |
Schedule of components for lease expense | Components of lease expense were as follows (in thousands): Fiscal year 2021 2020 2019 Operating $ 131,834 $ 129,431 $ 112,048 Variable 73,909 58,863 66,689 Short-term 283 414 368 Total $ 206,026 $ 188,708 $ 179,105 |
Schedule of supplemental cash flow information related to leases | Supplemental information related to leases (in thousands, except percentages): Fiscal Year 2021 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 138,715 $ 115,273 Right-of-use assets obtained in exchange for new operating lease liabilities 50,953 46,068 Weighted-average remaining lease term — operating leases (in years) 15.6 16.2 Weighted-average discount rate — operating leases 5.1 % 5.1 % |
Maturity of operating lease liabilities | As of December 28, 2021, the maturities of our operating lease liabilities were as follows (in thousands): 2022 $ 135,191 2023 134,044 2024 131,861 2025 131,286 2026 129,088 Thereafter 1,343,279 Total future lease payments 2,004,749 Less: Interest (654,662) Present value of lease liabilities $ 1,350,087 |
Derivative (Tables)
Derivative (Tables) | 12 Months Ended |
Dec. 28, 2021 | |
Derivative | |
Schedule of changes in AOCL, net of tax, related to the interest rate swap | The following table summarizes the changes in AOCL, net of tax, related to the interest rate swap (in thousands): Fiscal year ended December 28, 2021 December 29, 2020 Beginning balance $ (3,464) $ — Other comprehensive loss before reclassifications 2,514 (4,612) Amounts reclassified from AOCI 950 1,148 Other comprehensive loss, net of tax 3,464 (3,464) Ending balance $ — $ (3,464) |
Other Noncurrent Liabilities (T
Other Noncurrent Liabilities (Tables) | 12 Months Ended |
Dec. 28, 2021 | |
Other Noncurrent Liabilities | |
Schedule of other noncurrent liabilities | Other noncurrent liabilities consisted of (in thousands): Fiscal year ended December 28, 2021 December 29, 2020 Non-qualified deferred compensation liabilities $ 92,012 $ 83,702 Deferred consideration (1) 10,392 21,379 Contingent consideration and compensation liabilities (2) 23,894 7,465 Payroll taxes (3) — 18,308 Other 21,102 18,871 Total $ 147,400 $ 149,725 (1) The decrease during fiscal 2021 represents payment of deferred consideration per the Acquisition agreement. (2) The increase during fiscal 2021 primarily relates to the impact of an amendment to the Acquisition agreement, as well as to an increase in revenues utilized in the fair value calculation. (3) The decrease represents the repayment in fiscal 2021 of certain payroll taxes that were deferred in fiscal 2020 under the CARES Act. |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 28, 2021 | |
Stock-Based Compensation | |
Schedule of information related to stock-based compensation, net of forfeitures | The following table presents information related to stock-based compensation, net of forfeitures (in thousands): Fiscal Year 2021 2020 2019 Labor expenses $ 8,856 $ 7,753 $ 6,233 Other operating costs and expenses 311 309 274 General and administrative expenses 13,821 13,288 12,866 Total stock-based compensation 22,988 21,350 19,373 Income tax benefit 5,646 5,245 4,760 Total stock-based compensation, net of taxes $ 17,342 $ 16,105 $ 14,613 Capitalized stock-based compensation (1) $ 194 $ 207 $ 226 (1) It is our policy to capitalize the portion of stock-based compensation costs for our internal development department that relates to capitalizable activities such as the design and construction of new restaurants, remodeling existing locations and equipment installation. Capitalized stock-based compensation is included in property and equipment, net on the consolidated balance sheets. |
Schedule of stock option activity | Weighted- Average Weighted- Remaining Average Contractual Aggregate Shares Exercise Price Term Intrinsic Value (1) (In thousands) (Per share) (In years) (In thousands) Outstanding at beginning of year 2,294 $ 45.35 5.0 $ 307 Granted — $ — Exercised (577) $ 42.97 Forfeited or cancelled (1) $ 61.50 Outstanding at end of year 1,716 $ 46.14 5.1 $ — Exercisable at end of year 864 $ 48.97 3.5 $ — (1) Aggregate intrinsic value is calculated as the difference between our closing stock price at fiscal year end and the exercise price, multiplied by the number of in-the-money options and represents the pre-tax amount that would have been received by the option holders, had they all exercised their options on the fiscal year-end date. |
Schedule of restricted share and restricted share unit activity | Weighted- Average Shares Fair Value (In thousands) (Per share) Outstanding at beginning of year 2,008 $ 43.70 Granted 661 $ 49.57 Vested (320) $ 48.12 Forfeited (226) $ 44.06 Outstanding at end of year 2,123 $ 44.82 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 28, 2021 | |
Income Taxes | |
Schedule of provision for income taxes | The provision for income taxes consisted of the following (in thousands): Fiscal Year 2021 2020 2019 Income/(Loss) before income taxes $ 71,620 $ (356,036) $ 140,334 Income tax (benefit)/provision: Current: Federal $ 15,746 $ (38,414) $ 8,211 State 4,350 2,971 7,027 Total current 20,096 (35,443) 15,238 Deferred: Federal (20,434) (52,607) (3,695) State (415) (14,621) 1,498 Total deferred (20,849) (67,228) (2,197) Total (benefit)/provision $ (753) $ (102,671) $ 13,041 |
Schedule of reconciles the U.S. federal statutory rate to the effective tax rate | Fiscal Year 2021 2020 2019 U.S. federal statutory rate 21.0 % 21.0 % 21.0 % State and district income taxes, net of federal benefit 4.2 2.6 4.9 Credit for FICA taxes paid on tips (24.2) 2.1 (12.8) Other credits and incentives (4.2) 0.3 (1.4) Impact of net operating loss carryback (6.3) 3.4 — Deferred compensation (2.9) 0.6 (1.7) Equity compensation 0.0 (0.4) (0.2) Uncertain tax positions 10.3 0.0 0.0 Other 1.0 (0.8) (0.5) Effective tax rate (1.1) % 28.8 % 9.3 % |
Schedule of deferred tax assets and liabilities | Following are the temporary differences that created our deferred tax assets and liabilities (in thousands): December 28, 2021 December 29, 2020 Deferred tax assets: Staff member benefits $ 36,295 $ 33,419 Insurance reserves 12,897 11,460 Operating lease liability 315,403 319,274 Deferred income 33,075 31,119 Tax credit carryforwards 34,871 37,107 Goodwill 19,103 15,632 Stock-based compensation 10,122 9,937 State and foreign net operating loss carryforwards 3,005 3,536 Derivative asset — 1,409 Other 1,063 1,466 Subtotal 465,834 464,359 Less: Valuation allowance (1,036) (1,041) Total $ 464,798 $ 463,318 Deferred tax liabilities: Property and equipment $ (109,019) $ (124,634) Prepaid expenses (7,312) (7,027) Inventory (7,802) (7,766) Accrued rent (5,087) (4,947) Operating lease asset (277,220) (280,845) Other (724) (214) Total $ (407,164) $ (425,433) Net deferred tax asset/(liability) $ 57,634 $ 37,885 |
Schedule of reconciliation of our uncertain tax positions | Fiscal Year 2021 2020 2019 Balance at beginning of year $ 655 $ 704 $ 830 Additions related to prior year tax positions 4,157 — — Additions related to current period tax positions (13) (49) 13 Reductions related to settlements with taxing authorities and lapses of statutes of limitations — — (139) Balance at end of year $ 4,799 $ 655 $ 704 |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 28, 2021 | |
Segment Information | |
Schedule of segment information | Segment information is presented below (in thousands): Fiscal Year (1) 2021 2020 2019 Revenues: The Cheesecake Factory restaurants $ 2,293,225 $ 1,585,008 $ 2,180,882 North Italia 171,901 102,585 35,268 Other FRC 182,175 96,856 39,335 Other 280,239 198,776 227,207 Total $ 2,927,540 $ 1,983,225 $ 2,482,692 Income/(loss) from operations: The Cheesecake Factory restaurants $ 242,599 $ 45,540 $ 258,374 North Italia 8,624 (77,371) 1,608 Other FRC 16,323 (77,026) 5,309 Other (2) (185,228) (238,580) (161,693) Total $ 82,318 $ (347,437) $ 103,598 Depreciation and amortization: The Cheesecake Factory restaurants $ 65,987 $ 67,514 $ 70,971 North Italia 4,078 3,608 829 Other FRC 4,802 4,090 1,037 Other 14,787 16,203 15,296 Total $ 89,654 $ 91,415 $ 88,133 Impairment of assets and lease termination expenses: The Cheesecake Factory restaurants $ 11,904 $ 3,261 $ 8,888 North Italia — 71,782 — Other FRC 1,305 73,049 — Other 4,930 71,241 9,359 Total $ 18,139 $ 219,333 $ 18,247 Preopening costs: The Cheesecake Factory restaurants $ 4,868 $ 4,206 $ 9,967 North Italia 4,510 2,578 1,297 Other FRC 3,188 1,324 49 Other 1,145 2,348 1,836 Total $ 13,711 $ 10,456 $ 13,149 Capital expenditures: The Cheesecake Factory restaurants $ 31,832 $ 33,154 $ 59,045 North Italia 12,539 8,436 2,318 Other FRC 13,524 3,754 5,072 Other 9,048 4,985 7,330 Total $ 66,943 $ 50,329 $ 73,765 Total assets: The Cheesecake Factory restaurants $ 1,653,161 $ 1,671,733 $ 1,701,418 North Italia 270,029 270,218 297,840 Other FRC 276,369 308,866 310,414 Other 598,566 496,237 530,921 Total $ 2,798,125 $ 2,747,054 $ 2,840,593 (1) We completed the acquisition of North Italia and the remaining business of FRC on October 2, 2019. The results of the acquired businesses are included in our consolidated financial statements as of the acquisition date. (2) Fiscal 2021, 2020 and fiscal 2019 include $19.5 million, ($1.2) million and $6.3 million, respectively, of acquisition-related expense/(benefit). These amounts were recorded in acquisition-related costs and acquisition-related contingent consideration, compensation and amortization expense/(benefit) in the consolidated statements of income. |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) | 12 Months Ended | ||
Dec. 28, 2021USD ($)restaurant | Dec. 29, 2020USD ($) | Dec. 31, 2019 | |
Description of Business | |||
Number of company-owned upscale, casual, full-service dining restaurants | 306 | ||
Number of International locations operating under licensing agreements | 29 | ||
Number of bakery production facilities | 2 | ||
Basis of Presentation | |||
Length of fiscal year | 364 days | 364 days | 364 days |
Cash and Cash Equivalents | |||
Amounts receivable from credit card processors | $ | $ 17,500,000 | $ 9,100,000 | |
Conversion period, credit card sales | 3 days | ||
Concentration of Credit Risk | |||
Maximum amount of money market deposit insured by FDIC | $ | $ 250,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands | Dec. 28, 2021 | Mar. 30, 2021 | Dec. 29, 2020 |
Recent Accounting Pronouncements | |||
Retained Earnings (Accumulated Deficit) | $ 1,169,150 | $ 4,800 | $ 1,110,087 |
Cumulative effect of adopting ASU 2020-06 | |||
Recent Accounting Pronouncements | |||
Retained Earnings (Accumulated Deficit) | $ 4,800 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Property and Equipment (Details) | 12 Months Ended |
Dec. 28, 2021 | |
Buildings and land improvements | |
Property and equipment | |
Useful life | 30 years |
Leasehold improvements | Minimum | |
Property and equipment | |
Useful life | 10 years |
Leasehold improvements | Maximum | |
Property and equipment | |
Useful life | 30 years |
Furnishings, fixtures and equipment | Minimum | |
Property and equipment | |
Useful life | 3 years |
Furnishings, fixtures and equipment | Maximum | |
Property and equipment | |
Useful life | 15 years |
Computer software and equipment | |
Property and equipment | |
Useful life | 5 years |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Impairment of Long-Lived Assets and Lease Terminations (Details) $ in Thousands | 12 Months Ended | ||
Dec. 28, 2021USD ($) | Dec. 29, 2020USD ($)restaurant | Dec. 31, 2019USD ($)restaurant | |
Impairment of long-lived assets and lease terminations | |||
Impairment of assets and lease termination expenses | $ 18,139 | $ 219,333 | $ 18,247 |
The Cheesecake Factory restaurants | |||
Impairment of long-lived assets and lease terminations | |||
Impairment of assets and lease termination expenses | 11,904 | $ 3,261 | $ 8,888 |
Number of restaurants for which impairment and lease termination expenses were recorded | restaurant | 1 | 2 | |
Three, The Cheesecake Factory restaurants | |||
Impairment of long-lived assets and lease terminations | |||
Impairment of assets and lease termination expenses | 16,300 | $ 36,200 | $ 18,200 |
North Italia | |||
Impairment of long-lived assets and lease terminations | |||
Impairment of assets and lease termination expenses | $ 71,782 | ||
Number of restaurants for which impairment and lease termination expenses were recorded | restaurant | 1 | ||
Other FRC | |||
Impairment of long-lived assets and lease terminations | |||
Impairment of assets and lease termination expenses | 1,305 | $ 73,049 | |
Number of restaurants for which impairment and lease termination expenses were recorded | restaurant | 2 | ||
Other | |||
Impairment of long-lived assets and lease terminations | |||
Impairment of assets and lease termination expenses | $ 4,930 | $ 71,241 | $ 9,359 |
Number of restaurants for which impairment and lease termination expenses were recorded | restaurant | 6 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Investments in Unconsolidated Affiliates (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019USD ($) | Jan. 02, 2018USD ($) | Oct. 01, 2019 | |
Investments in unconsolidated affiliates | |||
Ownership percentage | 49.00% | ||
Impairment of assets | $ 0 | $ 0 | |
North Italia and Flower Child | |||
Investments in unconsolidated affiliates | |||
Equity investments in number of restaurants | 2 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2021 | Dec. 29, 2020 | Dec. 31, 2019 | |
Revenue Recognition | |||
Gift card breakage period | 3 years | ||
Revenue recognized | $ 6.8 | $ 7.6 | $ 8 |
Promotional programs | |||
Revenue Recognition | |||
Deferred revenue | 27.5 | 11.6 | |
Deferred revenue recognized | $ 15.2 | $ 11.2 | |
Minimum | |||
Revenue Recognition | |||
Revenue recognition agreement term | 1 year | ||
Revenue recognition for development and site fees over the life of the applicable licensee agreements (in years) | 8 years | ||
Maximum | |||
Revenue Recognition | |||
Revenue recognition agreement term | 3 years | ||
Revenue recognition for development and site fees over the life of the applicable licensee agreements (in years) | 30 years |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Leases (Details) $ in Millions | 12 Months Ended | |
Dec. 28, 2021USD ($)agreementlease | Dec. 29, 2020USD ($) | |
Number of leases that have been executed but have not yet commenced | lease | 2 | |
Renewal term of leases, Restaurant locations | 5 years | |
Number of lease concession agreements that were treated as lease modifications | agreement | 3 | |
Deferred rent payments | $ | $ 7.3 | $ 7.6 |
Minimum | ||
Initial term of leases, Restaurant locations | 10 years | |
Percentage of revenue | 2.00% | |
Maximum | ||
Initial term of leases, Restaurant locations | 20 years | |
Percentage of revenue | 10.00% |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Advertising Costs (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 28, 2021 | Dec. 29, 2020 | Dec. 31, 2019 | |
Advertising Costs | |||
Advertising costs | $ 18.3 | $ 16 | $ 10.6 |
Summary of Significant Accou_12
Summary of Significant Accounting Policies - Net (loss) income per share (Details) - USD ($) $ / shares in Units, shares in Thousands | Jun. 15, 2021 | Dec. 28, 2021 | Dec. 29, 2020 | Dec. 31, 2019 |
Basic net (loss)/income per common share: | ||||
Net income/(loss) | $ 72,373,000 | $ (253,365,000) | $ 127,293,000 | |
Dividends on Series A preferred stock | (18,661,000) | (13,485,000) | ||
Direct and incremental preferred stock issuance costs | $ (8,000,000) | (10,257,000) | ||
Undistributed earnings allocated to Series A preferred stock | (4,581,000) | |||
Net income/(loss) available to common stockholders | $ 49,131,000 | $ (277,107,000) | $ 127,293,000 | |
Basic weighted-average shares outstanding | 47,529 | 43,869 | 43,949 | |
Basic net (loss)/income per common share | $ 1.03 | $ (6.32) | $ 2.90 | |
Diluted net (loss)/income per common share: | ||||
Net income/(loss) available to common stockholders | $ 49,131,000 | $ (277,107,000) | $ 127,293,000 | |
Reallocation of undistributed earnings to Series A preferred stock | 85,000 | |||
Net income/(loss) available to common stockholders for diluted EPS | $ 49,216,000 | $ (277,107,000) | $ 127,293,000 | |
Basic weighted-average shares outstanding | 47,529 | 43,869 | 43,949 | |
Dilutive effect of equity awards | 981 | 596 | ||
Diluted weighted-average shares outstanding | 48,510 | 43,869 | 44,545 | |
Diluted net income/(loss) per common share (in dollars per share) | $ 1.01 | $ (6.32) | $ 2.86 | |
Temporary Equity, Par or Stated Value Per Share | $ 0.01 | $ 0.01 | ||
Aggregate principal amount | $ 1,000 | |||
Convertible Senior Notes | ||||
Diluted net (loss)/income per common share: | ||||
Aggregate principal amount | $ 345,000,000 | $ 345,000,000 | ||
Restricted Shares and Restricted Share Units | ||||
Diluted net (loss)/income per common share: | ||||
Antidilutive securities excluded from calculation of basic earnings per share (in shares) | 2,100 | 2,000 | 1,800 | |
Common Stock | ||||
Diluted net (loss)/income per common share: | ||||
Antidilutive securities excluded from calculation of basic earnings per share (in shares) | 1,900 | 4,000 | 2,300 |
Summary of Significant Accou_13
Summary of Significant Accounting Policies - Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands | Dec. 28, 2021 | Mar. 30, 2021 | Dec. 29, 2020 |
Recent Accounting Pronouncements | |||
Retained earnings | $ 1,169,150 | $ 4,800 | $ 1,110,087 |
Cumulative effect of adopting ASU 2020-06 | |||
Recent Accounting Pronouncements | |||
Retained earnings | $ 4,800 |
Acquisition Pro Forma Results_3
Acquisition Pro Forma Results of Operations - FRC Agreements (Details) - USD ($) $ in Millions | Oct. 02, 2019 | Dec. 28, 2021 | Dec. 29, 2020 |
FRC Agreements | |||
Deferred consideration | $ 11.3 | ||
Minimum | |||
FRC Agreements | |||
Undiscounted range of outcomes per the Monte Carlo model | 0 | $ 0 | |
Maximum | |||
FRC Agreements | |||
Undiscounted range of outcomes per the Monte Carlo model | $ 204 | $ 32 | |
FRC Acquisition | |||
FRC Agreements | |||
Number of years for providing finance to achieve the targets | 5 years | ||
North Italia Acquisition | |||
FRC Agreements | |||
Amount in escrow account | $ 13 |
Acquisition - Fair value of the
Acquisition - Fair value of the assets acquired and liabilities assumed (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 29, 2020 | Dec. 31, 2019 | Dec. 28, 2021 | |
Business Acquisition [Line Items] | |||
Goodwill. | $ 1,451 | $ 1,451 | |
Acquisition-related costs | $ 2,699 | $ 5,270 |
Acquisition - Pro Forma Results
Acquisition - Pro Forma Results of Operations (unaudited) (Details) $ / shares in Units, $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($)$ / shares | |
Business Acquisition [Line Items] | |
Revenues | $ 2,732,901 |
Net income | $ 74,949 |
Basic (in dollars per share) | $ / shares | $ 1.71 |
Diluted (in dollars per share) | $ / shares | $ 1.68 |
FRC Acquisition | |
Business Acquisition [Line Items] | |
Net income | $ 1,500 |
North Italia Acquisition | |
Business Acquisition [Line Items] | |
Net income | $ 92,000 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) | 12 Months Ended | ||
Dec. 28, 2021 | Dec. 29, 2020 | Jun. 15, 2021 | |
Assets (Liabilities) at fair value | |||
Non-qualified deferred compensation liabilities | $ (92,012,000) | $ (83,702,000) | |
Deferred consideration related to Acquisition | (10,392,000) | (21,379,000) | |
Aggregate principal amount | 1,000 | ||
Convertible Senior Notes | |||
Assets (Liabilities) at fair value | |||
Aggregate principal amount | 345,000,000 | $ 345,000,000 | |
Fair value of debt | 309,800,000 | ||
Minimum | |||
Assets (Liabilities) at fair value | |||
Undiscounted range of outcomes per the Monte Carlo model | 0 | 0 | |
Maximum | |||
Assets (Liabilities) at fair value | |||
Undiscounted range of outcomes per the Monte Carlo model | 204,000,000 | 32,000,000 | |
Level 1 | |||
Assets (Liabilities) at fair value | |||
Non-qualified deferred compensation assets | (92,588,000) | 83,485,000 | |
Non-qualified deferred compensation liabilities | (92,012,000) | (83,702,000) | |
Level 2 | |||
Assets (Liabilities) at fair value | |||
Interest rate swap | (4,591,000) | ||
Acquisition-related deferred consideration | (21,642,000) | (38,119,000) | |
Level 3 | |||
Assets (Liabilities) at fair value | |||
Acquisition-related contingent consideration and compensation liabilities | $ (23,894,000) | $ (7,465,000) |
Fair Value Measurements - Begin
Fair Value Measurements - Beginning and ending amounts of the fair value (Details) - Level 3 - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 28, 2021 | Dec. 29, 2020 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Beginning balance | $ 7,465 | $ 13,218 |
Change in fair value | 16,429 | (5,753) |
Ending balance | $ 23,894 | $ 7,465 |
Accounts and Other Receivable_2
Accounts and Other Receivables (Details) - USD ($) $ in Thousands | Dec. 28, 2021 | Dec. 29, 2020 | |
Accounts and Other Receivables | |||
Gift card distributors | [1] | $ 38,564 | $ 26,046 |
Bakery customers | 18,457 | 16,176 | |
Insurance providers | 9,193 | 8,991 | |
Delivery partner | 6,873 | 8,449 | |
Other | [2] | 27,417 | 16,125 |
Total | $ 100,504 | $ 75,787 | |
[1] | The increase stems from the impact of the COVID-19 pandemic on our business in the prior year | ||
[2] | The increase primarily relates to an Employee Retention Credit receivable associated with the CARES Act, as well as timing of tenant improvement and vendor rebate collections. |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Dec. 28, 2021 | Dec. 29, 2020 |
Inventories | ||
Restaurant food and supplies | $ 27,877 | $ 24,282 |
Bakery finished goods and work in progress | 7,951 | 7,861 |
Bakery raw materials and supplies | 7,011 | 7,145 |
Total | $ 42,839 | $ 39,288 |
Prepaid Expenses (Details)
Prepaid Expenses (Details) - USD ($) $ in Thousands | Dec. 28, 2021 | Dec. 29, 2020 |
Prepaid Expenses | ||
Gift card contract assets | $ 18,468 | $ 17,955 |
Other | 17,978 | 17,355 |
Total | $ 36,446 | $ 35,310 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 28, 2021 | Dec. 29, 2020 | Dec. 31, 2019 | |
Property and equipment | |||
Property and equipment, total | $ 1,924,374 | $ 1,877,088 | |
Less: Accumulated depreciation | (1,182,628) | (1,102,951) | |
Property and equipment, net | 741,746 | 774,137 | |
Depreciation expenses | 89,400 | 91,100 | $ 88,000 |
Repair and maintenance expenses | 71,100 | 56,600 | 56,300 |
Net expense on property and equipment disposals | 1,100 | 600 | $ 900 |
Land and related improvements | |||
Property and equipment | |||
Property and equipment, total | 15,852 | 15,852 | |
Buildings | |||
Property and equipment | |||
Property and equipment, total | 44,049 | 44,049 | |
Leasehold improvements | |||
Property and equipment | |||
Property and equipment, total | 1,188,848 | 1,154,400 | |
Furnishings, fixtures and equipment | |||
Property and equipment | |||
Property and equipment, total | 550,416 | 530,614 | |
Computer software and equipment | |||
Property and equipment | |||
Property and equipment, total | 54,853 | 51,678 | |
Restaurant smallwares | |||
Property and equipment | |||
Property and equipment, total | 35,285 | 34,009 | |
Construction in progress | |||
Property and equipment | |||
Property and equipment, total | $ 35,071 | $ 46,486 |
Intangible Assets, net (Details
Intangible Assets, net (Details) - USD ($) $ in Thousands | Sep. 29, 2021 | Dec. 28, 2021 | Dec. 29, 2020 | Dec. 31, 2019 |
Goodwill and Other Intangible Assets | ||||
Goodwill. | $ 1,451 | $ 1,451 | ||
Other intangible assets | ||||
Total indefinite-lived intangible assets | 242,664 | 242,880 | ||
Total definite-lived intangible assets | 9,037 | 10,280 | ||
Total intangible assets, net | 251,701 | 253,160 | ||
Amortization expenses related to our definite-lived intangible assets | $ 700 | 700 | $ 300 | |
Minimum | ||||
Other intangible assets | ||||
Definite-lived intangible assets, amortization period | 1 year | |||
Maximum | ||||
Other intangible assets | ||||
Definite-lived intangible assets, amortization period | 54 years | |||
Licensing agreements | ||||
Other intangible assets | ||||
Total gross carrying amount | $ 5,690 | 7,320 | ||
Impairment expense | $ 1,300 | 2,300 | ||
Non-transferable alcoholic beverage licenses | ||||
Other intangible assets | ||||
Total gross carrying amount | 3,347 | 2,960 | ||
Trade names and trademarks | ||||
Other intangible assets | ||||
Total indefinite-lived intangible assets | 233,767 | 233,676 | ||
Impairment expense | 101,000 | |||
Transferable alcoholic beverage licenses | ||||
Other intangible assets | ||||
Total indefinite-lived intangible assets | 7,446 | $ 7,753 | ||
Impairment expense | $ 400 | |||
Other FRC | Goodwill | ||||
Other intangible assets | ||||
Goodwill, Impairment Loss | 33,800 | |||
North Italia | Goodwill | ||||
Other intangible assets | ||||
Goodwill, Impairment Loss | 27,700 | |||
Flower Child | Goodwill | ||||
Other intangible assets | ||||
Goodwill, Impairment Loss | $ 17,900 |
Other Assets (Details)
Other Assets (Details) - USD ($) $ in Thousands | Dec. 28, 2021 | Dec. 29, 2020 |
Other Assets | ||
Non-qualified deferred compensation assets | $ 92,588 | $ 83,485 |
Deferred income taxes | 57,634 | 37,885 |
Other | 7,630 | 6,001 |
Total | $ 157,852 | $ 127,371 |
Gift Cards (Details)
Gift Cards (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 28, 2021 | Dec. 29, 2020 | |
Gift card liabilities: | ||
Beginning balance | $ 184,655 | $ 187,978 |
Activations | 144,892 | 110,670 |
Redemptions and breakage | (118,365) | (113,993) |
Ending balance | 211,182 | 184,655 |
Gift card contract assets: | ||
Beginning balance | 17,955 | 23,172 |
Deferrals | 15,852 | 12,348 |
Amortization | (15,339) | (17,565) |
Ending balance | $ 18,468 | $ 17,955 |
Other Accrued Expenses (Details
Other Accrued Expenses (Details) - USD ($) $ in Thousands | Dec. 28, 2021 | Dec. 29, 2020 |
Other Accrued Expenses | ||
Self-insurance | $ 67,649 | $ 62,567 |
Salaries and wages | 67,489 | 37,124 |
Staff member benefits | 28,489 | 26,686 |
Payroll and sales taxes | 22,944 | 24,316 |
Deferred consideration | 11,250 | 16,740 |
Other | 41,366 | 43,028 |
Total | $ 239,187 | $ 210,461 |
Long-Term Debt - Revolving Cred
Long-Term Debt - Revolving Credit Facility (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||
Jul. 30, 2019 | Dec. 28, 2021USD ($)$ / shares | Dec. 28, 2021USD ($)$ / shares | Mar. 30, 2021USD ($) | Dec. 29, 2020USD ($) | |
Long-Term Debt | |||||
Outstanding letters of credit | $ 29,900 | $ 29,900 | $ 23,400 | ||
Minimum Amount of Liquidity to be Maintained at the End of Each Calendar Month | 100,000 | ||||
Cash dividends | 5,070 | ||||
Net availability for borrowings | $ 240,100 | $ 240,100 | |||
Net Adjusted Leverage Ratio | 130 | 130 | |||
Liquidity Balance | $ 443,700 | $ 443,700 | |||
Series A Convertible Preferred stock | Revolving Credit Facility [Member] | |||||
Long-Term Debt | |||||
Shares Issued, Price Per Share | $ / shares | $ 0.01 | $ 0.01 | |||
Maximum | Series A Convertible Preferred stock | Revolving Credit Facility [Member] | |||||
Long-Term Debt | |||||
Cash dividends | $ 5,250 | ||||
New Facility | Maximum | |||||
Long-Term Debt | |||||
Financial covenant, Net Adjusted Leverage Ratio | 4.75 | ||||
New Facility | Minimum | |||||
Long-Term Debt | |||||
Financial covenant, EBITDAR Ratio | 1.9 | ||||
New Facility | Adjusted LIBO Rate | |||||
Long-Term Debt | |||||
Credit facility, basis spread on variable rate, (as a percent) | 2.50% | ||||
Commitment fee (as a percent) | 0.40% | ||||
New Facility | Federal Funds Effective Rate | |||||
Long-Term Debt | |||||
Credit facility, basis spread on variable rate, (as a percent) | 0.50% | ||||
New Facility | Base Rate Member | |||||
Long-Term Debt | |||||
Credit facility, basis spread on variable rate, (as a percent) | 1.50% | ||||
New Facility | One-month Adjusted LIBO Rate | |||||
Long-Term Debt | |||||
Credit facility, basis spread on variable rate, (as a percent) | 1.00% | ||||
Second Amendment | Revolving Credit Facility [Member] | |||||
Long-Term Debt | |||||
Maximum commitments | $ 400,000 | ||||
Maximum commitments, letter of credit sub-facility | 40,000 | ||||
Amended Credit Agreement [Member] | Revolving Credit Facility [Member] | |||||
Long-Term Debt | |||||
Revolving facility | 200,000 | ||||
Amended Credit Agreement [Member] | Maximum | Revolving Credit Facility [Member] | |||||
Long-Term Debt | |||||
Revolving facility | $ 125,000 | ||||
Commitment fee (as a percent) | 0.20% | ||||
Amended Credit Agreement [Member] | Minimum | Revolving Credit Facility [Member] | |||||
Long-Term Debt | |||||
Commitment fee (as a percent) | 0.10% | ||||
Amended Credit Agreement [Member] | Federal Funds Effective Rate | Revolving Credit Facility [Member] | |||||
Long-Term Debt | |||||
Credit facility, floating interest rate basis | federal funds rate | ||||
Credit facility, basis spread on variable rate, (as a percent) | 0.50% | ||||
Amended Credit Agreement [Member] | One-month Adjusted LIBO Rate | Revolving Credit Facility [Member] | |||||
Long-Term Debt | |||||
Credit facility, floating interest rate basis | one-month Adjusted LIBO Rate | ||||
Credit facility, basis spread on variable rate, (as a percent) | 1.00% |
Long-Term Debt - Convertible Se
Long-Term Debt - Convertible Senior Notes (Details) | Jun. 15, 2021USD ($) | Dec. 28, 2021USD ($)D$ / shares |
Debt Instrument [Line Items] | ||
Aggregate principal amount of debt issued | $ 1,000 | |
Net proceeds from the sale of the Notes | 345,000,000 | |
Convertible Senior Notes | ||
Debt Instrument [Line Items] | ||
Aggregate principal amount of debt issued | $ 345,000,000 | $ 345,000,000 |
Net proceeds from the sale of the Notes | $ 334,900,000 | |
Interest rate | 0.375% | |
Conversion ratio | 0.0127551 | |
Observation period | 30 days | |
Conversion price | $ / shares | $ 78.40 | |
Threshold percentage of stock price trigger | 130.00% | |
Number of threshold trading days | D | 20 | |
Number of consecutive threshold trading days | D | 30 | |
Minimum threshold aggregate principal amount of Notes outstanding and not called for redemption | $ 150,000,000 | |
Cure period in case of a default in the payment of interest | 30 days | |
Threshold cured period in case of default in other obligations | 60 days | |
Threshold limit of default with respect to indebtedness for borrowed money | $ 20,000,000 | |
Threshold limit for occurrence of default in case of rendering of certain judgments against to company or on its subsidiaries | $ 25,000,000 | |
Minimum percentage of notice holders can give notice in case of default | 25 | |
Maximum period of which noteholders to receive special interest as a remedy in case of default | 180 days | |
Special Interest Rate as a default remedy | 0.50 | |
Gross principal balance outstanding | $ 345,000,000 | |
Outstanding debt balance | 336,000,000 | |
unamortized debt issuance costs | 9,000,000 | |
Amortized debt issuance costs | $ 1,100,000 | |
Effective interest rate | 0.96% |
Leases (Details)
Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 28, 2021 | Dec. 29, 2020 | Dec. 31, 2019 | |
Leases | |||
Operating | $ 131,834 | $ 129,431 | $ 112,048 |
Variable | 73,909 | 58,863 | 66,689 |
Short-term | 283 | 414 | 368 |
Total | 206,026 | 188,708 | $ 179,105 |
Lessee Operating Lease Description | |||
Operating cash flows from operating leases | 138,715 | 115,273 | |
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 50,953 | $ 46,068 | |
Weighted-average remaining lease term - operating leases (in years) | 15 years 7 months 6 days | 16 years 2 months 12 days | |
Weighted-average discount rate - operating leases | 5.10% | 5.10% |
Leases - Maturity of operating
Leases - Maturity of operating lease liabilities (Details) $ in Thousands | 12 Months Ended |
Dec. 28, 2021USD ($) | |
Operating Leases | |
2022 | $ 135,191 |
2023 | 134,044 |
2024 | 131,861 |
2025 | 131,286 |
2026 | 129,088 |
Thereafter | 1,343,279 |
Total future lease payments | 2,004,749 |
Less: Interest | (654,662) |
Present value of lease liabilities | 1,350,087 |
Operating lease liabilities related to options extend | $ 816,000 |
Options to extend lease terms | options to extend lease terms |
Minimum lease payment for leases | $ 151,600 |
Derivative (Details)
Derivative (Details) - USD ($) $ in Millions | 12 Months Ended | ||||
Dec. 28, 2021 | Apr. 01, 2025 | Mar. 31, 2023 | Jun. 22, 2021 | Mar. 13, 2020 | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Gain (Loss) on Components Excluded from Assessment of Interest Rate Fair Value Hedge Effectiveness | $ 0 | ||||
Interest rate swap agreement | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Fixed interest rate | 0.802% | ||||
Fair value of derivative liability | $ 2.4 | ||||
Subsequent event | Interest rate swap agreement | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Notional amount | $ 140 | $ 280 |
Derivative - Changes in AOCL, n
Derivative - Changes in AOCL, net of tax (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 28, 2021 | Dec. 29, 2020 | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Beginning balance | $ 288,693 | $ 571,742 |
Ending balance | 330,166 | 288,693 |
Accumulated Other Comprehensive Income/(Loss) | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Beginning balance | (3,785) | (435) |
Ending balance | (287) | (3,785) |
Interest rate swap agreement | Accumulated Other Comprehensive Income/(Loss) | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Beginning balance | (3,464) | 0 |
Other comprehensive loss before reclassifications | 2,514 | (4,612) |
Amounts reclassified from AOCI | 950 | 1,148 |
Other comprehensive loss, net of tax | 3,464 | (3,464) |
Ending balance | $ 0 | $ (3,464) |
Other Noncurrent Liabilities (D
Other Noncurrent Liabilities (Details) - USD ($) $ in Thousands | Dec. 28, 2021 | Dec. 29, 2020 |
Other Noncurrent Liabilities | ||
Non-qualified deferred compensation liabilities | $ 92,012 | $ 83,702 |
Deferred consideration | 10,392 | 21,379 |
Contingent consideration and compensation liabilities | 23,894 | 7,465 |
Payroll taxes (1) | 18,308 | |
Other | 21,102 | 18,871 |
Total | $ 147,400 | $ 149,725 |
Commitments and Contingencies (
Commitments and Contingencies (Details) | Oct. 02, 2019USD ($) | Jun. 22, 2018USD ($) | Jun. 07, 2018USD ($)item | Dec. 28, 2021USD ($) | Dec. 29, 2020USD ($) |
Commitments and Contingencies | |||||
Purchase obligations | $ 139,500,000 | $ 91,600,000 | |||
Purchase obligations due within terms recorded | 3 years | ||||
Minimum payments for real estate and leases | $ 151,600,000 | 130,500,000 | |||
Outstanding standby letters of credit | 29,900,000 | 23,400,000 | |||
Total accrued liability for self-insured plans | 67,600,000 | $ 62,600,000 | |||
Wage citation | $ 4,200,000 | ||||
Number of restaurants receiving janitorial services | item | 8 | ||||
Deferred consideration | 11,300,000 | ||||
Liability for contingent consideration provision | 23,900,000 | ||||
Payments required under event of an actual or constructive termination of employment | 3,200,000 | ||||
Accrued potential bonuses | 3,000,000 | ||||
Annual founder's retirement benefit for ten years after termination of full time employment | $ 650,000 | ||||
Number of years annual founder's retirement benefit after termination of full time employment | 10 years | ||||
Number of months annual founder's retirement benefit after termination of full time employment | 6 months | ||||
Internal Revenue Service | |||||
Commitments and Contingencies | |||||
Tax disallowance | $ 8,000,000 | ||||
North Italia Acquisition | |||||
Commitments and Contingencies | |||||
Amount in escrow account | $ 13,000,000 | ||||
FRC Acquisition | |||||
Commitments and Contingencies | |||||
Number of years for providing finance to achieve the targets | 5 years |
Stockholders' Equity and Seri_2
Stockholders' Equity and Series A Convertible Preferred Stock (Details) - USD ($) $ / shares in Units, $ in Thousands | Jun. 15, 2021 | Apr. 20, 2020 | Jun. 29, 2021 | Mar. 30, 2021 | Mar. 31, 2020 | Dec. 28, 2021 | Dec. 29, 2020 | Dec. 31, 2019 |
Stockholders Equity | ||||||||
Common stock issuance (in shares) | 3,125,000 | |||||||
Common stock issuance | $ 175,000 | $ 167,050 | ||||||
Issuance costs | $ 8,000 | $ 10,257 | ||||||
Cash dividends declared per common share (in dollars per share) | $ 0.36 | $ 0.36 | $ 1.38 | |||||
Series A preferred stock cash-settled conversion | $ 443,751 | |||||||
Cash dividend per share of preferred stock | $ 25.35 | |||||||
Repurchased shares since program inception | 53,139,172 | 53,026,409 | ||||||
Value of shares repurchased since program inception | $ 1,702,509 | $ 1,696,743 | ||||||
Treasury stock repurchased during period | 5,766 | 3,621 | $ 50,982 | |||||
Conversion price (in dollars per share) | $ 22.23 | |||||||
Reduction to retained earnings | $ 4,800 | 1,169,150 | $ 1,110,087 | |||||
Cash dividend declared Series A preferred stock, $25.35 per share | 5,070 | |||||||
Cumulative effect of adopting ASU 2020-06 | ||||||||
Stockholders Equity | ||||||||
Reduction to retained earnings | $ 4,800 | |||||||
Treasury Stock | ||||||||
Stockholders Equity | ||||||||
Number of shares authorized to be repurchased | 56,000,000 | |||||||
Repurchased shares since program inception | 53,100,000 | |||||||
Value of shares repurchased since program inception | $ 1,702,500 | |||||||
Shares repurchased during period | 100,000 | 100,000 | 1,100,000 | |||||
Treasury stock repurchased during period | $ 5,800 | $ 3,600 | $ 51,000 | |||||
Series A Redeemable Convertible Preferred Stock | ||||||||
Stockholders Equity | ||||||||
Series A preferred stock cash-settled conversion | $ 443,800 | |||||||
Number of preferred stock shares repurchased | 150,000 | |||||||
Number of preferred stock shares converted | 50,000 | |||||||
Number of common shares issued upon conversion | 2,400,864 | |||||||
Liquidation preference value per shares | $ 1,067.42 | |||||||
Deemed dividend in connection with conversion and repurchase of the preferred stock | $ 13,600 | |||||||
Accrued dividend | 3,900 | |||||||
Dividend inducement | $ 9,700 | |||||||
Cash dividend per share of preferred stock | $ 19.72 | $ 25.35 | ||||||
Number of shares issued (in shares) | 200,000 | |||||||
Value of shares issued | $ 200,000 | |||||||
Price per share (in dollars per share) | $ 1,000 | |||||||
Preferred stock direct costs. | $ 10,300 | |||||||
Cash dividend declared Series A preferred stock, $25.35 per share | $ 5,100 | |||||||
Series A Convertible Preferred stock | ||||||||
Stockholders Equity | ||||||||
Preferred stock direct costs. | $ 10,257 | |||||||
Conversion price (in dollars per share) | $ 0.01 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - shares shares in Millions | 12 Months Ended | |||
Dec. 28, 2021 | May 30, 2019 | Apr. 05, 2017 | Apr. 04, 2017 | |
Stock-Based Compensation | ||||
Shares authorized for issuance under share-based compensation plan | 1.8 | 12.7 | 9.2 | |
Shares available for grant | 4 | 1.9 | ||
Maximum | ||||
Stock-Based Compensation | ||||
Shares authorized for issuance under share-based compensation plan | 4.8 | |||
Stock options | ||||
Stock-Based Compensation | ||||
Annual vesting rights (as a percent) | 20.00% | |||
Stock options | Minimum | ||||
Stock-Based Compensation | ||||
Option expiration period (in years) | 8 years | |||
Stock options | Maximum | ||||
Stock-Based Compensation | ||||
Option expiration period (in years) | 10 years | |||
Restricted Shares and Restricted Share Units | Minimum | ||||
Stock-Based Compensation | ||||
Annual vesting rights (as a percent) | 0.00% | |||
Vesting period (in years) | 3 years | |||
Restricted Shares and Restricted Share Units | Maximum | ||||
Stock-Based Compensation | ||||
Annual vesting rights (as a percent) | 150.00% | |||
Vesting period (in years) | 5 years |
Stock-Based Compensation - Net
Stock-Based Compensation - Net of Tax (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 28, 2021 | Dec. 29, 2020 | Dec. 31, 2019 | |
Stock-Based Compensation | |||
Total stock-based compensation | $ 22,988 | $ 21,350 | $ 19,373 |
Income tax benefit | 5,646 | 5,245 | 4,760 |
Total stock-based compensation, net of taxes | 17,342 | 16,105 | 14,613 |
Capitalized stock-based compensation | 194 | 207 | 226 |
Labor expenses | |||
Stock-Based Compensation | |||
Total stock-based compensation | 8,856 | 7,753 | 6,233 |
General and administrative expenses | |||
Stock-Based Compensation | |||
Total stock-based compensation | 13,821 | 13,288 | 12,866 |
Other operating costs and expenses | |||
Stock-Based Compensation | |||
Total stock-based compensation | $ 311 | $ 309 | $ 274 |
Stock-Based Compensation - Weig
Stock-Based Compensation - Weighted Average Fair Value (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 28, 2021 | Dec. 29, 2020 | Dec. 31, 2019 | |
Stock options | |||
Stock-Based Compensation | |||
Weighted-average fair value at the grant date for options issued (in dollars per share) | $ 6.66 | $ 9.84 | |
Weighted average assumptions under Black-Scholes valuation model | |||
Expected option term | 6 years 10 months 24 days | 6 years 10 months 24 days | |
Expected stock price volatility (as a percent) | 25.70% | 26.30% | |
Risk-free interest rate (as a percent) | 1.50% | 2.60% | |
Dividend yield (as a percent) | 3.60% | 2.90% | |
Stock option activity, Shares | |||
Outstanding at beginning of year (in shares) | 2,294 | ||
Exercised (in shares) | (577) | ||
Forfeited or cancelled (in shares) | (1) | ||
Outstanding at end of the period (in shares) | 1,716 | 2,294 | |
Exercisable at end of the period (in shares) | 864 | ||
Weighted Average Exercise Price | |||
Outstanding at beginning of year (in dollars per share) | $ 45.35 | ||
Exercised (in dollars per share) | 42.97 | ||
Forfeited or cancelled (in dollars per share) | 61.50 | ||
Outstanding at end of the period (in dollars per share) | 46.14 | $ 45.35 | |
Exercisable at end of the period (in dollars per share) | $ 48.97 | ||
Weighted Average Remaining Contractual Term (In years) | |||
Weighted Average Remaining Contractual Term (In years) | 5 years 1 month 6 days | 5 years | |
Exercisable at end of the period (In years) | 3 years 6 months | ||
Aggregate Intrinsic Value | |||
Outstanding at beginning of year | $ 307 | ||
Outstanding at end of the period | 0 | $ 307 | |
Exercisable at end of the period | 0 | ||
Total intrinsic value of options exercised | 7,100 | $ 100 | $ 4,300 |
Unrecognized Stock-based Compensation Expense | |||
Total unrecognized stock-based compensation expenses related to unvested stock options, restricted shares and restricted share units | $ 4,700 | ||
Expected weighted average period for recognition of compensation expense related to unvested stock option | 2 years 6 months | ||
Restricted Shares and Restricted Share Units | |||
Restricted Shares and Restricted Share Units, Shares | |||
Outstanding at beginning of year (in shares) | 2,008 | ||
Granted (in shares) | 661 | ||
Vested (in shares) | (320) | ||
Forfeited (in shares) | (226) | ||
Outstanding at end of the period (in shares) | 2,123 | 2,008 | |
Fair value of shares vested | $ 15,400 | $ 15,600 | $ 15,800 |
Weighted Average Fair Value | |||
Outstanding at beginning of year (in dollars per share) | $ 43.70 | ||
Granted (in dollars per share) | 49.57 | $ 37.94 | $ 45.02 |
Vested (in dollars per share) | 48.12 | ||
Forfeited (in dollars per share) | 44.06 | ||
Outstanding at end of the period (in dollars per share) | $ 44.82 | $ 43.70 | |
Unrecognized Stock-based Compensation Expense | |||
Total unrecognized stock-based compensation expenses related to unvested stock options, restricted shares and restricted share units | $ 44,000 | ||
Expected weighted average period for recognition of compensation expense related to unvested stock option | 2 years 10 months 24 days |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) $ in Millions | 12 Months Ended | ||
Dec. 28, 2021USD ($)item | Dec. 29, 2020USD ($) | Dec. 31, 2019USD ($) | |
Employee Benefit Plans | |||
Minimum number of investment options available to participating plan members | item | 1 | ||
Accrued liability for self-insured benefit plans | $ 15.3 | $ 14.8 | |
401(k) Plan | |||
Employee Benefit Plans | |||
Expense recognized | 2.1 | 1.8 | $ 1.2 |
ESP | |||
Employee Benefit Plans | |||
Expense recognized | $ 1.2 | $ 1.3 | $ 1.2 |
Income Taxes - Provision & Reco
Income Taxes - Provision & Reconciliation (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 28, 2021 | Dec. 29, 2020 | Dec. 31, 2019 | Jan. 01, 2022 | |
Income tax (benefit)/provision: | ||||
Income/(Loss) before income taxes | $ 71,620 | $ (356,036) | $ 140,334 | |
Current: | ||||
Federal | 15,746 | (38,414) | 8,211 | |
State | 4,350 | 2,971 | 7,027 | |
Total current | 20,096 | (35,443) | 15,238 | |
Deferred: | ||||
Federal | (20,434) | (52,607) | (3,695) | |
State | (415) | (14,621) | 1,498 | |
Total deferred | (20,849) | (67,228) | (2,197) | |
Total (benefit)/provision | $ (753) | $ (102,671) | $ 13,041 | |
Income Taxes | ||||
U.S. federal statutory rate (as a percent) | 21.00% | 21.00% | 21.00% | |
State and district income taxes, net of federal benefit (as a percent) | 4.20% | 2.60% | 4.90% | |
Credit for FICA taxes paid on tips (as a percent) | (24.20%) | 2.10% | (12.80%) | |
Other credits and incentives (as a percent) | (4.20%) | 0.30% | (1.40%) | |
Impact of net operating loss carryback | (6.30%) | 3.40% | ||
Deferred compensation (as a percent) | (2.90%) | 0.60% | (1.70%) | |
Equity compensation (as a percent) | 0.00% | (0.40%) | (0.20%) | |
Uncertain tax positions | 10.30% | 0.00% | 0.00% | |
Other (as a percent) | 1.00% | (0.80%) | (0.50%) | |
Effective Income Tax Rate Reconciliation, Percent | (1.10%) | 28.80% | 9.30% | |
Cash refunds of carryback claims | $ 18,400 | $ 21,300 | ||
Deferred FICA tax remittance | $ 36,600 | $ 4,300 | ||
Deferred FICA tax remittance period | 8 months 15 days |
Income Taxes - Temporary Differ
Income Taxes - Temporary Differences (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 28, 2021 | Dec. 29, 2020 | Dec. 31, 2019 | |
Deferred tax assets: | |||
Staff member benefits | $ 36,295 | $ 33,419 | |
Insurance reserves | 12,897 | 11,460 | |
Operating lease liability | 315,403 | 319,274 | |
Deferred income | 33,075 | 31,119 | |
Tax credit carryforwards | 34,871 | 37,107 | |
Goodwill | 19,103 | 15,632 | |
Stock-based compensation | 10,122 | 9,937 | |
State and foreign net operating loss carryforwards | 3,005 | 3,536 | |
Derivative asset | 1,409 | ||
Other | 1,063 | 1,466 | |
Subtotal | 465,834 | 464,359 | |
Less: Valuation allowance | (1,036) | (1,041) | |
Total | 464,798 | 463,318 | |
Deferred tax liabilities: | |||
Property and equipment | (109,019) | (124,634) | |
Prepaid expenses | (7,312) | (7,027) | |
Inventory | (7,802) | (7,766) | |
Accrued rent | (5,087) | (4,947) | |
Operating lease assets | (277,220) | (280,845) | |
Other | (724) | (214) | |
Total | (407,164) | (425,433) | |
Net deferred tax liability | 37,885 | ||
Net deferred tax asset/(liability) | 57,634 | ||
Reconciliation of beginning and ending amount of our uncertain tax positions | |||
Balance at beginning of year | 655 | 704 | $ 830 |
Additions related to prior year tax positions | 4,157 | ||
Additions related to current period tax positions | 13 | 49 | 13 |
Reductions related to settlements with taxing authorities and lapses of statutes of limitations | (139) | ||
Balance at end of year | 4,799 | 655 | $ 704 |
Accrued interest and penalties related with uncertain tax positions | 3,600 | 300 | |
Decrease in uncertain tax positions during the next twelve months based on the lapses of statutes of limitations for certain jurisdictions | 1,800 | ||
Tax credit carryforwards | 1,700 | 1,900 | |
Tax credit carryforward valuation allowance | 1,000 | ||
State | |||
Reconciliation of beginning and ending amount of our uncertain tax positions | |||
Tax credit carryforwards | 64,600 | 79,500 | |
Foreign | |||
Deferred tax assets: | |||
Tax credit carryforwards | 2,700 | ||
Federal | |||
Reconciliation of beginning and ending amount of our uncertain tax positions | |||
Tax credit carryforwards | $ 33,600 | $ 35,600 |
Segment Information (Details)
Segment Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 28, 2021 | Dec. 29, 2020 | Dec. 31, 2019 | |
Segment Information | |||
Revenues | $ 2,927,540 | $ 1,983,225 | $ 2,482,692 |
Income/(loss) from operations | 82,318 | (347,437) | 103,598 |
Depreciation and amortization | 89,654 | 91,415 | 88,133 |
Impairment of assets and lease termination expenses | 18,139 | 219,333 | 18,247 |
Preopening costs | 13,711 | 10,456 | 13,149 |
Capital expenditures | 66,943 | 50,329 | 73,765 |
Total assets | 2,798,125 | 2,747,054 | 2,840,593 |
The Cheesecake Factory restaurants | |||
Segment Information | |||
Revenues | 2,293,225 | 1,585,008 | 2,180,882 |
Income/(loss) from operations | 242,599 | 45,540 | 258,374 |
Depreciation and amortization | 65,987 | 67,514 | 70,971 |
Impairment of assets and lease termination expenses | 11,904 | 3,261 | 8,888 |
Preopening costs | 4,868 | 4,206 | 9,967 |
Capital expenditures | 31,832 | 33,154 | 59,045 |
Total assets | 1,653,161 | 1,671,733 | 1,701,418 |
Acquisition-related (benefit)/expenses | 19,500 | (1,200) | 6,300 |
North Italia | |||
Segment Information | |||
Revenues | 171,901 | 102,585 | 35,268 |
Income/(loss) from operations | 8,624 | (77,371) | 1,608 |
Depreciation and amortization | 4,078 | 3,608 | 829 |
Impairment of assets and lease termination expenses | 71,782 | ||
Preopening costs | 4,510 | 2,578 | 1,297 |
Capital expenditures | 12,539 | 8,436 | 2,318 |
Total assets | 270,029 | 270,218 | 297,840 |
Other FRC | |||
Segment Information | |||
Revenues | 182,175 | 96,856 | 39,335 |
Income/(loss) from operations | 16,323 | (77,026) | 5,309 |
Depreciation and amortization | 4,802 | 4,090 | 1,037 |
Impairment of assets and lease termination expenses | 1,305 | 73,049 | |
Preopening costs | 3,188 | 1,324 | 49 |
Capital expenditures | 13,524 | 3,754 | 5,072 |
Total assets | 276,369 | 308,866 | 310,414 |
Other | |||
Segment Information | |||
Revenues | 280,239 | 198,776 | 227,207 |
Income/(loss) from operations | (185,228) | (238,580) | (161,693) |
Depreciation and amortization | 14,787 | 16,203 | 15,296 |
Impairment of assets and lease termination expenses | 4,930 | 71,241 | 9,359 |
Preopening costs | 1,145 | 2,348 | 1,836 |
Capital expenditures | 9,048 | 4,985 | 7,330 |
Total assets | $ 598,566 | $ 496,237 | $ 530,921 |