Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 20, 2017 | Jul. 27, 2017 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 20, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | TACO | |
Entity Registrant Name | Del Taco Restaurants, Inc. | |
Entity Central Index Key | 1,585,583 | |
Current Fiscal Year End Date | --01-02 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 38,686,034 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 20, 2017 | Jan. 03, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 4,925 | $ 8,795 |
Accounts and other receivables, net | 3,118 | 4,141 |
Inventories | 2,585 | 2,718 |
Prepaid expenses and other current assets | 3,129 | 4,204 |
Total current assets | 13,757 | 19,858 |
Property and equipment, net | 135,142 | 138,320 |
Goodwill | 319,778 | 320,025 |
Trademarks | 220,300 | 220,300 |
Intangible assets, net | 23,276 | 24,782 |
Other assets, net | 3,658 | 3,872 |
Total assets | 715,911 | 727,157 |
Current liabilities: | ||
Accounts payable | 16,462 | 16,427 |
Other accrued liabilities | 36,403 | 36,653 |
Current portion of capital lease obligations and deemed landlord financing liabilities | 1,546 | 1,588 |
Total current liabilities | 54,411 | 54,668 |
Long-term debt, capital lease obligations and deemed landlord financing liabilities, excluding current portion, net | 160,204 | 173,743 |
Deferred income taxes | 91,908 | 91,273 |
Other non-current liabilities | 30,142 | 30,140 |
Total liabilities | 336,665 | 349,824 |
Commitments and contingencies | ||
Shareholders’ equity: | ||
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; no shares issued and outstanding | 0 | 0 |
Common stock, $0.0001 par value; 400,000,000 shares authorized; 38,572,982 shares issued and outstanding at June 20, 2017; 39,153,503 shares issued and outstanding at January 3, 2017 | 4 | 4 |
Additional paid-in capital | 352,712 | 360,131 |
Accumulated other comprehensive (loss) income | (64) | 172 |
Retained earnings | 26,594 | 17,026 |
Total shareholders’ equity | 379,246 | 377,333 |
Total liabilities and shareholders’ equity | $ 715,911 | $ 727,157 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - Successor [Member] - $ / shares | Jun. 20, 2017 | Jan. 03, 2017 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 400,000,000 | 400,000,000 |
Common stock, shares issued (in shares) | 38,572,982 | 39,153,503 |
Common stock, shares outstanding (in shares) | 38,572,982 | 39,153,503 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 20, 2017 | Jun. 14, 2016 | Jun. 20, 2017 | Jun. 14, 2016 | |
Revenue: | ||||
Company restaurant sales | $ 104,022 | $ 95,917 | $ 205,244 | $ 189,467 |
Franchise revenue | 3,903 | 3,576 | 7,516 | 6,905 |
Franchise sublease income | 656 | 533 | 1,166 | 1,057 |
Total revenue | 108,581 | 100,026 | 213,926 | 197,429 |
Restaurant operating expenses: | ||||
Food and paper costs | 28,770 | 26,358 | 56,688 | 52,487 |
Labor and related expenses | 33,185 | 30,249 | 66,406 | 60,033 |
Occupancy and other operating expenses | 20,918 | 19,526 | 41,636 | 39,649 |
General and administrative | 9,055 | 8,214 | 18,360 | 16,506 |
Depreciation and amortization | 5,278 | 5,532 | 10,381 | 11,018 |
Occupancy and other - franchise subleases | 602 | 510 | 1,083 | 1,013 |
Pre-opening costs | 151 | 35 | 177 | 128 |
Restaurant closure charges, net | 6 | (166) | 15 | 12 |
Loss on disposal of assets, net | 340 | 62 | 291 | 137 |
Total operating expenses | 98,305 | 90,320 | 195,037 | 180,983 |
Income from operations | 10,276 | 9,706 | 18,889 | 16,446 |
Other expense | ||||
Interest expense | 1,627 | 1,405 | 3,170 | 2,877 |
Transaction-related costs | 0 | 126 | 0 | 191 |
Total other expense | 1,627 | 1,531 | 3,170 | 3,068 |
Income from operations before provision for income taxes | 8,649 | 8,175 | 15,719 | 13,378 |
Provision for income taxes | 3,319 | 3,311 | 6,151 | 5,453 |
Net income | 5,330 | 4,864 | 9,568 | 7,925 |
Other comprehensive loss: | ||||
Change in fair value of interest rate cap, net of tax | (148) | 0 | (236) | 0 |
Total other comprehensive loss | (148) | 0 | (236) | 0 |
Comprehensive income | $ 5,182 | $ 4,864 | $ 9,332 | $ 7,925 |
Earnings per share: | ||||
Basic (in dollars per share) | $ 0.14 | $ 0.13 | $ 0.25 | $ 0.21 |
Diluted (in dollars per share) | $ 0.13 | $ 0.13 | $ 0.24 | $ 0.20 |
Weighted-average shares outstanding | ||||
Basic (in shares) | 38,535,855 | 38,292,215 | 38,769,895 | 38,545,115 |
Diluted (in shares) | 39,808,485 | 38,442,304 | 40,094,476 | 38,672,425 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 20, 2017 | Jun. 14, 2016 | |
Proceeds from Stock Options Exercised | $ 10 | $ 0 |
Operating activities | ||
Net income | 9,568 | 7,925 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 10,381 | 11,018 |
Amortization of favorable and unfavorable lease assets and liabilities, net | (292) | (280) |
Amortization of deferred financing costs and debt discount | 178 | 178 |
Stock-based compensation | 2,149 | 1,629 |
Deferred income taxes | 792 | 3,052 |
Loss on disposal of assets, net | 291 | 137 |
Restaurant closure charges | 85 | (137) |
Changes in operating assets and liabilities: | ||
Accounts and other receivables, net | 1,023 | 859 |
Inventories | 133 | 379 |
Prepaid expenses and other current assets | 1,075 | 371 |
Other assets | (60) | 0 |
Accounts payable | 35 | 435 |
Other accrued liabilities | (304) | (3,609) |
Other non-current liabilities | (240) | (904) |
Net cash provided by operating activities | 24,814 | 21,053 |
Investing activities | ||
Purchases of property and equipment | (14,814) | (15,546) |
Proceeds from disposal of property and equipment, net | 7,733 | 4 |
Purchases of other assets | (470) | (647) |
Proceeds from sale of company-operated restaurants | 2,192 | 0 |
Net cash used in investing activities | (5,359) | (16,189) |
Financing activities | ||
Repurchase of common stock and warrants | (9,517) | (6,943) |
Payment of tax withholding related to restricted stock vesting | (59) | 0 |
Payments on capital leases and deemed landlord financing | (759) | (817) |
Proceeds from revolving credit facility | 6,000 | 4,000 |
Payments on revolving credit facility | (19,000) | (4,000) |
Net cash used in financing activities | (23,325) | (7,760) |
Decrease in cash and cash equivalents | (3,870) | (2,896) |
Cash and cash equivalents at beginning of period | 8,795 | 10,194 |
Cash and cash equivalents at end of period | 4,925 | 7,298 |
Supplemental cash flow information: | ||
Cash paid during the period for interest | 2,688 | 2,872 |
Cash paid during the period for income taxes | 4,733 | 800 |
Supplemental schedule of non-cash activities: | ||
Accrued property and equipment purchases | 4,114 | 1,939 |
Write-offs of accounts receivables | 0 | 72 |
Change in other asset for fair value of interest rate cap recorded to other comprehensive loss, net of tax | $ (236) | $ 0 |
Description of Business
Description of Business | 6 Months Ended |
Jun. 20, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | Description of Business Del Taco Restaurants, Inc. (f/k/a Levy Acquisition Corp. (“LAC”)) is a Delaware corporation headquartered in Lake Forest, California. The consolidated financial statements include the accounts of Del Taco Restaurants, Inc. and its wholly owned subsidiaries (collectively, the “Company” or “Del Taco”). The Company develops, franchises, owns, and operates Del Taco quick-service Mexican-American restaurants. At June 20, 2017 , there were 304 company-operated and 251 franchise-operated Del Taco restaurants located in 15 states, including one franchise-operated unit in Guam. At June 14, 2016 , there were 298 company-operated and 245 franchise-operated Del Taco restaurants located in 16 states, including one franchise-operated unit in Guam. The Company was originally incorporated in Delaware on August 2, 2013 as a special purpose acquisition company, formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses. On June 30, 2015 (the “Closing Date”), the Company consummated its business combination with Del Taco Holdings, Inc. (“DTH”) pursuant to the agreement and plan of merger dated as of March 12, 2015 by and among LAC, Levy Merger Sub, LLC (“Levy Merger Sub”), LAC’s wholly owned subsidiary, and DTH (the “Merger Agreement”). Under the Merger Agreement, Levy Merger Sub merged with and into DTH, with DTH surviving the merger as a wholly-owned subsidiary of the Company (the “Business Combination” or “Merger”). In connection with the closing of the Business Combination, the Company changed its name from Levy Acquisition Corp. to Del Taco Restaurants, Inc. |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 20, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited consolidated financial statements included herein have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). For additional information, these unaudited consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended January 3, 2017 ("2016 Form 10-K"). The accounting policies used in preparing these unaudited consolidated financial statements are the same as those described in our 2016 Form 10-K. The Company’s fiscal year ends on the Tuesday closest to December 31. Fiscal year 2017 is a fifty-two week period ending January 2, 2018 . In a fifty-two week fiscal year, the first, second and third quarters each include twelve weeks of operations and the fourth quarter includes sixteen weeks of operations. Fiscal year 2016 is the fifty-three week period ended January 3, 2017 . In a fifty-three week fiscal year, the first, second and third quarters each include twelve weeks of operations and the fourth quarter includes seventeen weeks of operations. For fiscal year 2017 , the Company’s accompanying financial statements reflect the twelve weeks ended June 20, 2017 . For fiscal year 2016 , the Company’s accompanying financial statements reflect the twelve weeks ended June 14, 2016 . In the opinion of management, the accompanying consolidated financial statements reflect all adjustments which are necessary for a fair presentation of the consolidated financial position, results of operations and cash flows for the periods presented. The results of operations for such interim periods are not necessarily indicative of results of operations to be expected for the full fiscal year. Principles of Consolidation The accompanying unaudited consolidated financial statements include the accounts of the Company and its wholly and majority owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Management believes that such estimates have been based on reasonable and supportable assumptions and the resulting estimates are reasonable for use in the preparation of the consolidated financial statements. Actual results could differ from these estimates. The Company’s significant estimates include estimates for impairment of goodwill, intangible assets and property and equipment, valuations provided in business combinations, insurance reserves, restaurant closure reserves, stock-based compensation, contingent liabilities, certain leasing activities and income tax valuation allowances. Recently Issued Accounting Standards In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") No. 2016-02, Leases (Topic 842). This guidance will result in key changes to lease accounting and will aim to bring leases onto balance sheets to give investors, lenders, and other financial statement users a more comprehensive view of a company's long-term financial obligations as well as the assets it owns versus leases. The new leasing standard will be effective for fiscal years beginning after December 15, 2018, and for interim periods within those fiscal years. The Company currently believes the guidance will have a material impact on its consolidated balance sheets. The Company has not selected an adoption method. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) , which provides a comprehensive new revenue recognition model that requires a company to recognize revenue in an amount that reflects the consideration it expects to receive for the transfer of promised goods or services to its customers. The standard also requires additional disclosure regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. This ASU is effective for annual periods and interim periods beginning after December 15, 2017. The ASU is to be applied retrospectively or using a cumulative effect transition method. The Company expects to adopt this new guidance in fiscal year 2018, and has not yet selected a transition method. The Company does not currently believe the new revenue recognition standard will materially impact the recognition of company restaurant sales or royalty fees from franchisees. Additionally, lease rental revenues are not within the scope of this new guidance. Based on a preliminary assessment, the Company expects the adoption of the new guidance to change the timing of the recognition of initial franchise fees, including franchise and development fees, and renewal fees. Currently, these fees are generally recognized upfront upon either the opening of the respective restaurant or when a renewal agreement becomes effective. The Company currently believes the new guidance will generally require these fees to be recognized over the term of the related franchise agreement for the respective restaurant. The Company is continuing to evaluate the impact the adoption of this new guidance will have on these and other revenue transactions in addition to the impact on accounting policies and related disclosures. |
Restaurant Closure Charges, Net
Restaurant Closure Charges, Net | 6 Months Ended |
Jun. 20, 2017 | |
Restructuring and Related Activities [Abstract] | |
Restaurant Closure Charges, Net | Restaurant Closure Charges, Net At June 20, 2017 and January 3, 2017 , the restaurant closure liability is $2.8 million and $3.1 million , respectively. The details of the restaurant closure activities are discussed below. Restaurant Closures and Lease Reserves The following table represents other restaurant closure liability activity related to restaurant closures prior to 2015 and sublease income shortfalls (in thousands): Total Balance at January 3, 2017 $ 1,365 Charges for accretion in current period 51 Cash payments (141 ) Balance at June 20, 2017 $ 1,275 The current portion of the restaurant closure liability is $0.3 million at both June 20, 2017 and January 3, 2017 and is included in other accrued liabilities in the consolidated balance sheets. The non-current portion of the restaurant closure liability is $1.0 million and $1.1 million at June 20, 2017 and January 3, 2017 , respectively, and is included in other non-current liabilities in the consolidated balance sheets. Restaurant Closure and Other Related Charges for 12 Underperforming Restaurants During the fourth fiscal quarter of 2015, the Company closed 12 company-operated restaurants. During the twenty-four weeks ended June 20, 2017 , the Company recorded accretion expense related to the closures, offset by $0.1 million of sublease income from leases which are treated as deemed landlord financing. A summary of the restaurant closure liability activity for these 12 closed restaurants consisted of the following (in thousands): Contract termination costs Other associated costs Total Balance at January 3, 2017 $ 1,773 $ — $ 1,773 Charges for accretion in current period 33 — 33 Cash payments (316 ) — (316 ) Balance at June 20, 2017 $ 1,490 $ — $ 1,490 The current portion of the restaurant closure liability is $0.2 million and $0.6 million at June 20, 2017 and January 3, 2017 , respectively, and is included in other accrued liabilities in the consolidated balance sheets. The non-current portion of the restaurant closure liability is $1.3 million and $1.2 million at June 20, 2017 and January 3, 2017 , respectively, and is included in other non-current liabilities in the consolidated balance sheets. |
Summary of refranchising (Notes
Summary of refranchising (Notes) | 6 Months Ended |
Jun. 20, 2017 | |
Other Industries [Abstract] | |
Summary of Refranchising [Text Block] | Summary of Refranchising In connection with the sale of company-operated restaurants to franchisees, the Company typically enters into several agreements, in addition to an asset purchase agreement, with franchisees including franchise and lease agreements. The Company typically sells restaurants’ inventory and equipment and retains ownership or the leasehold interest to the real estate to lease and/or sublease to the franchisee. The Company has determined that its restaurant dispositions usually represent multiple-element arrangements, and as such, the cash consideration received is allocated to the separate elements based on their relative selling price. Cash consideration generally includes up-front consideration for the sale of the restaurants and franchise fees and future cash consideration for royalties and lease payments. The Company considers the future lease payments in allocating the initial cash consideration received. The Company compares the stated rent under the lease and/or sublease agreements with comparable market rents and the Company records favorable or unfavorable lease assets/liabilities with a corresponding offset to the gain or loss on the sale of the company-operated restaurants. The cash consideration per restaurant for franchise fees is consistent with the amounts stated in the related franchise agreements which are charged for separate standalone arrangements. Therefore, the Company recognizes the franchise fees when earned. Future royalty income is also recognized in revenue as earned. The following table summarizes the number of company-operated restaurants sold to franchisees and the related gain recognized during the twenty-four weeks ended June 20, 2017 (dollars in thousands): 24 Weeks Ended Company-operated restaurants sold to franchisees 5 Proceeds from the sale of company-operated restaurants $ 2,192 Net assets sold (primarily furniture, fixtures and equipment) (1,261 ) Goodwill related to the company-operated restaurants sold to franchisees (247 ) Net unfavorable lease liabilities (a) (548 ) Other costs (5 ) Gain on sale of company-operated restaurants (b) $ 131 |
Goodwill and other Intangible A
Goodwill and other Intangible Assets | 6 Months Ended |
Jun. 20, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and other Intangible Assets | Goodwill and other Intangible Assets Goodwill was $319.8 million at June 20, 2017 compared to $320.0 million at January 3, 2017 . The change is due to the sale of company-operated stores as described in more detail in Note 4. There have been no changes in the carrying amount of trademarks since January 3, 2017 . The Company’s other intangible assets at June 20, 2017 and January 3, 2017 consisted of the following (in thousands): June 20, 2017 January 3, 2017 Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net Favorable lease assets $ 14,161 $ (3,849 ) $ 10,312 $ 14,176 $ (2,996 ) $ 11,180 Franchise rights 15,489 (2,659 ) 12,830 15,489 (2,038 ) 13,451 Reacquired franchise rights 161 (27 ) 134 161 (10 ) 151 Total amortized other intangible assets $ 29,811 $ (6,535 ) $ 23,276 $ 29,826 $ (5,044 ) $ 24,782 During the twenty-four weeks ended June 20, 2017, the Company wrote-off $15,000 of favorable lease assets related to the closure of one company-operated restaurant. |
Debt, Obligations Under Capital
Debt, Obligations Under Capital Leases and Deemed Landlord Financing Liabilities | 6 Months Ended |
Jun. 20, 2017 | |
Debt Disclosure [Abstract] | |
Debt, Obligations Under Capital Leases and Deemed Landlord Financing Liabilities | Debt, Obligations Under Capital Leases and Deemed Landlord Financing Liabilities The Company’s long-term debt, capital lease obligations and deemed landlord financing liabilities at June 20, 2017 and January 3, 2017 consisted of the following (in thousands): June 20, 2017 January 3, 2017 2015 Senior Credit Facility, net of debt discount of $902 and $1,035 and deferred financing costs of $304 and $349 at June 20, 2017 and January 3, 2017, respectively $ 144,794 $ 157,616 Total outstanding indebtedness 144,794 157,616 Obligations under capital leases and deemed landlord financing liabilities 16,956 17,715 Total debt 161,750 175,331 Less: amounts due within one year 1,546 1,588 Total amounts due after one year, net $ 160,204 $ 173,743 At June 20, 2017 and January 3, 2017 , the Company assessed the amounts recorded under the 2015 Senior Credit Facility and determined that such amounts approximated fair value. 2015 Revolving Credit Facility On August 4, 2015 , the Company refinanced its existing senior credit facility and entered into a new credit agreement (the “Credit Agreement”). The Credit Agreement, which matures on August 4, 2020 , provides for a $250 million revolving credit facility (the “2015 Senior Credit Facility”). The Credit Agreement contains certain financial covenants, including the maintenance of a consolidated total lease adjusted leverage ratio and a consolidated fixed charge coverage ratio. The Company was in compliance with the financial covenants as of June 20, 2017 . Substantially all of the assets of the Company are pledged as collateral under the 2015 Senior Credit Facility. At June 20, 2017 , the weighted-average interest rate on the outstanding balance of the 2015 Senior Credit Facility was 2.8% . At June 20, 2017 , the Company had a total of $85.7 million of availability for additional borrowings under the 2015 Senior Credit Facility as the Company had $146.0 million of outstanding borrowings and letters of credit outstanding of $18.3 million which reduce availability under the 2015 Senior Credit Facility. |
Derivative Instruments
Derivative Instruments | 6 Months Ended |
Jun. 20, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | Derivative Instruments In June 2016, the Company entered into an interest rate cap agreement that became effective July 1, 2016, to hedge cash flows associated with interest rate fluctuations on variable rate debt, with a termination date of March 31, 2020 ("2016 Interest Rate Cap Agreement"). The 2016 Interest Rate Cap Agreement had an initial notional amount of $70.0 million of the 2015 Senior Credit Facility that effectively converted that portion of the outstanding balance of the 2015 Senior Credit Facility from variable rate debt to capped variable rate debt, resulting in a change in the applicable interest rate from an interest rate of one-month LIBOR plus the applicable margin (as provided by the 2015 Senior Credit Facility) to a capped interest rate of 2.00% plus the applicable margin. During the period from July 1, 2016 through June 20, 2017 , the 2016 Interest Rate Cap Agreement had no hedge ineffectiveness. 2016 Interest Rate Cap Agreement To ensure the effectiveness of the 2016 Interest Rate Cap Agreement, the Company elected the one-month LIBOR rate option for its variable rate interest payments on term balances equal to or in excess of the applicable notional amount of the interest rate cap agreement as of each reset date. The reset dates and other critical terms on the term loans perfectly match with the interest rate cap reset dates and other critical terms during the twelve weeks ended June 20, 2017 . As of June 20, 2017 , the Company was hedging forecasted transactions expected to occur through March 31, 2020. Assuming interest rates at June 20, 2017 remain constant, $0.3 million of interest expense related to hedges of these transactions is expected to be reclassified into earnings over the next 33 months. The Company intends to ensure that this hedge remains effective, therefore, approximately $20,000 is expected to be reclassified into interest expense over the next 12 months. The effective portion of the 2016 Interest Rate Cap Agreement through June 20, 2017 was included in accumulated other comprehensive income. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 20, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The fair values of cash and cash equivalents, accounts receivable, accounts payable and other accrued liabilities approximate their carrying amounts due to their short maturities. The carrying value of the 2015 Senior Credit Facility approximated fair value. The 2016 Interest Rate Cap Agreement is recorded at fair value in the Company’s consolidated balance sheets. As of June 20, 2017 and January 3, 2017 , the Company held certain assets and liabilities that are required to be measured at fair value on a recurring basis. For both periods, this included a derivative instrument related to interest rates. The Company determined the fair value of the interest rate cap contract based on counterparty quotes, with appropriate adjustments for any significant impact of nonperformance risk of the parties to the interest rate cap contract. Therefore, the Company categorized this interest rate cap contract as Level 2 fair value measurements. The fair value of the 2016 Interest Rate Cap Agreement was $0.2 million and $0.6 million at June 20, 2017 and January 3, 2017 , respectively, and is included in other assets in the consolidated balance sheets. The Company's assets and liabilities measured at fair value on a recurring basis as of June 20, 2017 and January 3, 2017 were as follows (in thousands): June 20, 2017 (Unaudited) Markets for Identical Assets (Level 1) Observable Inputs (Level 2) Unobservable Inputs (Level 3) 2016 Interest Rate Cap Agreement $ 205 $ — $ 205 $ — Total assets measured at fair value $ 205 $ — $ 205 $ — January 3, 2017 Markets for Identical Assets (Level 1) Observable Inputs (Level 2) Unobservable Inputs (Level 3) 2016 Interest Rate Cap Agreement $ 598 $ — $ 598 $ — Total assets measured at fair value $ 598 $ — $ 598 $ — |
Other Accrued Liabilities and O
Other Accrued Liabilities and Other Non-current Liabilities | 6 Months Ended |
Jun. 20, 2017 | |
Other Liabilities Disclosure [Abstract] | |
Other Accrued Liabilities and Other Non-current Liabilities | Other Accrued Liabilities and Other Non-current Liabilities A summary of other accrued liabilities follows (in thousands): June 20, 2017 January 3, 2017 Employee compensation and related items $ 11,203 $ 13,783 Accrued insurance 8,471 8,192 Accrued sales tax 5,264 3,916 Accrued advertising 2,325 1,657 Accrued real property tax 1,249 1,274 Accrued income tax 1,189 562 Restaurant closure liability 464 875 Other 6,238 6,394 $ 36,403 $ 36,653 A summary of other non-current liabilities follows (in thousands): June 20, 2017 January 3, 2017 Unfavorable lease liabilities $ 15,911 $ 17,072 Insurance reserves 4,305 4,269 Restaurant closure liability 2,301 2,263 Deferred rent liability 2,107 1,676 Deferred development and initial franchise fees 1,418 1,385 Unearned trade discount, non-current 1,392 1,596 Deferred gift card income 673 1,182 Other 2,035 697 $ 30,142 $ 30,140 |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 20, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation In connection with the approval of the Business Combination, the Del Taco Restaurants, Inc. 2015 Omnibus Incentive Plan (the “2015 Plan”) was approved by shareholders to offer eligible employees, directors and consultants cash and stock-based incentive awards. Awards under the 2015 Plan are generally not restricted to any specific form or structure and could include, without limitation, stock options, stock appreciation rights, restricted stock, other stock-based awards, other cash-based compensation and performance awards. Under the plan, there were 3,300,000 shares of common stock reserved and authorized. At June 20, 2017 , there were 1,597,458 shares of common stock available for grant under the 2015 Plan. Stock-Based Compensation Expense The total compensation expense related to the 2015 Plan was $1.1 million and $0.9 million for the twelve weeks ended June 20, 2017 and June 14, 2016 , respectively, and $2.1 million and $1.6 million for the twenty-four weeks ended June 20, 2017 and June 14, 2016 , respectively. Restricted Stock Awards A summary of outstanding and unvested restricted stock activity as of June 20, 2017 and changes during the period from January 3, 2017 through June 20, 2017 are as follows: Shares Weighted-Average Grant Date Fair Value Nonvested at January 3, 2017 1,133,822 $ 10.40 Granted 72,570 13.59 Vested (64,330 ) 9.63 Forfeited — — Nonvested at June 20, 2017 1,142,062 $ 10.64 During the twenty-four weeks ended June 20, 2017 , the Company made payments of $0.1 million related to tax withholding obligations for the vesting of restricted stock awards in exchange for 4,686 shares withheld. As of June 20, 2017 , there was $8.3 million of unrecognized expense, net of estimated forfeitures, related to restricted stock which is expected to be recognized over a weighted-average remaining period of 2.3 years . The fair value of these awards was determined based on the Company’s stock price on the grant date. Stock Options A summary of stock option activity as of June 20, 2017 and changes during the period from January 3, 2017 through June 20, 2017 are as follows: Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value (in years) Options outstanding at January 3, 2017 334,500 $ 9.94 6.1 $ 1,464 Granted 5,000 14.55 Exercised (1,000 ) 9.88 Forfeited/Expired (3,500 ) 10.40 Options outstanding at June 20, 2017 335,000 $ 10.01 5.7 $ 1,252 Options exercisable at June 20, 2017 53,000 $ 10.39 5.4 $ 177 Options exercisable and expected to vest at June 20, 2017 316,050 $ 10.02 5.7 $ 1,178 The aggregate intrinsic value in the table above is the amount by which the current market price of the Company's stock exceeds the exercise price on January 3, 2017 and June 20, 2017 , respectively. As of June 20, 2017 , there was $0.7 million of unrecognized stock compensation expense, net of estimated forfeitures, related to stock option grants which is expected to be recognized over a weighted-average remaining period of 2.5 years . |
Shareholders' Equity
Shareholders' Equity | 6 Months Ended |
Jun. 20, 2017 | |
Equity [Abstract] | |
Shareholders' Equity | Shareholders’ Equity On February 26, 2016, the Company's Board of Directors authorized a share repurchase program covering up to $25.0 million in the aggregate of the Company's common stock and warrants which was effective immediately and expires upon completion of the repurchase program, unless terminated earlier by the Board of Directors. On August 23, 2016, the Company announced that the Board of Directors increased the repurchase program by $25.0 million , to $50.0 million . Purchases under the program may be made in open market or privately negotiated transactions. During the twelve weeks ended June 20, 2017 , the Company repurchased 400,000 warrants for an average price per warrant of $3.75 for an aggregate cost of approximately $1.5 million , including incremental direct costs to acquire the warrants. During the twenty-four weeks ended June 20, 2017 , the Company repurchased (1) 641,165 shares of common stock for an average price per share of $12.48 for an aggregate cost of approximately $8.0 million , including incremental direct costs to acquire the shares, and (2) 400,000 warrants for an average price per warrant of $3.75 for an aggregate cost of approximately $1.5 million , including incremental direct costs to acquire the warrants. The Company expects to retire the repurchased shares and therefore has accounted for them as constructively retired as of June 20, 2017 . As of June 20, 2017 , there was approximately $25.3 million remaining under the share repurchase program. The Company has no obligations to repurchase shares or warrants under this authorization, and the timing and value of shares and warrants purchased will depend on the Company's stock price, warrant price, market conditions and other factors. The 400,000 warrants purchased during the twelve and twenty-four weeks ended June 20, 2017 were purchased from PW Acquisitions, LP, a related party, at $3.75 per warrant, representing a 5% discount from the closing price of $3.95 per warrant on the transaction date. Patrick Walsh currently serves on the Company's Board of Directors and is the chief executive officer and managing member of the general partner of PW Acquisitions, LP. |
Earnings per Share
Earnings per Share | 6 Months Ended |
Jun. 20, 2017 | |
Earnings Per Share [Abstract] | |
Earnings per Share | Earnings per Share Basic income per share is calculated by dividing net income attributable to Del Taco’s common shareholders for the period by the weighted average number of common shares outstanding for the period. In computing dilutive income per share, basic income per share is adjusted for the assumed issuance of all applicable potentially dilutive share-based awards, including warrants, restricted stock, common stock options and restricted stock units. Below are basic and diluted net income per share for the periods indicated (amounts in thousands except share and per share data): 12 Weeks Ended 24 Weeks Ended June 20, 2017 June 14, 2016 June 20, 2017 June 14, 2016 Numerator: Net income $ 5,330 $ 4,864 $ 9,568 $ 7,925 Denominator: Weighted-average shares outstanding - basic 38,535,855 38,292,215 38,769,895 38,545,115 Dilutive effect of unvested restricted stock 492,065 150,089 476,284 127,310 Dilutive effect of stock options 23,550 — 23,226 — Dilutive effect of warrants 757,015 — 825,071 — Weighted-average shares outstanding - diluted 39,808,485 38,442,304 40,094,476 38,672,425 Net income per share - basic 0.14 $ 0.13 0.25 $ 0.21 Net income per share - diluted 0.13 $ 0.13 0.24 $ 0.20 Antidilutive stock options, unvested restricted stock awards and warrants excluded from the computations 36,500 12,720,918 36,500 12,800,021 Antidilutive stock options, unvested restricted stock and warrants were excluded from the computation of diluted net income per share due to the assumed proceeds from the award’s exercise or vesting being greater than the average market price of the common shares. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 20, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The effective income tax rates were 38.4% and 40.5% for the twelve weeks ended June 20, 2017 and June 14, 2016 , respectively. The provision for income taxes consisted of income tax expense of $3.3 million for both the twelve weeks ended June 20, 2017 and June 14, 2016 . The effective income tax rates were 39.1% and 40.8% for the twenty-four weeks ended June 20, 2017 and June 14, 2016 , respectively. The provision for income taxes consisted of income tax expense of $6.2 million and $5.5 million for the twenty-four weeks ended June 20, 2017 and June 14, 2016 , respectively. The income tax expense for the twelve weeks ended June 20, 2017 is driven by the estimated effective income tax rate of 38.4% which primarily consists of statutory federal and state tax rates based on apportioned income, partially offset by federal targeted job credits. The income tax expense for the twelve weeks ended June 14, 2016 is driven by the estimated effective income tax rate of 40.5% which primarily consists of statutory federal and state tax rates based on apportioned income, as well as providing for deferred tax liabilities for the excess of the amount for financial reporting over the tax basis of an investment in a domestic subsidiary, partially offset by federal targeted job credits. The income tax expense for the twenty-four weeks ended June 20, 2017 is driven by the estimated effective income tax rate of 39.1% which primarily consists of statutory federal and state tax rates based on apportioned income, partially offset by federal targeted job credits. The income tax expense for the twenty-four weeks ended June 14, 2016 is driven by the estimated effective income tax rate of 40.8% which primarily consists of statutory federal and state tax rates based on apportioned income, as well as providing for deferred tax liabilities for the excess of the amount for financial reporting over the tax basis of an investment in a domestic subsidiary, partially offset by federal targeted job credits. Management believe it is more likely than not that all deferred tax assets will be realized and therefore no valuation allowance as of June 20, 2017 and January 3, 2017 is required. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 20, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies The primary claims in the Company’s business are workers’ compensation and general liabilities. These insurance programs are self-insured or high deductible programs with excess coverage that management believes is sufficient to adequately protect the Company. In the opinion of management, adequate provision has been made for all incurred claims up to the self-insured or high deductible limits, including provision for estimated claims incurred but not reported. Because of the uncertainty of the ultimate resolution of outstanding claims, as well as the uncertainty regarding claims incurred but not reported, it is possible that management’s provision for these losses could change materially. However, no estimate can currently be made of the range of additional losses. Purchasing Commitments The Company enters into various purchase obligations in the ordinary course of business, generally of short term nature. Those that are binding primarily relate to commitments for food purchases and supplies, amounts owed under contractor and subcontractor agreements, orders submitted for equipment for restaurants under construction, information technology service agreements and marketing initiatives, some of which are related to both company-operated and franchise-operated locations. The Company also has a long-term beverage supply agreement with a major beverage vendor whereby marketing rebates are provided to the Company and its franchisees based upon the volumes of purchases for system-wide restaurants which vary according to demand for beverage syrup. This contract has terms extending into 2021 . The Company’s future estimated cash payments under existing contractual purchase obligations for goods and services as of June 20, 2017 , are approximately $67.9 million . The Company has excluded agreements that are cancelable without penalty. Litigation In July 2013, a former Del Taco employee filed a purported class action complaint alleging that Del Taco has failed to pay overtime wages and has not appropriately provided meal breaks to its California general managers. On June 23, 2017, the Court filed a tentative ruling granting Del Taco’s motion to decertify the sole remaining class. Legal proceedings are inherently unpredictable, and the Company is not able to predict the ultimate outcome or cost of the unresolved matter. However, based on management’s current understanding of the relevant facts and circumstances, the Company does not believe that these proceedings give rise to a probable or estimable loss and should not have a material adverse effect on the Company’s financial position, operations or cash flows. Therefore, Del Taco has not recorded any amount for the claim as of June 20, 2017 . In March 2014, a former Del Taco employee filed a purported class action complaint alleging that Del Taco has not appropriately provided meal breaks and failed to pay wages to its California hourly employees. Discovery is in process and Del Taco intends to assert all of its defenses to this threatened class action and the individual claims. Del Taco has several defenses to the action that it believes should prevent the certification of the class, as well as the potential assessment of any damages on a class basis. Legal proceedings are inherently unpredictable, and the Company is not able to predict the ultimate outcome or cost of the unresolved matter. However, based on management’s current understanding of the relevant facts and circumstances, the Company does not believe that these proceedings give rise to a probable or estimable loss and should not have a material adverse effect on the Company’s financial position, operations or cash flows. Therefore, Del Taco has not recorded any amount for the claim as of June 20, 2017 . The Company and its subsidiaries are parties to other legal proceedings incidental to their businesses, including claims alleging the Company’s restaurants do not comply with the Americans with Disabilities Act of 1990. In the opinion of management, based upon information currently available, the ultimate liability with respect to those other actions will not have a material effect on the operating results, cash flows or the financial position of the Company. However, due to the risks and uncertainties inherent in legal proceedings and litigation, actual results could differ from expectations. |
Basis of Presentation and Sum20
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 20, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited consolidated financial statements included herein have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). For additional information, these unaudited consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended January 3, 2017 ("2016 Form 10-K"). The accounting policies used in preparing these unaudited consolidated financial statements are the same as those described in our 2016 Form 10-K. The Company’s fiscal year ends on the Tuesday closest to December 31. Fiscal year 2017 is a fifty-two week period ending January 2, 2018 . In a fifty-two week fiscal year, the first, second and third quarters each include twelve weeks of operations and the fourth quarter includes sixteen weeks of operations. Fiscal year 2016 is the fifty-three week period ended January 3, 2017 . In a fifty-three week fiscal year, the first, second and third quarters each include twelve weeks of operations and the fourth quarter includes seventeen weeks of operations. For fiscal year 2017 , the Company’s accompanying financial statements reflect the twelve weeks ended June 20, 2017 . For fiscal year 2016 , the Company’s accompanying financial statements reflect the twelve weeks ended June 14, 2016 . In the opinion of management, the accompanying consolidated financial statements reflect all adjustments which are necessary for a fair presentation of the consolidated financial position, results of operations and cash flows for the periods presented. The results of operations for such interim periods are not necessarily indicative of results of operations to be expected for the full fiscal year. |
Principles of Consolidation | Principles of Consolidation The accompanying unaudited consolidated financial statements include the accounts of the Company and its wholly and majority owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Management believes that such estimates have been based on reasonable and supportable assumptions and the resulting estimates are reasonable for use in the preparation of the consolidated financial statements. Actual results could differ from these estimates. The Company’s significant estimates include estimates for impairment of goodwill, intangible assets and property and equipment, valuations provided in business combinations, insurance reserves, restaurant closure reserves, stock-based compensation, contingent liabilities, certain leasing activities and income tax valuation allowances |
Recently Issued and Recently Adopted Accounting Standards | Recently Issued Accounting Standards In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") No. 2016-02, Leases (Topic 842). This guidance will result in key changes to lease accounting and will aim to bring leases onto balance sheets to give investors, lenders, and other financial statement users a more comprehensive view of a company's long-term financial obligations as well as the assets it owns versus leases. The new leasing standard will be effective for fiscal years beginning after December 15, 2018, and for interim periods within those fiscal years. The Company currently believes the guidance will have a material impact on its consolidated balance sheets. The Company has not selected an adoption method. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) , which provides a comprehensive new revenue recognition model that requires a company to recognize revenue in an amount that reflects the consideration it expects to receive for the transfer of promised goods or services to its customers. The standard also requires additional disclosure regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. This ASU is effective for annual periods and interim periods beginning after December 15, 2017. The ASU is to be applied retrospectively or using a cumulative effect transition method. The Company expects to adopt this new guidance in fiscal year 2018, and has not yet selected a transition method. The Company does not currently believe the new revenue recognition standard will materially impact the recognition of company restaurant sales or royalty fees from franchisees. Additionally, lease rental revenues are not within the scope of this new guidance. Based on a preliminary assessment, the Company expects the adoption of the new guidance to change the timing of the recognition of initial franchise fees, including franchise and development fees, and renewal fees. Currently, these fees are generally recognized upfront upon either the opening of the respective restaurant or when a renewal agreement becomes effective. The Company currently believes the new guidance will generally require these fees to be recognized over the term of the related franchise agreement for the respective restaurant. The Company is continuing to evaluate the impact the adoption of this new guidance will have on these and other revenue transactions in addition to the impact on accounting policies and related disclosures. |
Restaurant Closure Charges, N21
Restaurant Closure Charges, Net (Tables) | 6 Months Ended |
Jun. 20, 2017 | |
Restructuring and Related Activities [Abstract] | |
Restaurant Closure Liability Activity | The following table represents other restaurant closure liability activity related to restaurant closures prior to 2015 and sublease income shortfalls (in thousands): Total Balance at January 3, 2017 $ 1,365 Charges for accretion in current period 51 Cash payments (141 ) Balance at June 20, 2017 $ 1,275 |
Closure Liability Activity for 12 Closed Restaurants | A summary of the restaurant closure liability activity for these 12 closed restaurants consisted of the following (in thousands): Contract termination costs Other associated costs Total Balance at January 3, 2017 $ 1,773 $ — $ 1,773 Charges for accretion in current period 33 — 33 Cash payments (316 ) — (316 ) Balance at June 20, 2017 $ 1,490 $ — $ 1,490 |
Summary of refranchising (Table
Summary of refranchising (Tables) | 6 Months Ended |
Jun. 20, 2017 | |
Other Industries [Abstract] | |
Summary of refranchising [Table Text Block] | The following table summarizes the number of company-operated restaurants sold to franchisees and the related gain recognized during the twenty-four weeks ended June 20, 2017 (dollars in thousands): 24 Weeks Ended Company-operated restaurants sold to franchisees 5 Proceeds from the sale of company-operated restaurants $ 2,192 Net assets sold (primarily furniture, fixtures and equipment) (1,261 ) Goodwill related to the company-operated restaurants sold to franchisees (247 ) Net unfavorable lease liabilities (a) (548 ) Other costs (5 ) Gain on sale of company-operated restaurants (b) $ 131 |
Goodwill and other Intangible23
Goodwill and other Intangible Assets (Tables) | 6 Months Ended |
Jun. 20, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Other Intangible Assets | The Company’s other intangible assets at June 20, 2017 and January 3, 2017 consisted of the following (in thousands): June 20, 2017 January 3, 2017 Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net Favorable lease assets $ 14,161 $ (3,849 ) $ 10,312 $ 14,176 $ (2,996 ) $ 11,180 Franchise rights 15,489 (2,659 ) 12,830 15,489 (2,038 ) 13,451 Reacquired franchise rights 161 (27 ) 134 161 (10 ) 151 Total amortized other intangible assets $ 29,811 $ (6,535 ) $ 23,276 $ 29,826 $ (5,044 ) $ 24,782 |
Debt, Obligations Under Capit24
Debt, Obligations Under Capital Leases and Deemed Landlord Financing Liabilities (Tables) | 6 Months Ended |
Jun. 20, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | The Company’s long-term debt, capital lease obligations and deemed landlord financing liabilities at June 20, 2017 and January 3, 2017 consisted of the following (in thousands): June 20, 2017 January 3, 2017 2015 Senior Credit Facility, net of debt discount of $902 and $1,035 and deferred financing costs of $304 and $349 at June 20, 2017 and January 3, 2017, respectively $ 144,794 $ 157,616 Total outstanding indebtedness 144,794 157,616 Obligations under capital leases and deemed landlord financing liabilities 16,956 17,715 Total debt 161,750 175,331 Less: amounts due within one year 1,546 1,588 Total amounts due after one year, net $ 160,204 $ 173,743 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 20, 2017 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block] | The Company's assets and liabilities measured at fair value on a recurring basis as of June 20, 2017 and January 3, 2017 were as follows (in thousands): June 20, 2017 (Unaudited) Markets for Identical Assets (Level 1) Observable Inputs (Level 2) Unobservable Inputs (Level 3) 2016 Interest Rate Cap Agreement $ 205 $ — $ 205 $ — Total assets measured at fair value $ 205 $ — $ 205 $ — January 3, 2017 Markets for Identical Assets (Level 1) Observable Inputs (Level 2) Unobservable Inputs (Level 3) 2016 Interest Rate Cap Agreement $ 598 $ — $ 598 $ — Total assets measured at fair value $ 598 $ — $ 598 $ — |
Other Accrued Liabilities and26
Other Accrued Liabilities and Other Non-current Liabilities (Tables) | 6 Months Ended |
Jun. 20, 2017 | |
Other Liabilities Disclosure [Abstract] | |
Summary of Other Accrued Liabilities | A summary of other accrued liabilities follows (in thousands): June 20, 2017 January 3, 2017 Employee compensation and related items $ 11,203 $ 13,783 Accrued insurance 8,471 8,192 Accrued sales tax 5,264 3,916 Accrued advertising 2,325 1,657 Accrued real property tax 1,249 1,274 Accrued income tax 1,189 562 Restaurant closure liability 464 875 Other 6,238 6,394 $ 36,403 $ 36,653 |
Summary of Other Non-current Liabilities | A summary of other non-current liabilities follows (in thousands): June 20, 2017 January 3, 2017 Unfavorable lease liabilities $ 15,911 $ 17,072 Insurance reserves 4,305 4,269 Restaurant closure liability 2,301 2,263 Deferred rent liability 2,107 1,676 Deferred development and initial franchise fees 1,418 1,385 Unearned trade discount, non-current 1,392 1,596 Deferred gift card income 673 1,182 Other 2,035 697 $ 30,142 $ 30,140 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 20, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of Outstanding and Unvested Restricted Stock Activity | A summary of outstanding and unvested restricted stock activity as of June 20, 2017 and changes during the period from January 3, 2017 through June 20, 2017 are as follows: Shares Weighted-Average Grant Date Fair Value Nonvested at January 3, 2017 1,133,822 $ 10.40 Granted 72,570 13.59 Vested (64,330 ) 9.63 Forfeited — — Nonvested at June 20, 2017 1,142,062 $ 10.64 |
Summary of Stock Options Activity | A summary of stock option activity as of June 20, 2017 and changes during the period from January 3, 2017 through June 20, 2017 are as follows: Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value (in years) Options outstanding at January 3, 2017 334,500 $ 9.94 6.1 $ 1,464 Granted 5,000 14.55 Exercised (1,000 ) 9.88 Forfeited/Expired (3,500 ) 10.40 Options outstanding at June 20, 2017 335,000 $ 10.01 5.7 $ 1,252 Options exercisable at June 20, 2017 53,000 $ 10.39 5.4 $ 177 Options exercisable and expected to vest at June 20, 2017 316,050 $ 10.02 5.7 $ 1,178 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 6 Months Ended |
Jun. 20, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of Basic and Diluted Net Income (Loss) Per Share Data | Below are basic and diluted net income per share for the periods indicated (amounts in thousands except share and per share data): 12 Weeks Ended 24 Weeks Ended June 20, 2017 June 14, 2016 June 20, 2017 June 14, 2016 Numerator: Net income $ 5,330 $ 4,864 $ 9,568 $ 7,925 Denominator: Weighted-average shares outstanding - basic 38,535,855 38,292,215 38,769,895 38,545,115 Dilutive effect of unvested restricted stock 492,065 150,089 476,284 127,310 Dilutive effect of stock options 23,550 — 23,226 — Dilutive effect of warrants 757,015 — 825,071 — Weighted-average shares outstanding - diluted 39,808,485 38,442,304 40,094,476 38,672,425 Net income per share - basic 0.14 $ 0.13 0.25 $ 0.21 Net income per share - diluted 0.13 $ 0.13 0.24 $ 0.20 Antidilutive stock options, unvested restricted stock awards and warrants excluded from the computations 36,500 12,720,918 36,500 12,800,021 |
Description of Business - Addit
Description of Business - Additional Information (Details) | Mar. 12, 2015 | Jun. 20, 2017staterestaurant | Jun. 14, 2016staterestaurant |
Franchisor Disclosure [Line Items] | |||
Number of states in which entity operates | state | 15 | 16 | |
Stock purchase agreement date | Mar. 12, 2015 | ||
Entity Operated Units [Member] | |||
Franchisor Disclosure [Line Items] | |||
Number of restaurants | 304 | 298 | |
Franchised Units [Member] | |||
Franchisor Disclosure [Line Items] | |||
Number of restaurants | 251 | 245 | |
Franchised Units [Member] | GUAM | |||
Franchisor Disclosure [Line Items] | |||
Number of restaurants | 1 | 1 |
Restaurant Closure Charges, N30
Restaurant Closure Charges, Net - Additional Information (Details) | 3 Months Ended | 4 Months Ended | 6 Months Ended | ||
Jun. 20, 2017USD ($) | Dec. 29, 2015location | Jun. 20, 2017USD ($) | Jun. 14, 2016USD ($) | Jan. 03, 2017USD ($) | |
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring closure liability | $ 2,800,000 | $ 2,800,000 | $ 3,100,000 | ||
Current portion of restaurant closure liability | 464,000 | 464,000 | 875,000 | ||
Non-current portion of restaurant closure liability | 2,301,000 | 2,301,000 | 2,263,000 | ||
Charges for accretion in current period | 85,000 | $ (137,000) | |||
Closure of 12 Underperforming Restaurants [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring closure liability | 1,490,000 | 1,490,000 | 1,773,000 | ||
Current portion of restaurant closure liability | 200,000 | 200,000 | 600,000 | ||
Non-current portion of restaurant closure liability | 1,300,000 | 1,300,000 | |||
Number of underperforming locations | location | 12 | ||||
Charges for accretion in current period | 33,000 | ||||
Sublease income | 73,000 | ||||
Facility Closing [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring closure liability | 1,275,000 | 1,275,000 | 1,365,000 | ||
Current portion of restaurant closure liability | 300,000 | 300,000 | 300,000 | ||
Non-current portion of restaurant closure liability | $ 1,000,000 | 1,000,000 | $ 1,100,000 | ||
Charges for accretion in current period | $ 51,000 |
Restaurant Closure Charges, N31
Restaurant Closure Charges, Net - Restaurant Closure Liability Activity (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 20, 2017 | Jun. 14, 2016 | |
Restructuring Reserve [Roll Forward] | ||
Closure liability, Beginning balance | $ 3,100 | |
Charges for accretion in current period | 85 | $ (137) |
Closure liability, Ending balance | 2,800 | |
Facility Closing [Member] | ||
Restructuring Reserve [Roll Forward] | ||
Closure liability, Beginning balance | 1,365 | |
Charges for accretion in current period | 51 | |
Cash payments | (141) | |
Closure liability, Ending balance | 1,275 | |
Closure of 12 Underperforming Restaurants [Member] | ||
Restructuring Reserve [Roll Forward] | ||
Closure liability, Beginning balance | 1,773 | |
Charges for accretion in current period | 33 | |
Cash payments | (316) | |
Closure liability, Ending balance | 1,490 | |
Closure of 12 Underperforming Restaurants [Member] | Contract termination costs | ||
Restructuring Reserve [Roll Forward] | ||
Closure liability, Beginning balance | 1,773 | |
Charges for accretion in current period | 33 | |
Cash payments | (316) | |
Closure liability, Ending balance | 1,490 | |
Closure of 12 Underperforming Restaurants [Member] | Other associated costs | ||
Restructuring Reserve [Roll Forward] | ||
Closure liability, Beginning balance | 0 | |
Charges for accretion in current period | 0 | |
Cash payments | 0 | |
Closure liability, Ending balance | $ 0 |
Summary of refranchising (Detai
Summary of refranchising (Details) $ in Thousands | 6 Months Ended | ||
Jun. 20, 2017USD ($)restaurant | Jun. 14, 2016USD ($) | Jan. 03, 2017USD ($) | |
Franchisor Disclosure [Line Items] | |||
Proceeds from sale of company-operated restaurants | $ 2,192 | $ 0 | |
Favorable lease assets | 23,276 | $ 24,782 | |
Unfavorable lease liabilities | $ 15,911 | $ 17,072 | |
Sale of company-operated restaurants [Member] | |||
Franchisor Disclosure [Line Items] | |||
Company-operated restaurants sold to franchisees | restaurant | 5 | ||
Proceeds from sale of company-operated restaurants | $ 2,192 | ||
Net assets sold (primarily furniture, fixtures and equipment) | (1,261) | ||
Goodwill related to the company-operated restaurants sold to franchisees | (247) | ||
(Unfavorable)/favorable lease assets/liabilities | (548) | ||
Other costs | (5) | ||
Gain on sale of company-operated restaurants | 131 | ||
Favorable lease assets | 100 | ||
Unfavorable lease liabilities | $ 600 |
Goodwill and other Intangible33
Goodwill and other Intangible Assets - Schedule of Other Intangible Assets (Detail) - USD ($) $ in Thousands | Jun. 20, 2017 | Jan. 03, 2017 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 29,811 | $ 29,826 |
Accumulated Amortization | (6,535) | (5,044) |
Net | 23,276 | 24,782 |
Favorable Lease Assets [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 14,161 | 14,176 |
Accumulated Amortization | (3,849) | (2,996) |
Net | 10,312 | 11,180 |
Franchise rights [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 15,489 | 15,489 |
Accumulated Amortization | (2,659) | (2,038) |
Net | 12,830 | 13,451 |
Other Intangible Assets [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 161 | 161 |
Accumulated Amortization | (27) | (10) |
Net | $ 134 | $ 151 |
Goodwill and other Intangible34
Goodwill and other Intangible Assets - Additional Information (Details) - USD ($) | 6 Months Ended | |
Jun. 20, 2017 | Jan. 03, 2017 | |
Finite-Lived Intangible Assets [Line Items] | ||
Goodwill | $ 319,778,000 | $ 320,025,000 |
Favorable lease assets write-off | $ 15,000 |
Debt, Obligations Under Capit35
Debt, Obligations Under Capital Leases and Deemed Landlord Financing Liabilities - Schedule of Debt (Detail) - USD ($) $ in Thousands | Jun. 20, 2017 | Jan. 03, 2017 |
Debt Instrument [Line Items] | ||
Total outstanding indebtedness | $ 144,794 | $ 157,616 |
Obligations under capital leases and deemed landlord financing liabilities | 16,956 | 17,715 |
Total debt | 161,750 | 175,331 |
Less: amounts due within one year | 1,546 | 1,588 |
Total amounts due after one year, net | 160,204 | 173,743 |
2015 Revolving Credit Facility [Member] | ||
Debt Instrument [Line Items] | ||
Credit Facility | 144,794 | 157,616 |
Debt discount | 902 | 1,035 |
Deferred finance costs | $ 304 | $ 349 |
Debt, Obligations Under Capit36
Debt, Obligations Under Capital Leases and Deemed Landlord Financing Liabilities - Additional Information (Detail) - USD ($) | Aug. 04, 2015 | Jun. 20, 2017 | Jun. 14, 2016 | Jan. 03, 2017 |
Debt Instrument [Line Items] | ||||
Payment of senior secured debt and costs associated with refinancing | $ 19,000,000 | $ 4,000,000 | ||
2015 Revolving Credit Facility [Member] | ||||
Debt Instrument [Line Items] | ||||
Credit agreement issuance date | Aug. 4, 2015 | |||
Credit agreement maturity date | Aug. 4, 2020 | |||
Credit facility amount | $ 250,000,000 | |||
Letters of credit | 18,300,000 | |||
Unamortized debt discount | $ 902,000 | $ 1,035,000 | ||
Interest rate on outstanding balance of credit facility (percent) | 2.80% | |||
Availability for additional borrowings under credit facility | $ 85,700,000 | |||
Credit facility outstanding borrowings | $ 146,000,000 |
Derivative Instruments - Additi
Derivative Instruments - Additional Information (Details) - Interest Rate Cap [Member] - Cash Flow Hedging [Member] | Jun. 20, 2017USD ($) |
Derivative [Line Items] | |
Notional amount | $ 70,000,000 |
Cap interest rate | 2.00% |
Amount expected to be reclassified into earnings over the remaining term of the agreement | $ 300,000 |
Amount expected to be reclassified into interest expense over the next 12 months | $ 20,000 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Detail) - USD ($) | Jun. 20, 2017 | Jan. 03, 2017 |
Interest Rate Cap [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of interest rate cap | $ 200,000 | $ 600,000 |
Fair Value Measurements Fair Va
Fair Value Measurements Fair Value Measurement Summary of Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands | Jun. 20, 2017 | Jan. 03, 2017 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest rate cap | $ 205 | $ 598 |
Total assets measured at fair value | 205 | 598 |
Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest rate cap | 0 | 0 |
Total assets measured at fair value | 0 | 0 |
Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest rate cap | 205 | 598 |
Total assets measured at fair value | 205 | 598 |
Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest rate cap | 0 | 0 |
Total assets measured at fair value | $ 0 | $ 0 |
Other Accrued Liabilities and40
Other Accrued Liabilities and Other Non-current Liabilities - Summary of Other Accrued Liabilities (Detail) - USD ($) $ in Thousands | Jun. 20, 2017 | Jan. 03, 2017 |
Other Liabilities Disclosure [Abstract] | ||
Employee compensation and related items | $ 11,203 | $ 13,783 |
Accrued insurance | 8,471 | 8,192 |
Accrued sales tax | 5,264 | 3,916 |
Accrued income tax | 1,189 | 562 |
Accrued advertising | 2,325 | 1,657 |
Accrued real property tax | 1,249 | 1,274 |
Restaurant closure liability | 464 | 875 |
Other | 6,238 | 6,394 |
Other accrued liabilities | $ 36,403 | $ 36,653 |
Other Accrued Liabilities and41
Other Accrued Liabilities and Other Non-current Liabilities - Summary of Other Non-current Liabilities (Detail) - USD ($) $ in Thousands | Jun. 20, 2017 | Jan. 03, 2017 |
Other Liabilities Disclosure [Abstract] | ||
Unfavorable lease liabilities | $ 15,911 | $ 17,072 |
Insurance reserves | 4,305 | 4,269 |
Restaurant closure liability | 2,301 | 2,263 |
Unearned trade discount, non-current | 1,392 | 1,596 |
Deferred development and initial franchise fees | 1,418 | 1,385 |
Deferred gift card income | 673 | 1,182 |
Deferred rent liability | 2,107 | 1,676 |
Other | 2,035 | 697 |
Other non-current liabilities | $ 30,142 | $ 30,140 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 20, 2017 | Jun. 14, 2016 | Jun. 20, 2017 | Jun. 14, 2016 | Jan. 03, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Payments related to employee tax withholding obligations | $ 59 | $ 0 | |||
Number of awards outstanding (in shares) | 1,142,062 | 1,142,062 | 1,133,822 | ||
Number of stock options outstanding (in shares) | 335,000 | 335,000 | 334,500 | ||
2015 Plan [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Common stock reserved and authorized for issuance (in shares) | 3,300,000 | 3,300,000 | |||
Common stock authorized and available for grant (in shares) | 1,597,458 | 1,597,458 | |||
Stock-based compensation expense recorded | $ 1,100 | $ 900 | $ 2,100 | $ 1,600 | |
Restricted Stock [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Unrecognized compensation expense, net | 8,300 | $ 8,300 | |||
Weighted average period of recognition (in years) | 2 years 3 months 18 days | ||||
Payments related to employee tax withholding obligations | $ 100 | ||||
Shares paid for tax withholding for share based compensation | 4,686 | ||||
Stock Options [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Unrecognized stock compensation expense | $ 700 | $ 700 | |||
Vesting period (in years) | 2 years 6 months |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of Outstanding and Unvested Restricted Stock Activity (Details) | 6 Months Ended |
Jun. 20, 2017$ / sharesshares | |
Shares | |
Nonvested Shares, Beginning balance (in shares) | shares | 1,133,822 |
Granted (in shares) | shares | 72,570 |
Vested (in shares) | shares | (64,330) |
Forfeited (in shares) | shares | 0 |
Nonvested Shares, Ending balance (in shares) | shares | 1,142,062 |
Weighted-Average Grant Date Fair Value | |
Weighted-Average Grant Date Fair Value, Beginning balance (in dollars per share) | $ / shares | $ 10.40 |
Weighted-Average Grant Date Fair Value, Granted (in dollars per share) | $ / shares | 13.59 |
Weighted-Average Grant Date Fair Value, Vested (in dollars per share) | $ / shares | 9.63 |
Weighted-Average Grant Date Fair Value, Forfeited (in dollars per share) | $ / shares | 0 |
Weighted-Average Grant Date Fair Value, Ending balance (in dollars per share) | $ / shares | $ 10.64 |
Stock-Based Compensation - Su44
Stock-Based Compensation - Summary of Stock Options Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 20, 2017 | Jan. 03, 2017 | |
Shares | ||
Options outstanding, Beginning balance (in shares) | 334,500 | |
Granted (in shares) | 5,000 | |
Exercised (in shares) | (1,000) | |
Forfeited (in shares) | (3,500) | |
Options outstanding, Ending balance (in shares) | 335,000 | 334,500 |
Options exercisable (in shares) | 53,000 | |
Options exercisable and expected to vest (in shares) | 316,050 | |
Weighted Average Exercise Price | ||
Weighted Average Exercise Price, Options outstanding, Beginning balance (in dollars per share) | $ 9.94 | |
Weighted Average Exercise Price, Granted (in dollars per share) | 14.55 | |
Weighted Average Exercise Price, Exercised (in dollars per share) | 9.88 | |
Weighted Average Exercise Price, Forfeited (in dollars per share) | 10.40 | |
Weighted Average Exercise Price, Options outstanding, Ending balance (in dollars per share) | 10.01 | $ 9.94 |
Weighted Average Exercise Price, Options exercisable (in dollars per share) | 10.39 | |
Weighted Average Exercise Price, Options exercisable and expected (in dollars per share) | $ 10.02 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract] | ||
Weighted Average Remaining Contractual Term, Options outstanding (in years) | 5 years 8 months 12 days | 6 years 1 month |
Weighted Average Remaining Contractual Term, Options exercisable (in years) | 5 years 4 months 24 days | |
Weighted Average Remaining Contractual Term, Options exercisable and expected to vest (in years) | 5 years 8 months 12 days | |
Aggregate Intrinsic Value, Options outstanding, Beginning balance | $ 1,464 | |
Aggregate Intrinsic Value, Options outstanding, Ending balance | 1,252 | $ 1,464 |
Aggregate Intrinsic Value, Options exercisable | 177 | |
Aggregate Intrinsic Value, Options excersiable and expected to vest | $ 1,178 |
Shareholders' Equity - Addition
Shareholders' Equity - Additional Information (Detail) - USD ($) | Mar. 29, 2017 | Jun. 20, 2017 | Jun. 20, 2017 | Aug. 23, 2016 | Feb. 26, 2016 |
Common Stock and Warrants [Member] | |||||
Class of Stock [Line Items] | |||||
Maximum authorized stock repurchase amount (up to) | $ 50,000,000 | $ 50,000,000 | $ 25,000,000 | $ 25,000,000 | |
Remaining authorized stock repurchase amount | $ 25,300,000 | $ 25,300,000 | |||
Common Stock [Member] | |||||
Class of Stock [Line Items] | |||||
Shares repurchased (in shares) | 641,165 | ||||
Average price per share | $ 12.48 | ||||
Shares repurchased, value | $ 8,000,000 | ||||
Warrants [Member] | |||||
Class of Stock [Line Items] | |||||
Shares repurchased (in shares) | 400,000 | 400,000 | 400,000 | ||
Average price per share | $ 3.75 | $ 3.75 | $ 3.75 | ||
Shares repurchased, value | $ 1,500,000 | $ 1,500,000 | |||
Discount on repurchase | 5.00% | ||||
Share Price | $ 3.95 |
Earnings per Share - Schedule o
Earnings per Share - Schedule of Basic and Diluted Net Income per Share Data (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 20, 2017 | Jun. 14, 2016 | Jun. 20, 2017 | Jun. 14, 2016 | |
Numerator: | ||||
Net income | $ 5,330 | $ 4,864 | $ 9,568 | $ 7,925 |
Denominator: | ||||
Weighted-average shares outstanding - basic (in shares) | 38,535,855 | 38,292,215 | 38,769,895 | 38,545,115 |
Weighted-average shares outstanding - diluted | 39,808,485 | 38,442,304 | 40,094,476 | 38,672,425 |
Net (loss) income per share - basic (in dollars per share) | $ 0.14 | $ 0.13 | $ 0.25 | $ 0.21 |
Net (loss) income per share - diluted (in dollars per share) | $ 0.13 | $ 0.13 | $ 0.24 | $ 0.20 |
Antidilutive stock options, unvested restricted stock awards, unvested RSUs and warrants excluded from the computations (in dollars per share) | 36,500 | 12,720,918 | 36,500 | 12,800,021 |
Restricted Stock [Member] | ||||
Denominator: | ||||
Dilutive effect (in shares) | 492,065 | 150,089 | 476,284 | 127,310 |
Stock Options [Member] | ||||
Denominator: | ||||
Dilutive effect (in shares) | 23,550 | 0 | 23,226 | 0 |
Warrants [Member] | ||||
Denominator: | ||||
Dilutive effect (in shares) | 757,015 | 0 | 825,071 | 0 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 20, 2017 | Jun. 14, 2016 | Jun. 20, 2017 | Jun. 14, 2016 | Jan. 03, 2017 | |
Income Tax Disclosure [Abstract] | |||||
Effective income tax rates (percent) | 38.40% | (40.50%) | 39.10% | (40.80%) | |
Provision for income taxes | $ 3,319 | $ 3,311 | $ 6,151 | $ 5,453 | |
Valuation allowance | $ 0 | $ 0 | $ 0 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) $ in Millions | 6 Months Ended |
Jun. 20, 2017USD ($) | |
Loss Contingencies [Line Items] | |
Purchasing commitments contract extended terms | 2,021 |
Contractual purchase obligations for goods and services | $ 67.9 |