Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 27, 2020 | Nov. 05, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 27, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Registrant Name | J. Alexander’s Holdings, Inc. | |
Entity Incorporation, State or Country Code | TN | |
Entity Interactive Data Current | Yes | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Central Index Key | 0001617227 | |
Entity Shell Company | false | |
Entity File Number | 1-37473 | |
Entity Tax Identification Number | 47-1608715 | |
Entity Address, Address Line One | 3401 West End Avenue | |
Entity Address, Address Line Two | Suite 260 | |
Entity Address, Address Line Three | P.O. Box 24300 | |
Entity Address, City or Town | Nashville | |
Entity Address, State or Province | TN | |
Entity Address, Postal Zip Code | 37202 | |
City Area Code | 615 | |
Local Phone Number | 269-1900 | |
Entity Current Reporting Status | Yes | |
Current Fiscal Year End Date | --01-03 | |
Entity Filer Category | Accelerated Filer | |
Entity Ex Transition Period | true | |
Entity Common Stock, Shares Outstanding | 15,070,077 | |
Title of 12(b) Security | Common Stock, $0.001 par value | |
Trading Symbol | JAX | |
Security Exchange Name | NYSE |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 27, 2020 | Dec. 29, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 17,184 | $ 8,803 |
Accounts and other receivables | 1,604 | 2,035 |
Inventories | 2,638 | 3,095 |
Prepaid expenses and other current assets | 1,206 | 4,159 |
Total current assets | 22,632 | 18,092 |
Other assets | 6,002 | 5,698 |
Property and equipment, at cost, less accumulated depreciation and amortization of $72,555 and $64,967 as of September 27, 2020 and December 29, 2019, respectively | 103,461 | 109,303 |
Right-of-use lease assets, net | 73,689 | 70,277 |
Goodwill | 15,737 | |
Tradename and other indefinite-lived assets | 25,648 | 25,648 |
Deferred income taxes, net | 7,808 | 2,918 |
Deferred charges, less accumulated amortization of $384 and $343 as of September 27, 2020 and December 29, 2019, respectively | 198 | 239 |
Total assets | 239,438 | 247,912 |
Current liabilities: | ||
Accounts payable | 3,807 | 6,353 |
Accrued expenses and other current liabilities | 7,437 | 9,389 |
Unearned revenue | 2,760 | 4,111 |
Current portion of long-term debt | 12,222 | 7,056 |
Current portion of lease liabilities | 4,722 | 4,317 |
Total current liabilities | 30,948 | 31,226 |
Long-term debt, net of portion classified as current and deferred loan costs | 13,092 | 2,845 |
Long-term lease liabilities | 80,196 | 75,883 |
Deferred compensation obligations | 7,252 | 7,103 |
Other long-term liabilities | 2,256 | 138 |
Total liabilities | 133,744 | 117,195 |
Stockholders' equity: | ||
Common stock, par value $0.001 per share: authorized 30,000,000 shares; issued and outstanding of 15,070,077 and 15,011,676 shares as of September 27, 2020 and December 29, 2019, respectively | 15 | 15 |
Preferred stock, par value $0.001 per share: authorized 10,000,000 shares; no shares issued and outstanding as of September 27, 2020 or December 29, 2019 | ||
Additional paid-in capital | 105,425 | 104,056 |
(Accumulated deficit) Retained earnings | (1,304) | 25,088 |
Total stockholders' equity attributable to J. Alexander's Holdings, Inc. | 104,136 | 129,159 |
Non-controlling interests | 1,558 | 1,558 |
Total stockholders' equity | 105,694 | 130,717 |
Commitments and contingencies | ||
Total liabilities and stockholders' equity | $ 239,438 | $ 247,912 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Sep. 27, 2020 | Dec. 29, 2019 |
Statement Of Financial Position [Abstract] | ||
Property and equipment, at cost, less accumulated depreciation and amortization | $ 72,555 | $ 64,967 |
Deferred charges, accumulated amortization | $ 384 | $ 343 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 30,000,000 | 30,000,000 |
Common stock, shares issued | 15,070,077 | 15,011,676 |
Common stock, shares outstanding | 15,070,077 | 15,011,676 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
Income Statement [Abstract] | ||||
Net sales | $ 46,230 | $ 56,867 | $ 130,804 | $ 183,830 |
Costs and expenses: | ||||
Food and beverage costs | 14,251 | 18,110 | 43,289 | 58,441 |
Restaurant labor and related costs | 15,592 | 18,835 | 48,484 | 57,542 |
Depreciation and amortization of restaurant property and equipment | 3,037 | 2,968 | 9,191 | 8,847 |
Other operating expenses | 10,666 | 11,916 | 31,156 | 37,028 |
Total restaurant operating expenses | 43,546 | 51,829 | 132,120 | 161,858 |
Transaction, contested proxy and other related expenses | 12 | 117 | 635 | 768 |
General and administrative expenses | 3,811 | 4,288 | 12,646 | 13,816 |
Goodwill impairment | 15,737 | |||
Long-lived asset impairment charges and restaurant closing costs | 173 | 1,040 | ||
Pre-opening expenses | 72 | 211 | 163 | 357 |
Total operating expenses | 47,614 | 56,445 | 162,341 | 176,799 |
Operating (loss) income | (1,384) | 422 | (31,537) | 7,031 |
Other (expense) income: | ||||
Interest expense | (283) | (135) | (588) | (490) |
Other, net | 24 | 55 | 151 | 191 |
Total other expense | (259) | (80) | (437) | (299) |
(Loss) income from continuing operations before income taxes | (1,643) | 342 | (31,974) | 6,732 |
Income tax (expense) benefit | (64) | 495 | 5,742 | 238 |
Loss from discontinued operations, net | (53) | (66) | (160) | (183) |
Net (loss) income | $ (1,760) | $ 771 | $ (26,392) | $ 6,787 |
Basic (loss) earnings per share: | ||||
(Loss) income from continuing operations, net of tax | $ (0.12) | $ 0.06 | $ (1.78) | $ 0.47 |
Loss from discontinued operations, net | 0 | 0 | (0.01) | (0.01) |
Basic (loss) earnings per share | (0.12) | 0.05 | (1.79) | 0.46 |
Diluted (loss) earnings per share: | ||||
(Loss) income from continuing operations, net of tax | (0.12) | 0.06 | (1.78) | 0.47 |
Loss from discontinued operations, net | 0 | 0 | (0.01) | (0.01) |
Diluted (loss) earnings per share | $ (0.12) | $ 0.05 | $ (1.79) | $ 0.46 |
Weighted-average common shares outstanding: | ||||
Basic | 14,729 | 14,695 | 14,706 | 14,695 |
Diluted | 14,729 | 14,808 | 14,706 | 14,746 |
Comprehensive (loss) income | $ (1,760) | $ 771 | $ (26,392) | $ 6,787 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands | Total | Cumulative Effect Period of Adoption Adjustment | Common Stock | Additional Paid-in Capital | Additional Paid-in CapitalCommon Class B Units | Retained Earnings (Accumulated Deficit) | Retained Earnings (Accumulated Deficit)Cumulative Effect Period of Adoption Adjustment | Non-controlling Interests | Non-controlling InterestsCommon Class B Units |
Balances at Dec. 30, 2018 | $ 121,659 | $ (1,257) | $ 15 | $ 96,272 | $ 17,528 | $ (1,257) | $ 7,844 | ||
Balance, shares at Dec. 30, 2018 | 14,695,176 | ||||||||
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201602Member | ||||||||
Share-based compensation | $ 296 | 296 | |||||||
Cancellation of subsidiary Class B Units (Note 2 (g)) | $ 6,286 | $ (6,286) | |||||||
Comprehensive (loss) income | 3,848 | 3,848 | |||||||
Balances at Mar. 31, 2019 | 124,546 | $ 15 | 102,854 | 20,119 | 1,558 | ||||
Balance, shares at Mar. 31, 2019 | 14,695,176 | ||||||||
Balances at Dec. 30, 2018 | 121,659 | $ (1,257) | $ 15 | 96,272 | 17,528 | $ (1,257) | 7,844 | ||
Balance, shares at Dec. 30, 2018 | 14,695,176 | ||||||||
Comprehensive (loss) income | 6,787 | ||||||||
Balances at Sep. 29, 2019 | 128,219 | $ 15 | 103,588 | 23,058 | 1,558 | ||||
Balance, shares at Sep. 29, 2019 | 15,011,676 | ||||||||
Balances at Mar. 31, 2019 | 124,546 | $ 15 | 102,854 | 20,119 | 1,558 | ||||
Balance, shares at Mar. 31, 2019 | 14,695,176 | ||||||||
Share-based compensation | 296 | 296 | |||||||
Comprehensive (loss) income | 2,168 | 2,168 | |||||||
Balances at Jun. 30, 2019 | 127,010 | $ 15 | 103,150 | 22,287 | 1,558 | ||||
Balance, shares at Jun. 30, 2019 | 14,695,176 | ||||||||
Issuance of restricted and performance stock awards, shares | 316,500 | ||||||||
Share-based compensation | 438 | 438 | |||||||
Comprehensive (loss) income | 771 | 771 | |||||||
Balances at Sep. 29, 2019 | 128,219 | $ 15 | 103,588 | 23,058 | 1,558 | ||||
Balance, shares at Sep. 29, 2019 | 15,011,676 | ||||||||
Balances at Dec. 29, 2019 | 130,717 | $ 15 | 104,056 | 25,088 | 1,558 | ||||
Balance, shares at Dec. 29, 2019 | 15,011,676 | ||||||||
Share-based compensation | 455 | 455 | |||||||
Comprehensive (loss) income | (17,644) | (17,644) | |||||||
Balances at Mar. 29, 2020 | 113,528 | $ 15 | 104,511 | 7,444 | 1,558 | ||||
Balance, shares at Mar. 29, 2020 | 15,011,676 | ||||||||
Balances at Dec. 29, 2019 | 130,717 | $ 15 | 104,056 | 25,088 | 1,558 | ||||
Balance, shares at Dec. 29, 2019 | 15,011,676 | ||||||||
Comprehensive (loss) income | (26,392) | ||||||||
Balances at Sep. 27, 2020 | 105,694 | $ 15 | 105,425 | (1,304) | 1,558 | ||||
Balance, shares at Sep. 27, 2020 | 15,070,077 | ||||||||
Balances at Mar. 29, 2020 | 113,528 | $ 15 | 104,511 | 7,444 | 1,558 | ||||
Balance, shares at Mar. 29, 2020 | 15,011,676 | ||||||||
Share-based compensation | 453 | 453 | |||||||
Comprehensive (loss) income | (6,988) | (6,988) | |||||||
Balances at Jun. 28, 2020 | 106,993 | $ 15 | 104,964 | 456 | 1,558 | ||||
Balance, shares at Jun. 28, 2020 | 15,011,676 | ||||||||
Issuance of restricted stock awards, shares | 63,000 | ||||||||
Share-based compensation | 480 | 480 | |||||||
Vested shares withheld to pay employee portion of payroll taxes, value | (19) | (19) | |||||||
Vested shares withheld to pay employee portion of payroll taxes, shares | (4,599) | ||||||||
Comprehensive (loss) income | (1,760) | (1,760) | |||||||
Balances at Sep. 27, 2020 | $ 105,694 | $ 15 | $ 105,425 | $ (1,304) | $ 1,558 | ||||
Balance, shares at Sep. 27, 2020 | 15,070,077 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 27, 2020 | Sep. 29, 2019 | |
Cash flows from operating activities: | ||
Net (loss) income | $ (26,392) | $ 6,787 |
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | ||
Depreciation and amortization of property and equipment | 9,340 | 9,034 |
Share-based compensation expense | 1,388 | 1,030 |
Asset impairment charges | 16,426 | |
Deferred income taxes | (4,890) | (998) |
Other, net | 415 | 215 |
Changes in assets and liabilities: | ||
Accounts and other receivables | 431 | (319) |
Prepaid expenses and other current assets | 2,953 | 1,960 |
Accounts payable | (1,920) | (1,306) |
Accrued expenses and other current liabilities | (1,952) | (5,980) |
Lease right-of-use assets and liabilities | 1,306 | 1,242 |
Other assets and liabilities, net | 1,356 | (911) |
Net cash (used in) provided by operating activities | (1,539) | 10,754 |
Cash flows from investing activities: | ||
Purchase of property and equipment | (6,082) | (7,757) |
Proceeds from sale of property and equipment | 1,070 | |
Other investing activities | (290) | (122) |
Net cash used in investing activities | (5,302) | (7,879) |
Cash flows from financing activities: | ||
Proceeds from borrowing under debt agreement | 32,100 | |
Payments on long-term debt | (16,350) | (3,750) |
Other financing activities | (528) | (43) |
Net cash provided by (used in) financing activities | 15,222 | (3,793) |
Increase (decrease) in cash and cash equivalents | 8,381 | (918) |
Cash and cash equivalents at beginning of period | 8,803 | 8,783 |
Cash and cash equivalents at end of period | 17,184 | 7,865 |
Supplemental disclosures: | ||
Property and equipment obligations accrued at beginning of period | 1,116 | 819 |
Property and equipment obligations accrued at end of period | 490 | 2,669 |
Cash paid for interest | 405 | 467 |
Cash paid for income taxes | $ 84 | $ 718 |
Organization and Business
Organization and Business | 9 Months Ended |
Sep. 27, 2020 | |
Organization And Business [Abstract] | |
Organization and Business | Note 1 – Organization and Business J. Alexander’s Holdings, Inc. (the “Company”) was incorporated on August 15, 2014 in the state of Tennessee and is a holding company which is the sole managing member of and owns all of the outstanding Class A Units of J. Alexander’s Holdings, LLC, the parent company of all of the Company’s operating subsidiaries. The Company is a publicly-traded company, with its stock listed on the New York Stock Exchange under the symbol “JAX.” The Company, through J. Alexander’s Holdings, LLC and its subsidiaries, owns and operates full service, upscale restaurants including J. Alexander’s, Redlands Grill, Overland Park Grill, Merus Grill and Stoney River Steakhouse and Grill (“Stoney River”). At September 27, 2020 and December 29, 2019, the Company operated 46 and 47 restaurants, respectively, in 16 states. The Company’s restaurants are concentrated primarily in the East, Southeast, and Midwest regions of the United States. The Company does not have any restaurants operating under franchise agreements. |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 27, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Note 2 – Basis of Presentation (a) Interim Financial Statements The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the instructions to Form 10-Q and rules of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnote disclosures required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the quarter and nine-month period ended September 27, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending January 3, 2021. For further information, refer to the Consolidated Financial Statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2019, filed with the SEC on March 13, 2020, and amended on April 17, 2020 (the “2019 Annual Report”). Total comprehensive (loss) income is comprised solely of net (loss) income for all periods presented. There have been no material changes in the Company’s significant accounting policies, other than those described in Note 2(k) – Inventory Method Change and Note 7 – Recent Accounting Pronouncements, as compared to the significant accounting policies described in the Company’s 2019 Annual Report. (b) Effects of COVID-19 On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency due to the global spread of a new strain of coronavirus (“COVID-19”) and the related risks to the international community. On March 11, 2020, the WHO classified the COVID-19 outbreak as a pandemic, and on March 13, 2020 the United States declared the pandemic a National Public Health Emergency. In response, many states and jurisdictions in which the Company operates restaurants issued stay-at-home orders and other measures, including the closure of all in-restaurant dining, aimed at slowing the spread of the virus beginning in March 2020. These measures resulted in the closure of the Company’s dining rooms 7 In addition to the decline in restaurant sales, the Company has also incurred approximately $3,336 of costs directly related to the COVID-19 pandemic in the nine-month period ended September 27, 2020, which consists primarily of benefits and payments to furloughed restaurant employees for emergency sick leave, vacation and other sick leave benefits and related payroll taxes as well as inventory waste. Additionally, the Company continued to incur expenses related to the ongoing operations of the restaurants as well as monthly rent and occupancy-related costs during the period that its restaurants were temporarily closed, or operating on an off-premise basis only or with limited capacity. The Company has implemented measures to reduce its costs and limit its cash outflows during the COVID-19 pandemic, including temporary reductions in staffing levels and related furloughs of restaurant-level hourly employees, elimination of certain positions at the Company’s corporate office, deferral or cancellation of significant capital expenditure projects, engaging in negotiations with vendors and landlords regarding deferral or abatement of rental and other contractual obligations and the deferral of tax payments where allowed. The Company executed deferral and abatement agreements for certain of its locations with their respective landlord during the second and third quarters of 2020 while negotiations for other locations are ongoing. The disruption in operations and reduction in restaurant sales also led the Company to consider the impact of the COVID-19 pandemic on the recoverability of its assets, including property and equipment, right-of-use assets for operating leases, goodwill and intangible assets, and others. Such impairment analyses resulted in the Company recording impairment charges totaling $16,426 for the nine-month period ended September 27, 2020 and are discussed further in Note 2(m) below. T he ultimate severity and longevity of the COVID-19 pandemic is unknown, and therefore, To preserve financial flexibility, the Company drew the remaining $17,000 of available capacity (at the time of the draw) under its revolving credit facilities in March 2020. During April 2020, the Company also entered into deferral letter agreements with its lender to postpone principal and interest payments on its outstanding indebtedness for a period of 90 days and, in June 2020, an additional deferral letter was entered into to defer principal payments for an additional 90-day period. Additionally, the Company entered into a modification agreement in April 2020 to defer the maturity of, and interest payments under one of its term loans to September 2021 (which was subsequently modified again in October 2020 as discussed below). In May 2020, the Company obtained a waiver letter from its lender that waived existing financial covenants and instituted new financial covenants. In June 2020, the Company entered into an amendment with its lender to increase the borrowing capacity under its revolving line of credit by an additional $15,000. Finally, in October 2020, the Company entered into an agreement with its lender which extended the maturity dates of certain of its outstanding loans along with other modifications including instituting new financial covenants. See Note 11 – Subsequent Events for further discussion. The full impact of the COVID-19 pandemic continues to evolve as of the date of this report. Given the uncertainty surrounding the global economy and governmental restrictions on the Company’s operations, the Company cannot reasonably predict when its restaurants will be able to return to normal dining room operations. Due to the rapid development and fluidity of this situation, the Company cannot determine the ultimate impact that the COVID-19 pandemic will have on its consolidated financial condition, liquidity and future results of operations, and therefore any prediction as to the ultimate material adverse impact on the Company’s consolidated financial condition, liquidity, and future results of operations is uncertain. The Company does expect that its results of operations, cash flows and liquidity will be negatively affected by the pandemic, in some form, for the remainder of fiscal year 2020. (c) Principles of Consolidation The unaudited Condensed Consolidated Financial Statements include the accounts of the Company as well as the accounts of its subsidiaries. All intercompany profits, transactions, and balances between the Company and its subsidiaries have been eliminated. It is the Company’s policy to reclassify prior year amounts to conform to the current year’s presentation for comparative purposes, if such a reclassification is warranted. The Company is a holding company with no direct operations and that holds as its sole asset an equity interest in J. Alexander’s Holdings, LLC and, as a result, relies on J. Alexander’s Holdings, LLC to provide it with funds necessary to meet its financial obligations. 8 ( d ) Fiscal Year The Company’s fiscal year ends on the Sunday closest to December 31, and each quarter typically consists of 13 weeks. The quarter and nine-month periods ended September 27, 2020 and September 29, 2019 each included 13 and 39 weeks of operations, respectively. Fiscal years 2020 and 2019 include 53 and 52 weeks of operations, respectively. ( e ) Discontinued Operations and Restaurant Closures During the second quarter of 2020, the Company made the decision to permanently close the Lyndhurst Grill location in Cleveland, Ohio, on May 1, 2020 after a review of its projected and historical financial performance. This location was also required to be temporarily closed in mid‑March due to COVID-19-related traffic limitations unique to that specific restaurant which further impacted operating results. Restaurant closing costs recorded during the quarter and nine-month period ended September 27, 2020 totaled $173 and $351, respectively, and include labor expenses incurred subsequent to closure, severance, the loss on sale of fixed assets at this location discussed below and other miscellaneous costs. Expenses associated with the closure of the Lyndhurst Grill restaurant have not been included in discontinued operations as its closure does not represent a strategic shift that will have a major effect on the Company’s operations and financial results. As such, these restaurant closing costs have been included as a component of “Long-lived asset impairment charges and restaurant closing costs” in the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income. The Company entered into an agreement to sell this property in the second quarter of 2020 and the transaction closed in the third quarter of 2020. The assets sold included the land and building for which the Company received proceeds of $1,070. The Company previously recorded a long-lived asset impairment charge of $689 related to the fixed assets at this location during the first quarter of 2020 which is discussed in Note 2(m) below. In addition, the Company remains party to a lease agreement for a location that was closed in 2013 and is accounted for as a discontinued operation. The $53 and $66 losses from discontinued operations included in the quarters ended September 27, 2020 and September 29, 2019, respectively, and losses for the nine-month periods ended September 27, 2020 and September 29, 2019 of $160 and $183, respectively, consist solely of exit and disposal costs for this location. ( f ) Transaction, Contested Proxy and other Related Expenses Transaction, contested proxy and other related expenses totaled $12 and $635 for the quarter and nine-month period ended September 27, 2020, respectively. In the first nine months of 2020, the Company incurred legal fees, other professional fees and consulting fees related to the ongoing evaluation of strategic alternatives. During the first quarter of 2020, the Company announced that given the uncertainties in the business community, the restaurant industry and the financial markets as a result of the COVID-19 pandemic, the ongoing review of strategic alternatives by the Company’s Board of Directors (the “Board”) was not expected to be completed until the uncertainties are resolved. Transaction, contested proxy and other related expenses for the quarter and nine-month period ended September 29, 2019 totaled $117 and $768, respectively. Expenses in 2019 include costs associated with both soliciting shareholder proxies for the Company’s 2019 annual meeting of shareholders as well as costs related to the evaluation of strategic alternatives. ( g ) (Loss) Earnings per Share Basic (loss) earnings per share of common stock is computed by dividing net (loss) income by the weighted average number of shares outstanding for the reporting period. Diluted (loss) earnings per share of common stock is computed similarly to basic (loss) earnings per share except the weighted average shares outstanding are increased to include potential shares outstanding resulting from share-based compensation awards and additional shares from the assumed exercise of any common stock equivalents, if dilutive. In periods of net loss, no potential common shares are included in the diluted shares outstanding as the effect is anti-dilutive. J. Alexander’s Holdings, LLC Class B Units are considered common stock equivalents for this purpose. The number of additional shares of common stock related to these common stock equivalents is calculated using the if-converted method, if dilutive. The number of additional shares of common stock related to stock option awards and unvested restricted share awards subject to only a service condition is calculated using the treasury stock method, if dilutive. Unvested restricted share awards that are subject to a performance condition are regarded as contingently issuable common shares and are included in the denominator of the diluted earnings per share calculation using the treasury stock method as of the beginning of the period in which the performance condition has been satisfied, if dilutive. Refer to Note 3 – (Loss) Earnings per Share for the basic and diluted (loss) earnings per share calculations and additional discussion. 9 ( h ) Non-controlling Interests Non-controlling interests presented on the Condensed Consolidated Balance Sheets represent the portion of net assets of the Company attributable to the non-controlling J. Alexander’s Holdings, LLC Class B Unit holders. As of each September 27, 2020 and December 29, 2019, the non-controlling interests presented on the Condensed Consolidated Balance Sheets were $1,558. On February 28, 2019, in conjunction with the termination agreement (“Termination Agreement”) entered into in November 2018 between J. Alexander’s Holdings, LLC and Black Knight Advisory Services, LLC (“Black Knight”), the 1,500,024 Class B Units held by Black Knight were cancelled and forfeited for no consideration. Therefore, the Black Knight non‑controlling interest associated with their Class B Unit share-based compensation expense was reclassified to additional paid-in capital in the first quarter of 2019, and as of September 27, 2020 and December 29, 2019, non-controlling interests consist solely of the previously recognized non-cash compensation expense relative to the Class B Units held by management. The Hypothetical Liquidation at Book Value method was used as of each of September 27, 2020 and September 29, 2019 to determine allocations of non-controlling interests in respect of vested grants consistent with the terms of the Second Amended and Restated LLC Agreement of J. Alexander’s Holdings, LLC, and pursuant to those calculations, no allocation of net (loss) income was made to non-controlling interests for either of the quarters or nine-month periods ended September 27, 2020 or September 29, 2019. ( i ) Use of Estimates Management has made certain estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the unaudited Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the periods presented to prepare these unaudited Condensed Consolidated Financial Statements in conformity with GAAP. Significant items subject to such estimates and assumptions include those related to the accounting for gift card breakage, determination of uncertain tax positions and the valuation allowance relative to deferred tax assets, if any, estimates of useful lives of property and equipment and leasehold improvements, the carrying amount of intangible assets, fair market valuations, determination of lease terms, and accounting for impairment losses, contingencies, and litigation. Actual results could differ from these estimates. ( j ) Share Repurchase Program On November 1, 2018, the Board authorized a share repurchase program which replaced the previous share repurchase program that expired on October 29, 2018, and allows for the repurchase of shares up to an aggregate purchase price of $15,000 over the three-year (k) Inventory Method Change At the beginning of fiscal 2020, the Company implemented a new inventory management system. In connection with this implementation, the Company changed its method of accounting for inventory from the lower of cost (first-in, first-out) or net realizable value method utilized by its legacy system to the lower of cost or net realizable value method, with cost being determined using an average cost method, effective December 30, 2019 (the first day of the current fiscal year). The Company believes this change in accounting principle is preferable, as it will result in greater precision in the costing of inventories. In addition, the average cost method better aligns with the functionality of the new inventory management system. The Company determined that the effects of adopting the average cost method were not material to its Condensed Consolidated Financial Statements. Prior to the conversion to the new inventory management system, the Company was not able to determine the impact of the change to the average cost method. Therefore, it did not retroactively apply the change to periods prior to fiscal year 2020. ( l ) Debt On September 27, 2020, the Company was party to the Third Amended and Restated Loan Agreement, dated June 5, 2020, by and between J. Alexander’s, LLC and Pinnacle Bank, as amended (the “Third Loan Agreement”). The Third Loan Agreement was subsequently amended by the Fourth Amended and Restated Loan Agreement (the “Fourth Loan Agreement”), dated October 28, 2020 and entered into by the same parties, which extends the maturity of three of the 10 Company’s loans to January 1, 2023 and makes the same interest rate apply to each of the loans as described below. The Fourth Amended and Restated Loan Agreement amends and restates in its entirety the Third Loan Agreement . The discussion that follows describes the terms of the Company’s credit facilities under the Fourth Loan Agreement with deviations from the Third Loan Agreement that was in place as of September 27, 2020 as notated. The Fourth Loan Agreement consists of the following loans: (i) a $4,028 term loan set to mature on January 1, 2023 (the “Mortgage Loan” previously stated at $5,000 and set to mature on September 3, 2021), (ii) a $20,000 development line of credit set to mature on January 1, 2023 (the “Development Line of Credit” previously set to mature on September 3, 2021), (iii) a $556 term loan set to mature on December 10, 2020 (the “Term Loan” previously stated at $10,000 and set to mature on September 3, 2021), and (iv) a $16,000 revolving line of credit set to mature on January 1, 2023 (the “Revolving Line of Credit” previously set to mature on September 3, 2021). At September 27, 2020, the amounts outstanding under the Development Line of Credit and the Revolving Line of Credit were $20,000 and $1,000, respectively. At September 27, 2020, $4,167 was outstanding under the Mortgage Loan and an additional $556 was outstanding under the Term Loan. Due to the modification of each credit facility’s maturity date effective with the Fourth Loan Agreement, the Company considered these dates when determining its intent and ability to reclassify short-term debt as of September 27, 2020 to long-term debt. As such, a portion of the outstanding debt at September 27, 2020 is classified as long-term on the Company’s Condensed Consolidated Balance Sheet at September 27, 2020. During the first quarter of 2020, the Company announced it drew down the remaining $17,000 of available capacity (at the time of the draw) under the Development Line of Credit and the Revolving Line of Credit (the “Credit Draw”). The Credit Draw was undertaken as a precautionary measure to provide increased liquidity and preserve financial flexibility in light of the current disruption and uncertainty resulting from the COVID-19 pandemic. Following the Credit Draw, debt outstanding under the Development Line of Credit and the Revolving Line of Credit totaled $21,000. Pursuant to the terms of the Second Amended and Restated Loan Agreement (the “Second Loan Agreement”), the borrowings under the Second Loan Agreement bore interest at 30-day LIBOR plus a sliding interest rate scale determined by a maximum adjusted debt to EBITDAR ratio (following the Credit Draw, set at 30-day LIBOR plus 2.35% as of September 27, 2020). Under the Fourth Loan Agreement, each of these credit facilities bear interest at a rate of 30-day LIBOR plus 2.5%, with a floor for LIBOR of 1.5%. The maximum adjusted debt to EBITDAR ratio financial covenant which previously determined these interest rates as of September 27, 2020 was eliminated by the Fourth Loan Agreement. In October 2020, the Company paid $10,000 of the $20,000 outstanding Development Line of Credit balance, which was included in the “Current portion of long-term debt” balance on the Condensed Consolidated Balance Sheet as of September 27, 2020 due to the Company’s intent and ability to pay this amount within a twelve-month period as of the balance sheet date. On April 15, 2020, the Company entered into a modification of the Second Loan Agreement impacting the Term Loan, which deferred the two remaining principal payments totaling $556 until the Term Loan’s new maturity date which was modified to be September 3, 2021. As noted above, the Fourth Loan Agreement further modified the maturity date of the Term Loan to December 10, 2020. With respect to interest payments in the interim, the Term Loan was modified to defer such payments until July 3, 2020 at which point monthly interest payments resumed and will continue through its current maturity date of December 10, 2020. Similar to the Term Loan, the Company also negotiated for the deferral of principal and interest payments related to the Mortgage Loan and executed deferral letters in both April 2020 and June 2020 related to such deferrals. The principal payments otherwise due in April through September 2020 totaling $834 will now be payable when the loan matures on January 1, 2023 and interest payments resumed on July 3, 2020. As noted above, under the Fourth Loan Agreement, each of these credit facilities bear interest at a rate of 30-day LIBOR plus 2.5%, with a floor for LIBOR of 1.5%. The maximum adjusted debt to EBITDAR ratio financial covenant which previously determined these interest rates as of September 27, 2020 was eliminated by the Fourth Loan Agreement, and was set at 30-day LIBOR plus 2.35% as of September 27, 2020. The Company also reached an agreement with its lender in April 2020 to defer interest payments on its Development Line of Credit and Revolving Line of Credit for the months of April, May and June 2020, and interest payments resumed on July 3, 2020. On June 5, 2020, the Company entered into the Third Loan Agreement with Pinnacle Bank which amended its Revolving Line of Credit to expand its capacity from $1,000 to a total of $16,000 by adding an accordion feature for the additional $15,000, with the additional capacity available for general corporate purposes, including working capital and letters of credit. This amendment also required the Company to pledge the previously unencumbered five owned properties as collateral to the lender. The additional capacity is available for borrowing by the Company in amounts up to and including $5,000 per fiscal month beginning in the eighth fiscal month of 2020, with any amounts not borrowed during any particular period to be available for borrowing in subsequent periods. Any advances on the expanded Revolving Line of Credit are contingent on the Company achieving certain levels of revenue on a trailing three-fiscal-month basis. Borrowings under the Revolving Line of Credit under the Third Loan Agreement bore interest at a rate of LIBOR plus 2.5%, with a floor for LIBOR of 1.5%, and was 11 payable quarterly beginning on September 3, 2020. Under the Fourth Loan Agreement, the interest rate on this credit facility remains the same and a ll outstanding principal and interest is now due and payable at the end of fiscal 2022 . The Third Loan Agreement included certain terms agreed upon in a May 2020 waiver, which waived financial covenant compliance for existing financial covenants under the Second Loan Agreement beginning May 7, 2020 through the period ending July 4, 2021, and implemented two new financial covenants included in the Third Loan Agreement. These financial covenants are now incorporated in the Fourth Loan Agreement, which also extended the Company’s obligation to maintain these financial covenants through the new maturity date at the end of fiscal 2022. The new financial covenants require (i) minimum revenue of (a) at least $99,800 for the Company’s fiscal year ending January 3, 2021, (b) at least $118,400 on a four-quarter trailing basis by April 4, 2021, and (c) at least $166,800 on a four-quarter trailing basis by July 4, 2021, and (ii) a maximum adjusted debt to tangible net worth ratio of 0.80 or less, measured quarterly beginning September 27, 2020. The Fourth Loan Agreement also includes a fixed coverage charge ratio covenant of not less than 1.00 to 1.00 for the fiscal third and fourth quarters of 2021 and not less than 1.05 through the end of fiscal 2022. Under the Second Loan Agreement, the fixed coverage charge financial covenant was required to be at a ratio of not less than 1.25 to 1.00 throughout the term of that agreement. On April 10, 2020 and April 15, 2020, respectively, J. Alexander’s, LLC and Stoney River Management Company, LLC each an indirect subsidiary of the Company, were each granted loans from Pinnacle Bank in the aggregate amounts of $10,000 and $5,100 pursuant to the Paycheck Protection Program under the Coronavirus Aid Relief and Economic Security Act (“CARES Act”), which was enacted March 27, 2020. The Company believed its subsidiary operating companies were eligible for the loans in accordance with the special eligibility provisions for larger companies under provisions included in the CARES Act and the applicable implementing guidance issued by the U.S. Small Business Administration under the Paycheck Protection Program that was available at the time loan applications were submitted. The loans had been obtained to support the goal in the legislation of providing financial assistance to restaurant-level employees, including approximately 3,400 furloughed hourly employees that were not assisting with the Company’s carry-out programs at the time, and to restore the Company’s workforce as quickly as possible once dine-in operations could be safely resumed in accordance with applicable state and local government guidelines. However, as a result of additional guidance issued by the United States Treasury Department and the U.S. Small Business Administration on April 23, 2020, ( m ) Goodwill Impairment and Long-lived Asset Impairment Charges In light of the decline in the market price of the Company’s common stock, the impact of mandated dining room closures on financial results, the expected reduction in economic activity in the near term, and the general economic and market volatility, the Company determined that these factors constituted an interim triggering event as of the end of the Company’s first, second and third quarters of 2020, and performed impairment analyses with regard to its indefinite-lived intangible assets, property and equipment (including its right-of-use assets for operating leases) and goodwill. As a result, the Company recorded asset impairment charges totaling $16,426 in the first nine months of 2020. The Company performed a quantitative goodwill impairment test as of March 29, 2020 utilizing a market approach which included observable market prices associated with the Company’s common stock price in determining a fair value for the Company and its reporting units. As a result of this test, the Company determined that the J. Alexander’s reporting unit’s carrying value exceeded its fair value to such an extent that the full impairment of goodwill in the first quarter of 2020 in the amount of $15,737 was appropriate. The effect of this conclusion is presented as a component of “Goodwill impairment charge” on the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income. Additionally, the Company recorded a long-lived asset impairment charge of $689 to state the assets at its Lyndhurst Grill location in Cleveland, Ohio, at their fair value as of March 29, 2020, which is presented as “Long-lived asset impairment charges and restaurant closing costs” on the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income. During the second quarter of 2020, the Company made the decision to permanently close this location after a review of its projected and historical financial performance. This location was also required to be temporarily closed in mid‑March 2020 due to COVID-19-related traffic limitations unique to that specific restaurant which further impacted operating results. 12 The Company also performed a quantitative impairment analysis in the first, second and third quarters of 2020 relative to its indefinite-lived intangible assets and determined that the fair value of these assets substantially exceeded their carrying values and no impairment existed as of September 27, 2020. |
Earnings (Loss) per Share
Earnings (Loss) per Share | 9 Months Ended |
Sep. 27, 2020 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) per Share | Note 3 – Earnings (Loss) per Share The following table sets forth the computation of basic and diluted (loss) earnings per share: Quarter Ended Nine Months Ended (Dollars and shares in thousands, except per share amounts) September 27, September 29, September 27, September 29, 2020 2019 2020 2019 Numerator: (Loss) income from continuing operations, net of tax $ (1,707 ) $ 837 $ (26,232 ) $ 6,970 Loss from discontinued operations, net (53 ) (66 ) (160 ) (183 ) Net (loss) income $ (1,760 ) $ 771 $ (26,392 ) $ 6,787 Denominator: Weighted average shares (denominator for basic (loss) earnings per share) 14,729 14,695 14,706 14,695 Effect of dilutive securities - 113 - 51 Adjusted weighted average shares and assumed conversions (denominator for diluted (loss) earnings per share) 14,729 14,808 14,706 14,746 Basic (loss) earnings per share: (Loss) income from continuing operations, net of tax $ (0.12 ) $ 0.06 $ (1.78 ) $ 0.47 Loss from discontinued operations, net (0.00 ) (0.00 ) (0.01 ) (0.01 ) Basic (loss) earnings per share $ (0.12 ) $ 0.05 $ (1.79 ) $ 0.46 Diluted (loss) earnings per share: (Loss) income from continuing operations, net of tax $ (0.12 ) $ 0.06 $ (1.78 ) $ 0.47 Loss from discontinued operations, net (0.00 ) (0.00 ) (0.01 ) (0.01 ) Diluted (loss) earnings per share $ (0.12 ) $ 0.05 $ (1.79 ) $ 0.46 Note: Per share amounts may not sum due to rounding. Basic (loss) earnings per share of common stock is computed by dividing net (loss) income by the weighted average number of shares outstanding for the reporting period. Diluted (loss) earnings per share of common stock gives effect during the reporting period to all dilutive potential shares outstanding resulting from share-based compensation awards and additional shares from the assumed exercise of any common stock equivalents, if dilutive. We incurred a net loss for the quarter and nine-month period ended September 27, 2020, and therefore, diluted shares outstanding equaled basic shares outstanding for each of these periods. The J. Alexander’s Holdings, LLC Class B Units are considered common stock equivalents, and the number of additional shares of common stock related to these Class B Units is calculated using the if-converted method. The 833,346 Class B Units associated with management’s profits interest awards are considered to be antidilutive as of and for the quarter and nine-month period ended September 29, 2019, and, therefore, have been excluded from the diluted earnings per share calculations. The number of additional shares of common stock related to stock option awards is calculated using the treasury stock method, if dilutive. There were 1,741,750 and 1,495,750 stock option awards outstanding as of September 27, 2020 and September 29, 2019, respectively. A portion of the stock option awards outstanding as of September 27, 2020 include awards to purchase 246,000 shares of common stock at an exercise price of $5.00 issued on August 7, 2020. The dilutive impact of the awards outstanding as of September 29, 2019 on the number of weighted average shares in the diluted earnings per share calculation was 102,490 and 47,446 for the quarter and nine-month periods ended September 29, 2019, respectively. As of September 27, 2020 and September 29, 2019, there were 261,003 and 264,000 restricted share awards outstanding, respectively, which were subject to only a service condition. The restricted share awards outstanding as of September 27, 2020 include 63,000 awards which were granted by the Company to members of the Board on August 7, 2020 at $4.43, the Company’s stock price on the 13 date of grant. During the third quarter of 2020, 65,997 restricted share awards vested, and such vested shares, net of shares withheld for taxes, are included in weighted average shares outstanding for basic loss per share calculation purposes for the quarter and nine-month period ended September 27, 2020. The 264,000 unvested restricted share awards outstanding as of September 29, 2019 were considered dilutive for the quarter and nine-month period ended September 29, 2019 and the impact on the number of weighted average shares in the diluted earnings per share calculation was 10,763 and 3,588 , respectively. As of September 27, 2020 and September 29, 2019, there were 52,500 performance share awards outstanding. The performance condition associated with such awards had not been met at either September 27, 2020 or September 29, 2019, and, therefore, the portion of the awards that had satisfied the applicable service condition at September 27, 2020 were excluded from the weighted average shares outstanding for basic loss per share calculations for the third quarter and nine-months ended September 27, 2020. Additionally, any dilutive impact of the awards was not considered in either the third quarter and nine-month period ended September 29, 2019 due to the fact that the performance condition had not been satisfied. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 27, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 4 – Income Taxes On March 27, 2020, the CARES Act was enacted into law. The CARES Act is a tax and spending package intended to provide economic relief to address the impact of the COVID-19 pandemic. The CARES Act includes several significant income and other business tax provisions that, among other things, eliminates the taxable income limit for certain net operating losses (“NOLs”) and allows businesses to carry back NOLs arising in 2018, 2019 and 2020 to the five prior tax years, loosens the business interest limitation under Internal Revenue Code Section 163(j) and fixes the qualified improvement property (“QIP”) regulations in the 2017 Tax Cuts and Jobs Act. Additionally, the CARES Act provides for non-income tax-related relief such as refundable employee retention tax credits and the deferral of the employer-paid portion of social security taxes. As a result of the CARES Act, the Company estimates that it will be able to obtain a tax refund from the carryback of NOLs expected to be generated in fiscal 2020, and it is currently in the process of quantifying the estimated total amount of that carryback. The Company also intends to take full advantage of the deferral offered for the employer-paid portion of social security taxes and the refundable employee retention tax credits. As of September 27, 2020, the Company has deferred the payment of $2,143 of social security taxes which are accrued as “Other long-term liabilities” in the Consolidated Balance Sheets. The Company continues to evaluate the various provisions of the CARES Act and their impact on its effective tax rate and its consolidated financial statements as a whole, but the Company does anticipate the impact for the full fiscal year 2020 could be significant. Prior to the third quarter of 2020, the interim tax provision was prepared on an actual effective tax rate basis rather than on an estimated annual effective rate basis as the Company determined at the time that a reliable estimate of the annual effective tax rate could not be made due to the uncertainty presented by the COVID-19 pandemic and its impact on the Company’s ability to effectively forecast results for fiscal 2020 on which an annual effective tax rate could be based in accordance with ASC 740 – Income Taxes. However, during the third quarter of 2020, the Company determined that a reliable annual effective tax rate could be estimated and that it would be appropriate to record its income tax provision for the quarter ended September 27, 2020 based on such estimated annual effective tax rate. The Company recognized an income tax expense of $64 and an income tax benefit of $5,742 for the quarter and nine-month period ended September 27, 2020, respectively. For the nine-month period ended September 27, 2020, the Company recognized $508 of current benefit related to the carryback of calculated NOLs for the first nine months of 2020 to prior years as allowed under the CARES Act. The net effective tax rate (including the impact of discrete items) for the first nine months of 2020 was 17.9% compared to (3.6)% for the same period in 2019. The factors that caused the net effective tax rate to vary from the federal statutory rate of 21% for the nine-month period ended September 27, 2020 primarily related to the impact of the nondeductible book goodwill impairment charge recorded during 2020, partially offset by the Federal Insurance Contribution Act (“FICA”) tip credit, state income taxes, the anticipated carryback of the NOLs generated during 2020 to prior years, including the impact of the correction of the QIP regulations on the anticipated carryback, and other items. For the nine-month period ended September 29, 2019, the factors that caused the net effective tax rate to vary from the federal statutory rate included the impact of the FICA tip credit and other credits, partially offset by state income taxes and certain non-deductible expenses. In addition to these items, for the nine-month period ended September 29, 2019, we recognized a rate benefit of 4.9% due to the impact of discrete tax items, including but not limited to, the return to provision reconciliation and the beginning of the year deferred tax rate adjustment. The Company regularly assesses the need for a valuation allowance related to its deferred tax assets, which includes consideration of both positive and negative evidence related to the likelihood of realization of such deferred tax assets to determine, based on the weight of the available evidence, whether it is more-likely-than-not that some or all of its deferred tax assets will not be realized. In its assessment, the Company considers recent financial operating results, projected future taxable income, the reversal of existing taxable differences, and tax planning strategies. The Company has evaluated the need for valuation allowances as of the nine-month period ended September 27, 2020 and has determined that a valuation allowance of $248 is necessary relative to certain state net 14 operating loss es and other deferred tax assets which are not expected to be realized. Management also determined at September 27 , 2020 that it is more likely than not that the results of future operations and reversal of deferred tax liabilities will generate sufficient taxable income to realize the remaining deferred tax assets not covered by this valuation allowance. The Company will continue to assess the likelihood of the realization of its deferred tax assets, especially in light of the COVID-19 pandemic and related economic uncertainty, and the valuation allowance will be adjusted accordingly in future periods , if required . |
Commitment and Contingencies
Commitment and Contingencies | 9 Months Ended |
Sep. 27, 2020 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 5 – Commitments and Contingencies (a) Contingent Leases As a result of the disposition of the Company’s predecessor’s Wendy’s operations in 1996, subsidiaries of the Company may remain secondarily liable for certain real property leases with remaining terms of one to five years. The total estimated amount of lease payments remaining on these five leases at September 27, 2020 was approximately $823. In connection with the sale of the Company’s predecessor’s Mrs. Winner’s Chicken & Biscuit restaurant operations in 1989 and certain previous dispositions, subsidiaries of the Company also may remain secondarily liable for one real property lease. The total estimated amount of lease payments remaining on this lease at September 27, 2020 was approximately $281. There have been no payments by subsidiaries of the Company of such contingent liabilities in the history of the Company. Management believes the likelihood of any significant loss is remote. (b) Tax Contingencies The Company and its subsidiaries are subject to real property, personal property, business, franchise, income, withholding, unemployment, unclaimed property, sales and use taxes in various jurisdictions within the United States and are regularly under audit by tax authorities. This is believed to be common for the restaurant industry. Management believes the ultimate disposition of these matters will not have a material adverse effect on the consolidated financial position or results of operations of the Company. (c) Litigation Contingencies The Company and its subsidiaries are defendants from time to time in various claims or legal proceedings arising in the ordinary course of business, including claims relating to workers’ compensation matters, labor-related claims, discrimination and similar matters, claims resulting from guest accidents while visiting a restaurant, claims relating to lease and contractual obligations, federal and state tax matters, and claims from guests or employees alleging illness, injury or other food quality, health or operational concerns, and injury or wrongful death under “dram shop” laws that allow a person to sue the Company and its subsidiaries based on any injury caused by an intoxicated person who was wrongfully served alcoholic beverages at one of the Company’s restaurants. Management does not believe that any of the legal proceedings pending against the Company and its subsidiaries as of the date of this report will have a material adverse effect on the Company’s liquidity, consolidated results of operations or financial condition. The Company may incur liabilities, settle disputes, sustain judgments, or accrue expenses relating to legal proceedings in a particular fiscal year, which may adversely affect its consolidated results of operations, or on occasion, receive settlements that favorably affect its consolidated results of operations. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 27, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 6 – Fair Value Measurements As of September 27, 2020 and December 29, 2019, the fair value of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and other current liabilities approximated their carrying value due to their short-term nature. The carrying amounts of long-term debt approximate fair value as interest rates and negotiated terms and conditions are consistent with current market rates because of the close proximity of recent refinancing transactions to the dates of these unaudited Condensed Consolidated Financial Statements (Level 2). The Company utilizes the following fair value hierarchy, which prioritizes the inputs into valuation techniques used to measure fair value. Accordingly, the Company uses valuation techniques which maximize the use of observable inputs and minimize the use of unobservable inputs when determining fair value. The three levels of the hierarchy are as follows: Level 1 Defined as observable inputs such as quoted prices in active markets for identical assets or liabilities. 15 Level 2 Defined as observable inputs other than Level 1 prices. These include quoted prices for similar assets or liabilities in an active market, quoted prices for identical assets or liabilities in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 Defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis As discussed in Note 2(m) above, during the first quarter of fiscal year 2020, primarily due to the impacts of the COVID-19 pandemic, the Company determined that a triggering event had occurred requiring an impairment evaluation of its long-lived assets, indefinite‑lived intangible assets and goodwill. As a result of these analyses, the Company recorded a $689 impairment charge related to the long-lived assets at one restaurant location that management determined would be permanently closed (the Lyndhurst Grill location) and a $15,737 impairment charge related to the Company’s recorded goodwill. The impairment charges were measured based on the amounts by which the carrying values of the assets exceeded their relative fair values. No impairment was recorded for indefinite‑lived intangible assets as their fair values were determined to substantially exceed their carrying values. Fair values for goodwill and long-lived assets that were impaired during the first nine-months of 2020 were estimated utilizing a market approach, and fair value estimates for indefinite-lived intangibles were determined based on an income approach. Fair value estimates utilized market participant assumptions reflecting all available information as of the impairment date. The fair value of goodwill was $0 (Level 3) and the Lyndhurst Grill location was sold during the third quarter of 2020 and therefore has no remaining value on the Company’s Condensed Consolidated Balance Sheet as of September 27, 2020. There were no non-financial assets measured at fair value on a non‑recurring basis as of December 29, 2019. The Company updated its impairment analyses for its long-lived and indefinite-lived intangible assets as of September 27, 2020 as the Company continued to be impacted by the COVID-19 pandemic during the third quarter. No additional impairment was recorded for long-lived or indefinite-lived intangible assets for the quarter ended September 27, 2020. The ultimate severity and longevity of the COVID-19 pandemic is unknown, and therefore, it is possible that additional impairments could be identified in future periods, and such amounts could be material. Assets and Liabilities Measured at Fair Value on a Recurring Basis The following tables present the Company’s financial assets and liabilities measured at fair value on a recurring basis as of the dates indicated: September 27, 2020 Level 1 Level 2 Level 3 Cash and cash equivalents * $ 96 $ - $ - U.S. government obligations * 276 - - Corporate bonds * 2,242 - - Mutual and money market funds ** 1,071 - - Cash surrender value - life insurance * - 2,272 - Total $ 3,685 $ 2,272 $ - December 29, 2019 Level 1 Level 2 Level 3 Cash and cash equivalents * $ 71 $ - $ - U.S. government obligations * 300 - - Corporate bonds * 2,195 - - Mutual and money market funds ** 833 - - Cash surrender value - life insurance * - 2,253 - Total $ 3,399 $ 2,253 $ - * - As held in the Trust (as defined below). ** - As held in the 409a Trust (as defined below). 16 Cash and cash equivalents are classified as Level 1 of the fair value hierarchy as they represent cash held in a rabbi trust established under a retirement benefit arrangement with certain of the Company’s current and former officers (the “Trust”). Cash held in the Trust is invested through an overnight repurchase agreement the investments of which may include U.S. Treasury securities, such as bonds or Treasury bills, and other agencies of the U.S. government. Such investments are valued using quoted market prices in active markets. U.S. government obligations held in the Trust include U.S. Treasury Bonds. These bonds as well as the corporate bonds listed above are considered to be trading securities and are classified as Level 1 of the fair value hierarchy given their readily available quoted prices in active markets. At September 27, 2020 and December 29, 2019, the Company held investments in mutual and money market funds classified as trading securities that were also held in a rabbi trust as of September 27, 2020 (the “409a Trust”) to support its future obligations to participants of its nonqualified deferred compensation plan, which are carried at fair value based on quoted market prices in active markets for identical assets (Level 1). Cash surrender value - life insurance is classified as Level 2 in the fair value hierarchy. The value of each policy was determined by MassMutual Financial Group, an A-rated insurance company, which provides the value of these policies to the Company on a regular basis. There were no transfers between the levels listed above during either of the reporting periods. Unrealized gains or losses on investments held in either the Trust or the 409a Trust are presented as a component of “Other, net” on the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income. The assets of both the Trust and the 409a Trust disclosed above are presented as a component of “Other assets” on the Condensed Consolidated Balance Sheets. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 9 Months Ended |
Sep. 27, 2020 | |
Accounting Changes And Error Corrections [Abstract] | |
Recent Accounting Pronouncements | Note 7 – Recent Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (the “FASB”) Accounting Standards Update (“ASU”) Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement 17 In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU No. 2019-12”). ASU No. 2019-12 simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. This standard is effective for annual periods beginning after December 15, 2020, including interim periods within those annual periods, with early adoption permitted. The Company is currently assessing the potential impact of ASU No. 2019-12 on its unaudited Condensed Consolidated Financial Statements and related disclosures. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) In April 2020, the staff of the FASB issued a question-and-answer document that stated that entities may elect to account for lease concessions related to the effects of the COVID-19 pandemic as though the rights and obligations for those concessions existed as of the commencement of 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 as long as the concession does not result in a substantial increase in the rights of the lessor or in the obligations of the lessee. The Company has made such elections. See Note 10 – Leases below for additional discussion regarding rent concessions granted during the second and third quarters of 2020. The Company continues to have discussions and negotiations are ongoing with its landlords regarding future rent concessions. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 27, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 8 – Related Party Transactions On September 28, 2015, J. Alexander’s Holdings, LLC entered into a management consulting agreement (“Management Consulting Agreement”) with Black Knight, pursuant to which Black Knight provided corporate and strategic advisory services to J. Alexander’s Holdings, LLC. On November 30, 2018 (“Termination Date”), the Company terminated the Management Consulting Agreement by entering into the Termination Agreement. Under the Management Consulting Agreement, J. Alexander’s Holdings, LLC issued Black Knight 1,500,024 non-voting Class B Units and was required to pay Black Knight an annual fee equal to 3% of the Company’s Adjusted EBITDA for each fiscal year during the term of the Management Consulting Agreement and to reimburse Black Knight for its direct out-of-pocket costs incurred for management services provided to J. Alexander’s Holdings, LLC. Under the Management Consulting Agreement, “Adjusted EBITDA” meant the Company’s net income before interest expense, income tax (expense) benefit, depreciation and amortization, and adding asset impairment charges and restaurant closing costs, loss on disposals of fixed assets, transaction and integration costs, non-cash compensation, loss from discontinued operations, gain on debt extinguishment, pre-opening costs and certain unusual items. As a result of the Termination Agreement, in the first quarter of 2019, the Company paid approximately $705 to Black Knight which represented the pro-rata portion of its consulting fees earned during 2018 through the Termination Date. Additionally, the early termination of the Management Consulting Agreement by J. Alexander’s Holdings, LLC required the cash payment of $4,560 to Black Knight as a termination fee which the Company paid on January 31, 2019 using cash on hand. Under the terms of the Termination Agreement, Black Knight had 90 days from the Termination Date to exercise its right to convert the value of the Class B units it was granted under the Management Consulting Agreement above the applicable hurdle rate to the Company’s common stock. Since Black Knight did not exercise its conversion rights within the 90-day period, the Class B Units were cancelled and forfeited for no consideration on February 28, 2019. |
Revenue
Revenue | 9 Months Ended |
Sep. 27, 2020 | |
Revenue From Contract With Customer [Abstract] | |
Revenue | Note 9 – Revenue The following table presents the Company’s revenues disaggregated by revenue source for the periods presented: Quarter Ended Nine Months Ended September 27, September 29, September 27, September 29, 2020 2019 2020 2019 Restaurant $ 46,158 $ 56,835 $ 130,446 $ 183,485 Gift card breakage 72 32 358 345 Net sales $ 46,230 $ 56,867 $ 130,804 $ 183,830 The Company recognized revenue associated with gift cards redeemed by guests of $620 and $779 during the quarters ended September 27, 2020 and September 29, 2019, respectively, and $2,433 and $3,208 during the nine-month periods ended September 27, 2020 and September 29, 2019, respectively. Further, of the amounts that were redeemed during the nine-month periods ended September 27, 2020 and September 29, 2019, $1,786 and $2,197, respectively, were recorded within unearned revenue at the beginning of each of the respective fiscal years. Unearned revenue increased by $488 and $607 during the quarters ended September 27, 2020 and September 29, 2019, respectively, and by $1,441 and $1,954 during the nine-month periods ended September 27, 2020 and September 29, 2019, respectively, as a result of gift cards sold. |
Leases
Leases | 9 Months Ended |
Sep. 27, 2020 | |
Leases [Abstract] | |
Leases | Note 10 – Leases The Company adopted ASC Topic 842, Leases Exit or Disposal Obligations During the first nine months of 2020, the Company took possession of the new restaurant location in San Antonio, Texas, the construction of which is scheduled to be completed during the fourth quarter of 2020. However, due to the current restrictions associated with the COVID-19 pandemic in Texas, coupled with the lead time associated with preparing a new location for opening, the Company has scheduled this restaurant to open in the first quarter of fiscal year 2021. The Company recorded a ROU asset in exchange for a new lease liability of $4,515. Further, the Company entered into a lease for a new restaurant location in Madison, Alabama, which it anticipates will also open during fiscal year 2021 but for which it has not yet taken possession. Each of these leases include a lease term, including option periods, of 30 years. The Company modified an existing lease related to its Stoney River Annapolis location during the first quarter of 2020, which included changes to the length of the lease’s option periods. However, the total number of years between the two option periods remained the same, and the modification did not extend the total lease period beyond that which was agreed upon in the original lease. While base rental payments remained unchanged, the breakpoint and percentages applicable to percentage rental payments were modified should the restaurant’s sales exceed such thresholds. The amendment also provided for a lease incentive payment of $527 contingent upon certain conditions which were met by the Company. The lease incentive payment was recorded as a reduction to the ROU asset during the first quarter of 2020 and received in the second quarter of 2020. As a result of the modification, the Company updated the incremental borrowing rate associated with the lease as of the date of the modification. Additionally, in the second quarter of 2020, the Company modified the lease for its Redlands Grill location in Nashville to extend the upcoming renewal term of the lease to 10 years as well as adjust the rent payments that would have been made under the original lease agreement. Pursuant to this modification, the Company also adjusted the incremental borrowing rate associated with the lease. In the second and third quarters of 2020, the Company was granted COVID-19 related rent concessions for 13 of its restaurant locations and for its corporate office. Under these landlord agreements, certain rent payments will be deferred for various periods, generally providing for 50% rent deferral ranging between three to six months. Certain other locations received rent abatements ranging from 50% to the full amount of the original lease amount ranging from three to seven months. The Company has elected to account for lease concessions resulting directly from COVID-19 as though the enforceable rights and obligations to the concessions existed in the respective agreements at lease inception and will not account for the concessions as lease modifications, unless the 19 concession results in a substantial increase in the Company’s obligations , taking into consideration the recent guidance issued by the FASB in its Staff question-and-answer document regarding rent concessions related to the effects of the COVID-19 pandemic. During the nine months ended September 27, 2020, 12 of the Company’s 14 rent concession agreements qualified for this accounting election, and the remaining two agreements were treated as lease modifications due to a significant extension to the lease term resulting in a substantial increase in total lease payments associated with each lease. The Company’s ROU assets and lease liabilities have been remeasured for lease concessions received to take into consideration the impact of the two lease modifications including adjustment for their respective incremental borrowing rates as well as the timing of the aforementioned abatements and deferrals, the impact of which is presented in the information below. The Company continues to engage in rent concession negotiations for a number of its restaurant locations as of September 27, 2020. The cash paid during the third quarter and first nine months of 2020 for amounts included in the measurement of lease liabilities totaled $1,763 and $6,190, respectively. Maturities of lease liabilities by fiscal year for the Company’s operating leases are as follows: September 27, 2020 2020 (1) $ 1,925 2021 9,917 2022 9,731 2023 9,745 2024 9,402 2025 and thereafter 96,391 Total minimum lease payments 137,111 Less: Imputed interest (2) 52,193 Present value of lease liabilities $ 84,918 (1) Excluding the 39 weeks ended September 27, 2020 (2) Amount necessary to reduce net minimum lease payments to present value calculated using the Company’s incremental borrowing rates, which are consistent with the lease terms at adoption date (for those leases in existence as of the adoption date of Topic 842) or lease inception or modification date (for those leases entered into or modified after the adoption date). |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 27, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 11 – Subsequent Events On October 28, 2020, the Company entered into the Fourth Loan Agreement with Pinnacle Bank to modify certain terms within the Third Loan Agreement in place as of September 27, 2020 as discussed in Note 2(l) – Debt above. Also discussed in Note 2(l), the Company considered the terms of the Fourth Loan Agreement when determining the Company’s intent and ability to reclassify short-term debt as of September 27, 2020 to long-term debt. As such, a portion of the outstanding debt at September 27, 2020 is classified as long-term on the Company’s Condensed Consolidated Balance Sheet at September 27, 2020. Further, in October 2020, the Company paid $10,000 of the $20,000 outstanding Development Line of Credit balance, which was included in the “Current portion of long-term debt” balance on the Condensed Consolidated Balance Sheet as of September 27, 2020. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 9 Months Ended |
Sep. 27, 2020 | |
Accounting Policies [Abstract] | |
Interim Financial Statements | (a) Interim Financial Statements The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the instructions to Form 10-Q and rules of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnote disclosures required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the quarter and nine-month period ended September 27, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending January 3, 2021. For further information, refer to the Consolidated Financial Statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2019, filed with the SEC on March 13, 2020, and amended on April 17, 2020 (the “2019 Annual Report”). Total comprehensive (loss) income is comprised solely of net (loss) income for all periods presented. There have been no material changes in the Company’s significant accounting policies, other than those described in Note 2(k) – Inventory Method Change and Note 7 – Recent Accounting Pronouncements, as compared to the significant accounting policies described in the Company’s 2019 Annual Report. |
Effects of COVID-19 | (b) Effects of COVID-19 On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency due to the global spread of a new strain of coronavirus (“COVID-19”) and the related risks to the international community. On March 11, 2020, the WHO classified the COVID-19 outbreak as a pandemic, and on March 13, 2020 the United States declared the pandemic a National Public Health Emergency. In response, many states and jurisdictions in which the Company operates restaurants issued stay-at-home orders and other measures, including the closure of all in-restaurant dining, aimed at slowing the spread of the virus beginning in March 2020. These measures resulted in the closure of the Company’s dining rooms 7 In addition to the decline in restaurant sales, the Company has also incurred approximately $3,336 of costs directly related to the COVID-19 pandemic in the nine-month period ended September 27, 2020, which consists primarily of benefits and payments to furloughed restaurant employees for emergency sick leave, vacation and other sick leave benefits and related payroll taxes as well as inventory waste. Additionally, the Company continued to incur expenses related to the ongoing operations of the restaurants as well as monthly rent and occupancy-related costs during the period that its restaurants were temporarily closed, or operating on an off-premise basis only or with limited capacity. The Company has implemented measures to reduce its costs and limit its cash outflows during the COVID-19 pandemic, including temporary reductions in staffing levels and related furloughs of restaurant-level hourly employees, elimination of certain positions at the Company’s corporate office, deferral or cancellation of significant capital expenditure projects, engaging in negotiations with vendors and landlords regarding deferral or abatement of rental and other contractual obligations and the deferral of tax payments where allowed. The Company executed deferral and abatement agreements for certain of its locations with their respective landlord during the second and third quarters of 2020 while negotiations for other locations are ongoing. The disruption in operations and reduction in restaurant sales also led the Company to consider the impact of the COVID-19 pandemic on the recoverability of its assets, including property and equipment, right-of-use assets for operating leases, goodwill and intangible assets, and others. Such impairment analyses resulted in the Company recording impairment charges totaling $16,426 for the nine-month period ended September 27, 2020 and are discussed further in Note 2(m) below. T he ultimate severity and longevity of the COVID-19 pandemic is unknown, and therefore, To preserve financial flexibility, the Company drew the remaining $17,000 of available capacity (at the time of the draw) under its revolving credit facilities in March 2020. During April 2020, the Company also entered into deferral letter agreements with its lender to postpone principal and interest payments on its outstanding indebtedness for a period of 90 days and, in June 2020, an additional deferral letter was entered into to defer principal payments for an additional 90-day period. Additionally, the Company entered into a modification agreement in April 2020 to defer the maturity of, and interest payments under one of its term loans to September 2021 (which was subsequently modified again in October 2020 as discussed below). In May 2020, the Company obtained a waiver letter from its lender that waived existing financial covenants and instituted new financial covenants. In June 2020, the Company entered into an amendment with its lender to increase the borrowing capacity under its revolving line of credit by an additional $15,000. Finally, in October 2020, the Company entered into an agreement with its lender which extended the maturity dates of certain of its outstanding loans along with other modifications including instituting new financial covenants. See Note 11 – Subsequent Events for further discussion. The full impact of the COVID-19 pandemic continues to evolve as of the date of this report. Given the uncertainty surrounding the global economy and governmental restrictions on the Company’s operations, the Company cannot reasonably predict when its restaurants will be able to return to normal dining room operations. Due to the rapid development and fluidity of this situation, the Company cannot determine the ultimate impact that the COVID-19 pandemic will have on its consolidated financial condition, liquidity and future results of operations, and therefore any prediction as to the ultimate material adverse impact on the Company’s consolidated financial condition, liquidity, and future results of operations is uncertain. The Company does expect that its results of operations, cash flows and liquidity will be negatively affected by the pandemic, in some form, for the remainder of fiscal year 2020. |
Principles of Consolidation | (c) Principles of Consolidation The unaudited Condensed Consolidated Financial Statements include the accounts of the Company as well as the accounts of its subsidiaries. All intercompany profits, transactions, and balances between the Company and its subsidiaries have been eliminated. It is the Company’s policy to reclassify prior year amounts to conform to the current year’s presentation for comparative purposes, if such a reclassification is warranted. The Company is a holding company with no direct operations and that holds as its sole asset an equity interest in J. Alexander’s Holdings, LLC and, as a result, relies on J. Alexander’s Holdings, LLC to provide it with funds necessary to meet its financial obligations. |
Fiscal Year | ( d ) Fiscal Year The Company’s fiscal year ends on the Sunday closest to December 31, and each quarter typically consists of 13 weeks. The quarter and nine-month periods ended September 27, 2020 and September 29, 2019 each included 13 and 39 weeks of operations, respectively. Fiscal years 2020 and 2019 include 53 and 52 weeks of operations, respectively. |
Discontinued Operations and Restaurant Closure | ( e ) Discontinued Operations and Restaurant Closures During the second quarter of 2020, the Company made the decision to permanently close the Lyndhurst Grill location in Cleveland, Ohio, on May 1, 2020 after a review of its projected and historical financial performance. This location was also required to be temporarily closed in mid‑March due to COVID-19-related traffic limitations unique to that specific restaurant which further impacted operating results. Restaurant closing costs recorded during the quarter and nine-month period ended September 27, 2020 totaled $173 and $351, respectively, and include labor expenses incurred subsequent to closure, severance, the loss on sale of fixed assets at this location discussed below and other miscellaneous costs. Expenses associated with the closure of the Lyndhurst Grill restaurant have not been included in discontinued operations as its closure does not represent a strategic shift that will have a major effect on the Company’s operations and financial results. As such, these restaurant closing costs have been included as a component of “Long-lived asset impairment charges and restaurant closing costs” in the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income. The Company entered into an agreement to sell this property in the second quarter of 2020 and the transaction closed in the third quarter of 2020. The assets sold included the land and building for which the Company received proceeds of $1,070. The Company previously recorded a long-lived asset impairment charge of $689 related to the fixed assets at this location during the first quarter of 2020 which is discussed in Note 2(m) below. In addition, the Company remains party to a lease agreement for a location that was closed in 2013 and is accounted for as a discontinued operation. The $53 and $66 losses from discontinued operations included in the quarters ended September 27, 2020 and September 29, 2019, respectively, and losses for the nine-month periods ended September 27, 2020 and September 29, 2019 of $160 and $183, respectively, consist solely of exit and disposal costs for this location. |
Transaction, Contested Proxy and other Related Expenses | ( f ) Transaction, Contested Proxy and other Related Expenses Transaction, contested proxy and other related expenses totaled $12 and $635 for the quarter and nine-month period ended September 27, 2020, respectively. In the first nine months of 2020, the Company incurred legal fees, other professional fees and consulting fees related to the ongoing evaluation of strategic alternatives. During the first quarter of 2020, the Company announced that given the uncertainties in the business community, the restaurant industry and the financial markets as a result of the COVID-19 pandemic, the ongoing review of strategic alternatives by the Company’s Board of Directors (the “Board”) was not expected to be completed until the uncertainties are resolved. Transaction, contested proxy and other related expenses for the quarter and nine-month period ended September 29, 2019 totaled $117 and $768, respectively. Expenses in 2019 include costs associated with both soliciting shareholder proxies for the Company’s 2019 annual meeting of shareholders as well as costs related to the evaluation of strategic alternatives. |
(Loss) Earnings per Share | ( g ) (Loss) Earnings per Share Basic (loss) earnings per share of common stock is computed by dividing net (loss) income by the weighted average number of shares outstanding for the reporting period. Diluted (loss) earnings per share of common stock is computed similarly to basic (loss) earnings per share except the weighted average shares outstanding are increased to include potential shares outstanding resulting from share-based compensation awards and additional shares from the assumed exercise of any common stock equivalents, if dilutive. In periods of net loss, no potential common shares are included in the diluted shares outstanding as the effect is anti-dilutive. J. Alexander’s Holdings, LLC Class B Units are considered common stock equivalents for this purpose. The number of additional shares of common stock related to these common stock equivalents is calculated using the if-converted method, if dilutive. The number of additional shares of common stock related to stock option awards and unvested restricted share awards subject to only a service condition is calculated using the treasury stock method, if dilutive. Unvested restricted share awards that are subject to a performance condition are regarded as contingently issuable common shares and are included in the denominator of the diluted earnings per share calculation using the treasury stock method as of the beginning of the period in which the performance condition has been satisfied, if dilutive. Refer to Note 3 – (Loss) Earnings per Share for the basic and diluted (loss) earnings per share calculations and additional discussion. |
Non-controlling Interests | ( h ) Non-controlling Interests Non-controlling interests presented on the Condensed Consolidated Balance Sheets represent the portion of net assets of the Company attributable to the non-controlling J. Alexander’s Holdings, LLC Class B Unit holders. As of each September 27, 2020 and December 29, 2019, the non-controlling interests presented on the Condensed Consolidated Balance Sheets were $1,558. On February 28, 2019, in conjunction with the termination agreement (“Termination Agreement”) entered into in November 2018 between J. Alexander’s Holdings, LLC and Black Knight Advisory Services, LLC (“Black Knight”), the 1,500,024 Class B Units held by Black Knight were cancelled and forfeited for no consideration. Therefore, the Black Knight non‑controlling interest associated with their Class B Unit share-based compensation expense was reclassified to additional paid-in capital in the first quarter of 2019, and as of September 27, 2020 and December 29, 2019, non-controlling interests consist solely of the previously recognized non-cash compensation expense relative to the Class B Units held by management. The Hypothetical Liquidation at Book Value method was used as of each of September 27, 2020 and September 29, 2019 to determine allocations of non-controlling interests in respect of vested grants consistent with the terms of the Second Amended and Restated LLC Agreement of J. Alexander’s Holdings, LLC, and pursuant to those calculations, no allocation of net (loss) income was made to non-controlling interests for either of the quarters or nine-month periods ended September 27, 2020 or September 29, 2019. |
Use of Estimates | ( i ) Use of Estimates Management has made certain estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the unaudited Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the periods presented to prepare these unaudited Condensed Consolidated Financial Statements in conformity with GAAP. Significant items subject to such estimates and assumptions include those related to the accounting for gift card breakage, determination of uncertain tax positions and the valuation allowance relative to deferred tax assets, if any, estimates of useful lives of property and equipment and leasehold improvements, the carrying amount of intangible assets, fair market valuations, determination of lease terms, and accounting for impairment losses, contingencies, and litigation. Actual results could differ from these estimates. |
Share Repurchase Program | ( j ) Share Repurchase Program On November 1, 2018, the Board authorized a share repurchase program which replaced the previous share repurchase program that expired on October 29, 2018, and allows for the repurchase of shares up to an aggregate purchase price of $15,000 over the three-year |
Inventory Method Change | (k) Inventory Method Change At the beginning of fiscal 2020, the Company implemented a new inventory management system. In connection with this implementation, the Company changed its method of accounting for inventory from the lower of cost (first-in, first-out) or net realizable value method utilized by its legacy system to the lower of cost or net realizable value method, with cost being determined using an average cost method, effective December 30, 2019 (the first day of the current fiscal year). The Company believes this change in accounting principle is preferable, as it will result in greater precision in the costing of inventories. In addition, the average cost method better aligns with the functionality of the new inventory management system. The Company determined that the effects of adopting the average cost method were not material to its Condensed Consolidated Financial Statements. Prior to the conversion to the new inventory management system, the Company was not able to determine the impact of the change to the average cost method. Therefore, it did not retroactively apply the change to periods prior to fiscal year 2020. |
Debt | ( l ) Debt On September 27, 2020, the Company was party to the Third Amended and Restated Loan Agreement, dated June 5, 2020, by and between J. Alexander’s, LLC and Pinnacle Bank, as amended (the “Third Loan Agreement”). The Third Loan Agreement was subsequently amended by the Fourth Amended and Restated Loan Agreement (the “Fourth Loan Agreement”), dated October 28, 2020 and entered into by the same parties, which extends the maturity of three of the 10 Company’s loans to January 1, 2023 and makes the same interest rate apply to each of the loans as described below. The Fourth Amended and Restated Loan Agreement amends and restates in its entirety the Third Loan Agreement . The discussion that follows describes the terms of the Company’s credit facilities under the Fourth Loan Agreement with deviations from the Third Loan Agreement that was in place as of September 27, 2020 as notated. The Fourth Loan Agreement consists of the following loans: (i) a $4,028 term loan set to mature on January 1, 2023 (the “Mortgage Loan” previously stated at $5,000 and set to mature on September 3, 2021), (ii) a $20,000 development line of credit set to mature on January 1, 2023 (the “Development Line of Credit” previously set to mature on September 3, 2021), (iii) a $556 term loan set to mature on December 10, 2020 (the “Term Loan” previously stated at $10,000 and set to mature on September 3, 2021), and (iv) a $16,000 revolving line of credit set to mature on January 1, 2023 (the “Revolving Line of Credit” previously set to mature on September 3, 2021). At September 27, 2020, the amounts outstanding under the Development Line of Credit and the Revolving Line of Credit were $20,000 and $1,000, respectively. At September 27, 2020, $4,167 was outstanding under the Mortgage Loan and an additional $556 was outstanding under the Term Loan. Due to the modification of each credit facility’s maturity date effective with the Fourth Loan Agreement, the Company considered these dates when determining its intent and ability to reclassify short-term debt as of September 27, 2020 to long-term debt. As such, a portion of the outstanding debt at September 27, 2020 is classified as long-term on the Company’s Condensed Consolidated Balance Sheet at September 27, 2020. During the first quarter of 2020, the Company announced it drew down the remaining $17,000 of available capacity (at the time of the draw) under the Development Line of Credit and the Revolving Line of Credit (the “Credit Draw”). The Credit Draw was undertaken as a precautionary measure to provide increased liquidity and preserve financial flexibility in light of the current disruption and uncertainty resulting from the COVID-19 pandemic. Following the Credit Draw, debt outstanding under the Development Line of Credit and the Revolving Line of Credit totaled $21,000. Pursuant to the terms of the Second Amended and Restated Loan Agreement (the “Second Loan Agreement”), the borrowings under the Second Loan Agreement bore interest at 30-day LIBOR plus a sliding interest rate scale determined by a maximum adjusted debt to EBITDAR ratio (following the Credit Draw, set at 30-day LIBOR plus 2.35% as of September 27, 2020). Under the Fourth Loan Agreement, each of these credit facilities bear interest at a rate of 30-day LIBOR plus 2.5%, with a floor for LIBOR of 1.5%. The maximum adjusted debt to EBITDAR ratio financial covenant which previously determined these interest rates as of September 27, 2020 was eliminated by the Fourth Loan Agreement. In October 2020, the Company paid $10,000 of the $20,000 outstanding Development Line of Credit balance, which was included in the “Current portion of long-term debt” balance on the Condensed Consolidated Balance Sheet as of September 27, 2020 due to the Company’s intent and ability to pay this amount within a twelve-month period as of the balance sheet date. On April 15, 2020, the Company entered into a modification of the Second Loan Agreement impacting the Term Loan, which deferred the two remaining principal payments totaling $556 until the Term Loan’s new maturity date which was modified to be September 3, 2021. As noted above, the Fourth Loan Agreement further modified the maturity date of the Term Loan to December 10, 2020. With respect to interest payments in the interim, the Term Loan was modified to defer such payments until July 3, 2020 at which point monthly interest payments resumed and will continue through its current maturity date of December 10, 2020. Similar to the Term Loan, the Company also negotiated for the deferral of principal and interest payments related to the Mortgage Loan and executed deferral letters in both April 2020 and June 2020 related to such deferrals. The principal payments otherwise due in April through September 2020 totaling $834 will now be payable when the loan matures on January 1, 2023 and interest payments resumed on July 3, 2020. As noted above, under the Fourth Loan Agreement, each of these credit facilities bear interest at a rate of 30-day LIBOR plus 2.5%, with a floor for LIBOR of 1.5%. The maximum adjusted debt to EBITDAR ratio financial covenant which previously determined these interest rates as of September 27, 2020 was eliminated by the Fourth Loan Agreement, and was set at 30-day LIBOR plus 2.35% as of September 27, 2020. The Company also reached an agreement with its lender in April 2020 to defer interest payments on its Development Line of Credit and Revolving Line of Credit for the months of April, May and June 2020, and interest payments resumed on July 3, 2020. On June 5, 2020, the Company entered into the Third Loan Agreement with Pinnacle Bank which amended its Revolving Line of Credit to expand its capacity from $1,000 to a total of $16,000 by adding an accordion feature for the additional $15,000, with the additional capacity available for general corporate purposes, including working capital and letters of credit. This amendment also required the Company to pledge the previously unencumbered five owned properties as collateral to the lender. The additional capacity is available for borrowing by the Company in amounts up to and including $5,000 per fiscal month beginning in the eighth fiscal month of 2020, with any amounts not borrowed during any particular period to be available for borrowing in subsequent periods. Any advances on the expanded Revolving Line of Credit are contingent on the Company achieving certain levels of revenue on a trailing three-fiscal-month basis. Borrowings under the Revolving Line of Credit under the Third Loan Agreement bore interest at a rate of LIBOR plus 2.5%, with a floor for LIBOR of 1.5%, and was 11 payable quarterly beginning on September 3, 2020. Under the Fourth Loan Agreement, the interest rate on this credit facility remains the same and a ll outstanding principal and interest is now due and payable at the end of fiscal 2022 . The Third Loan Agreement included certain terms agreed upon in a May 2020 waiver, which waived financial covenant compliance for existing financial covenants under the Second Loan Agreement beginning May 7, 2020 through the period ending July 4, 2021, and implemented two new financial covenants included in the Third Loan Agreement. These financial covenants are now incorporated in the Fourth Loan Agreement, which also extended the Company’s obligation to maintain these financial covenants through the new maturity date at the end of fiscal 2022. The new financial covenants require (i) minimum revenue of (a) at least $99,800 for the Company’s fiscal year ending January 3, 2021, (b) at least $118,400 on a four-quarter trailing basis by April 4, 2021, and (c) at least $166,800 on a four-quarter trailing basis by July 4, 2021, and (ii) a maximum adjusted debt to tangible net worth ratio of 0.80 or less, measured quarterly beginning September 27, 2020. The Fourth Loan Agreement also includes a fixed coverage charge ratio covenant of not less than 1.00 to 1.00 for the fiscal third and fourth quarters of 2021 and not less than 1.05 through the end of fiscal 2022. Under the Second Loan Agreement, the fixed coverage charge financial covenant was required to be at a ratio of not less than 1.25 to 1.00 throughout the term of that agreement. On April 10, 2020 and April 15, 2020, respectively, J. Alexander’s, LLC and Stoney River Management Company, LLC each an indirect subsidiary of the Company, were each granted loans from Pinnacle Bank in the aggregate amounts of $10,000 and $5,100 pursuant to the Paycheck Protection Program under the Coronavirus Aid Relief and Economic Security Act (“CARES Act”), which was enacted March 27, 2020. The Company believed its subsidiary operating companies were eligible for the loans in accordance with the special eligibility provisions for larger companies under provisions included in the CARES Act and the applicable implementing guidance issued by the U.S. Small Business Administration under the Paycheck Protection Program that was available at the time loan applications were submitted. The loans had been obtained to support the goal in the legislation of providing financial assistance to restaurant-level employees, including approximately 3,400 furloughed hourly employees that were not assisting with the Company’s carry-out programs at the time, and to restore the Company’s workforce as quickly as possible once dine-in operations could be safely resumed in accordance with applicable state and local government guidelines. However, as a result of additional guidance issued by the United States Treasury Department and the U.S. Small Business Administration on April 23, 2020, |
Goodwill Impairment and Long-lived Asset Impairment Charges | ( m ) Goodwill Impairment and Long-lived Asset Impairment Charges In light of the decline in the market price of the Company’s common stock, the impact of mandated dining room closures on financial results, the expected reduction in economic activity in the near term, and the general economic and market volatility, the Company determined that these factors constituted an interim triggering event as of the end of the Company’s first, second and third quarters of 2020, and performed impairment analyses with regard to its indefinite-lived intangible assets, property and equipment (including its right-of-use assets for operating leases) and goodwill. As a result, the Company recorded asset impairment charges totaling $16,426 in the first nine months of 2020. The Company performed a quantitative goodwill impairment test as of March 29, 2020 utilizing a market approach which included observable market prices associated with the Company’s common stock price in determining a fair value for the Company and its reporting units. As a result of this test, the Company determined that the J. Alexander’s reporting unit’s carrying value exceeded its fair value to such an extent that the full impairment of goodwill in the first quarter of 2020 in the amount of $15,737 was appropriate. The effect of this conclusion is presented as a component of “Goodwill impairment charge” on the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income. Additionally, the Company recorded a long-lived asset impairment charge of $689 to state the assets at its Lyndhurst Grill location in Cleveland, Ohio, at their fair value as of March 29, 2020, which is presented as “Long-lived asset impairment charges and restaurant closing costs” on the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income. During the second quarter of 2020, the Company made the decision to permanently close this location after a review of its projected and historical financial performance. This location was also required to be temporarily closed in mid‑March 2020 due to COVID-19-related traffic limitations unique to that specific restaurant which further impacted operating results. 12 The Company also performed a quantitative impairment analysis in the first, second and third quarters of 2020 relative to its indefinite-lived intangible assets and determined that the fair value of these assets substantially exceeded their carrying values and no impairment existed as of September 27, 2020. |
Earnings (Loss) per Share (Tabl
Earnings (Loss) per Share (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Diluted (Loss) Earnings per Share | The following table sets forth the computation of basic and diluted (loss) earnings per share: Quarter Ended Nine Months Ended (Dollars and shares in thousands, except per share amounts) September 27, September 29, September 27, September 29, 2020 2019 2020 2019 Numerator: (Loss) income from continuing operations, net of tax $ (1,707 ) $ 837 $ (26,232 ) $ 6,970 Loss from discontinued operations, net (53 ) (66 ) (160 ) (183 ) Net (loss) income $ (1,760 ) $ 771 $ (26,392 ) $ 6,787 Denominator: Weighted average shares (denominator for basic (loss) earnings per share) 14,729 14,695 14,706 14,695 Effect of dilutive securities - 113 - 51 Adjusted weighted average shares and assumed conversions (denominator for diluted (loss) earnings per share) 14,729 14,808 14,706 14,746 Basic (loss) earnings per share: (Loss) income from continuing operations, net of tax $ (0.12 ) $ 0.06 $ (1.78 ) $ 0.47 Loss from discontinued operations, net (0.00 ) (0.00 ) (0.01 ) (0.01 ) Basic (loss) earnings per share $ (0.12 ) $ 0.05 $ (1.79 ) $ 0.46 Diluted (loss) earnings per share: (Loss) income from continuing operations, net of tax $ (0.12 ) $ 0.06 $ (1.78 ) $ 0.47 Loss from discontinued operations, net (0.00 ) (0.00 ) (0.01 ) (0.01 ) Diluted (loss) earnings per share $ (0.12 ) $ 0.05 $ (1.79 ) $ 0.46 Note: Per share amounts may not sum due to rounding. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis | The following tables present the Company’s financial assets and liabilities measured at fair value on a recurring basis as of the dates indicated: September 27, 2020 Level 1 Level 2 Level 3 Cash and cash equivalents * $ 96 $ - $ - U.S. government obligations * 276 - - Corporate bonds * 2,242 - - Mutual and money market funds ** 1,071 - - Cash surrender value - life insurance * - 2,272 - Total $ 3,685 $ 2,272 $ - December 29, 2019 Level 1 Level 2 Level 3 Cash and cash equivalents * $ 71 $ - $ - U.S. government obligations * 300 - - Corporate bonds * 2,195 - - Mutual and money market funds ** 833 - - Cash surrender value - life insurance * - 2,253 - Total $ 3,399 $ 2,253 $ - * - As held in the Trust (as defined below). ** - As held in the 409a Trust (as defined below). |
Revenue (Tables)
Revenue (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Disaggregation Of Revenue [Abstract] | |
Disaggregation of Revenue | The following table presents the Company’s revenues disaggregated by revenue source for the periods presented: Quarter Ended Nine Months Ended September 27, September 29, September 27, September 29, 2020 2019 2020 2019 Restaurant $ 46,158 $ 56,835 $ 130,446 $ 183,485 Gift card breakage 72 32 358 345 Net sales $ 46,230 $ 56,867 $ 130,804 $ 183,830 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Leases [Abstract] | |
Schedule of Maturities of Lease Liabilities for Operating Leases | Maturities of lease liabilities by fiscal year for the Company’s operating leases are as follows: September 27, 2020 2020 (1) $ 1,925 2021 9,917 2022 9,731 2023 9,745 2024 9,402 2025 and thereafter 96,391 Total minimum lease payments 137,111 Less: Imputed interest (2) 52,193 Present value of lease liabilities $ 84,918 (1) Excluding the 39 weeks ended September 27, 2020 (2) Amount necessary to reduce net minimum lease payments to present value calculated using the Company’s incremental borrowing rates, which are consistent with the lease terms at adoption date (for those leases in existence as of the adoption date of Topic 842) or lease inception or modification date (for those leases entered into or modified after the adoption date). |
Organization and Business - Add
Organization and Business - Additional Information (Details) | 9 Months Ended | |
Sep. 27, 2020RestaurantOperatingplace | Dec. 29, 2019RestaurantOperatingplace | |
Organization And Business [Abstract] | ||
Date of incorporation | Aug. 15, 2014 | |
Number of restaurants | Restaurant | 46 | 47 |
Number of states in entity operates | Operatingplace | 16 | 16 |
Basis of Presentation - Additio
Basis of Presentation - Additional Information (Details) $ in Thousands | Oct. 28, 2020USD ($)Loan | Sep. 27, 2020USD ($)Employee | Aug. 01, 2020USD ($) | Apr. 15, 2020USD ($) | Feb. 28, 2019shares | Nov. 01, 2018USD ($) | Oct. 29, 2015 | Oct. 31, 2020USD ($) | May 31, 2020 | Jul. 04, 2021USD ($) | Apr. 04, 2021USD ($) | Sep. 27, 2020USD ($)Employee | Mar. 29, 2020USD ($) | Sep. 29, 2019USD ($) | Jun. 28, 2020USD ($) | Sep. 27, 2020USD ($)Employeeshares | Sep. 29, 2019USD ($) | Jan. 03, 2021USD ($) | Jun. 05, 2020USD ($) | Apr. 29, 2020USD ($) | Apr. 10, 2020USD ($) | Dec. 29, 2019USD ($) |
Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
Asset impairment charges | $ 16,426 | |||||||||||||||||||||
Restaurant closing costs | $ 173 | 351 | ||||||||||||||||||||
Long-lived asset impairment charge | $ 689 | |||||||||||||||||||||
Proceeds from sale of long-lived assets | 1,070 | |||||||||||||||||||||
Loss from discontinued operations, net | 53 | $ 66 | 160 | $ 183 | ||||||||||||||||||
Transaction, proxy and other related expenses | 12 | 117 | $ 635 | 768 | ||||||||||||||||||
Potential common shares included in diluted shares outstanding as effect is antidilutive | shares | 0 | |||||||||||||||||||||
Non-controlling interests | $ 1,558 | 1,558 | $ 1,558 | $ 1,558 | ||||||||||||||||||
Aggregate purchase price for repurchase of company stock outstanding | $ 15,000 | |||||||||||||||||||||
Period to repurchase common stock | 3 years | |||||||||||||||||||||
Stock repurchase program expiration date | Nov. 1, 2021 | Oct. 29, 2018 | ||||||||||||||||||||
Common stock repurchase activity | shares | 0 | |||||||||||||||||||||
Repayments of debt | $ 16,350 | 3,750 | ||||||||||||||||||||
Net sales | $ 46,230 | 56,867 | $ 130,804 | 183,830 | ||||||||||||||||||
Number of furloughed hourly employees | Employee | 3,400 | 3,400 | 3,400 | |||||||||||||||||||
Goodwill impairment charge | 15,737 | $ 15,737 | ||||||||||||||||||||
Impairment of indefinite-lived intangible assets | 0 | $ 0 | $ 0 | |||||||||||||||||||
Financial Institution | ||||||||||||||||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
Debt instrument, covenant compliance | The Third Loan Agreement included certain terms agreed upon in a May 2020 waiver, which waived financial covenant compliance for existing financial covenants under the Second Loan Agreement beginning May 7, 2020 through the period ending July 4, 2021 | |||||||||||||||||||||
Debt instrument, covenant description | The new financial covenants require (i) minimum revenue of (a) at least $99,800 for the Company’s fiscal year ending January 3, 2021, (b) at least $118,400 on a four-quarter trailing basis by April 4, 2021, and (c) at least $166,800 on a four-quarter trailing basis by July 4, 2021, and (ii) a maximum adjusted debt to tangible net worth ratio of 0.80 or less, measured quarterly beginning September 27, 2020. | |||||||||||||||||||||
Financial Institution | Maximum | ||||||||||||||||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
Adjusted debt to tangible net worth ratio | 0.80 | 0.80 | 0.80 | |||||||||||||||||||
Allocation of Net Income | ||||||||||||||||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
Non-controlling interests | $ 0 | 0 | $ 0 | 0 | ||||||||||||||||||
Black Knight Advisory Services, LLC | Common Class B Units | ||||||||||||||||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
Number of share forfeited and cancelled | shares | 1,500,024 | |||||||||||||||||||||
J. Alexander's, LLC | Financial Institution | ||||||||||||||||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
Aggregate loan granted under CARES Act | $ 10,000 | |||||||||||||||||||||
Aggregate loan repaid under CARES Act | $ 10,000 | |||||||||||||||||||||
Stoney River Management Company, LLC | Financial Institution | ||||||||||||||||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
Aggregate loan granted under CARES Act | $ 5,100 | |||||||||||||||||||||
Aggregate loan repaid under CARES Act | $ 5,100 | |||||||||||||||||||||
Discontinued Operations | ||||||||||||||||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
Loss from discontinued operations, net | 53 | $ 66 | $ 160 | $ 183 | ||||||||||||||||||
Fourth Amended and Restated Loan Agreement | Subsequent Event | ||||||||||||||||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
Debt instrument, expiration date | Jan. 1, 2023 | |||||||||||||||||||||
Fourth Amended and Restated Loan Agreement | Subsequent Event | Financial Institution | ||||||||||||||||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
Debt instrument, covenant description | The Fourth Loan Agreement also includes a fixed coverage charge ratio covenant of not less than 1.00 to 1.00 for the fiscal third and fourth quarters of 2021 and not less than 1.05 through the end of fiscal 2022. Under the Second Loan Agreement, the fixed coverage charge financial covenant was required to be at a ratio of not less than 1.25 to 1.00 throughout the term of that agreement. | |||||||||||||||||||||
Financial Debt Covenants | Financial Institution | Scenario Forecast | ||||||||||||||||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
Net sales | $ 166,800 | $ 118,400 | $ 99,800 | |||||||||||||||||||
Second Loan Agreement | Subsequent Event | Financial Institution | ||||||||||||||||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
Debt Instrument Covenant Minimum Required Fixed Charge Coverage Ratio | 125.00% | |||||||||||||||||||||
Development Line of Credit | Financial Institution | ||||||||||||||||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
Line of credit facility, expiration date | Sep. 3, 2021 | |||||||||||||||||||||
Line of credit, outstanding | $ 20,000 | 20,000 | $ 20,000 | |||||||||||||||||||
Development Line of Credit | Fourth Amended and Restated Loan Agreement | Subsequent Event | ||||||||||||||||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
Repayments of debt | $ 10,000 | |||||||||||||||||||||
Line of credit facility, outstanding | $ 20,000 | |||||||||||||||||||||
Development Line of Credit | Fourth Amended and Restated Loan Agreement | Subsequent Event | Financial Institution | ||||||||||||||||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
Line of credit facility | $ 20,000 | |||||||||||||||||||||
Line of credit facility, expiration date | Jan. 1, 2023 | |||||||||||||||||||||
Mortgage Loan | ||||||||||||||||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
Principal payments deferral amount | $ 834 | |||||||||||||||||||||
Principal payments deferred date | Sep. 3, 2021 | |||||||||||||||||||||
Mortgage Loan | Financial Institution | ||||||||||||||||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
Debt instrument, expiration date | Sep. 3, 2021 | |||||||||||||||||||||
Long term loan | 5,000 | 5,000 | $ 5,000 | |||||||||||||||||||
Loan, outstanding | 4,167 | 4,167 | $ 4,167 | |||||||||||||||||||
Mortgage Loan | Fourth Amended and Restated Loan Agreement | Subsequent Event | Financial Institution | ||||||||||||||||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
Debt instrument, expiration date | Jan. 1, 2023 | |||||||||||||||||||||
Long term loan | $ 4,028 | |||||||||||||||||||||
Extension of Maturity Date | Fourth Amended and Restated Loan Agreement | Subsequent Event | ||||||||||||||||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
Number of loans | Loan | 3 | |||||||||||||||||||||
Revolving Line of Credit | Financial Institution | ||||||||||||||||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
Line of credit facility, expiration date | Sep. 3, 2021 | |||||||||||||||||||||
Line of credit, outstanding | $ 1,000 | 1,000 | $ 1,000 | |||||||||||||||||||
Revolving Line of Credit | Fourth Amended and Restated Loan Agreement | Subsequent Event | Financial Institution | ||||||||||||||||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
Line of credit facility | $ 16,000 | |||||||||||||||||||||
Line of credit facility, expiration date | Jan. 1, 2023 | |||||||||||||||||||||
Revolving Line of Credit | Third Amended and Restated Loan Agreement | ||||||||||||||||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
Line of credit facility | $ 16,000 | |||||||||||||||||||||
Original line of credit facility amount | 1,000 | |||||||||||||||||||||
Line of credit facility expansion amount | $ 15,000 | |||||||||||||||||||||
Monthly incremental line of credit facility | $ 5,000 | |||||||||||||||||||||
Revolving Line of Credit | Third Amended and Restated Loan Agreement | LIBOR | ||||||||||||||||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
Debt instrument, basis spread on variable rate | 2.50% | |||||||||||||||||||||
Revolving Line of Credit | Third Amended and Restated Loan Agreement | LIBOR | Floor | ||||||||||||||||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
Interest on borrowings | 1.50% | |||||||||||||||||||||
Revolving Line of Credit | Development Line of Credit | ||||||||||||||||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
Line of credit, amount drew down during period | 17,000 | |||||||||||||||||||||
Line of credit, outstanding | $ 21,000 | |||||||||||||||||||||
Revolving Line of Credit | Development Line of Credit | LIBOR | ||||||||||||||||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
Debt instrument, description of variable rate basis | 30-day LIBOR plus 2.35% | |||||||||||||||||||||
Debt instrument, basis spread on variable rate | 2.35% | |||||||||||||||||||||
Revolving Line of Credit | Development Line of Credit | Fourth Amended and Restated Loan Agreement | Subsequent Event | LIBOR | Floor | ||||||||||||||||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
Debt instrument, floor rate | 1.50% | |||||||||||||||||||||
Revolving Line of Credit | Development Line of Credit | Third Amended and Restated Loan Agreement | LIBOR | ||||||||||||||||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
Debt instrument, description of variable rate basis | 30-day LIBOR plus 2.5% | |||||||||||||||||||||
Debt instrument, basis spread on variable rate | 2.50% | |||||||||||||||||||||
Term Loan | ||||||||||||||||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
Principal payments deferral amount | $ 556 | |||||||||||||||||||||
Term Loan | Financial Institution | ||||||||||||||||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
Long term loan | $ 10,000 | 10,000 | $ 10,000 | |||||||||||||||||||
Debt instrument, original expiration date | Sep. 3, 2021 | |||||||||||||||||||||
Loan, outstanding | $ 556 | $ 556 | $ 556 | |||||||||||||||||||
Term Loan | Fourth Amended and Restated Loan Agreement | Subsequent Event | ||||||||||||||||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
Debt instrument, expiration date | Dec. 10, 2020 | |||||||||||||||||||||
Long term loan | $ 556 | |||||||||||||||||||||
Debt instrument, new expiration date | Dec. 10, 2020 | |||||||||||||||||||||
Debt instrument, description of variable rate basis | 30-day LIBOR plus 2.5% | |||||||||||||||||||||
Debt instrument, basis spread on variable rate | 2.50% | |||||||||||||||||||||
Term Loan | Fourth Amended and Restated Loan Agreement | Subsequent Event | LIBOR | Floor | ||||||||||||||||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
Debt instrument, floor rate | 1.50% | |||||||||||||||||||||
Term Loan | Third Amended and Restated Loan Agreement | ||||||||||||||||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
Debt instrument, description of variable rate basis | 30-day LIBOR plus 2.35% | |||||||||||||||||||||
Debt instrument, basis spread on variable rate | 2.35% | |||||||||||||||||||||
Modification Agreement | Revolving Line of Credit | ||||||||||||||||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
Line of credit, remaining borrowing capacity | $ 15,000 | |||||||||||||||||||||
Covenant Extended Period Commencing July 5, 2021 Through January 2, 2022 | Fourth Amended and Restated Loan Agreement | Subsequent Event | Financial Institution | ||||||||||||||||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
Debt Instrument Covenant Minimum Required Fixed Charge Coverage Ratio | 100.00% | |||||||||||||||||||||
Covenant Extended Period Commencing January 3, 2022 Through End of Fiscal 2022 | Fourth Amended and Restated Loan Agreement | Subsequent Event | Financial Institution | ||||||||||||||||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
Debt Instrument Covenant Minimum Required Fixed Charge Coverage Ratio | 105.00% | |||||||||||||||||||||
COVID-19 | ||||||||||||||||||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
Cost incurred during period | $ 3,336 |
Earnings (Loss) per Share - Com
Earnings (Loss) per Share - Computation of Basic and Diluted (Loss) Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
Numerator: | ||||
(Loss) income from continuing operations, net of tax | $ (1,707) | $ 837 | $ (26,232) | $ 6,970 |
Loss from discontinued operations, net | (53) | (66) | (160) | (183) |
Net (loss) income | $ (1,760) | $ 771 | $ (26,392) | $ 6,787 |
Denominator: | ||||
Weighted average shares (denominator for basic (loss) earnings per share) | 14,729 | 14,695 | 14,706 | 14,695 |
Effect of dilutive securities | 113 | 51 | ||
Adjusted weighted average shares and assumed conversions (denominator for diluted (loss) earnings per share) | 14,729 | 14,808 | 14,706 | 14,746 |
Basic (loss) earnings per share: | ||||
(Loss) income from continuing operations, net of tax | $ (0.12) | $ 0.06 | $ (1.78) | $ 0.47 |
Loss from discontinued operations, net | 0 | 0 | (0.01) | (0.01) |
Basic (loss) earnings per share | (0.12) | 0.05 | (1.79) | 0.46 |
Diluted (loss) earnings per share: | ||||
(Loss) income from continuing operations, net of tax | (0.12) | 0.06 | (1.78) | 0.47 |
Loss from discontinued operations, net | 0 | 0 | (0.01) | (0.01) |
Diluted (loss) earnings per share | $ (0.12) | $ 0.05 | $ (1.79) | $ 0.46 |
Earnings (Loss) per Share - Add
Earnings (Loss) per Share - Additional Information (Details) - $ / shares | Aug. 07, 2020 | Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 |
Restricted Share Awards | |||||
Antidilutive Securities Excluded From And Dilutive Securities Included In Computation Of Earnings Per Share [Line Items] | |||||
Dilutive shares included in computation of earnings per share | 10,763 | 3,588 | |||
Granted share awards | 63,000 | 65,997 | 261,003 | 264,000 | |
Shares issued, grant price | $ 4.43 | ||||
Number of share-based compensation unvested awards included in computation of earnings per share | 264,000 | 264,000 | |||
Performance Share Awards | |||||
Antidilutive Securities Excluded From And Dilutive Securities Included In Computation Of Earnings Per Share [Line Items] | |||||
Number of share awards outstanding | 52,500 | 52,500 | 52,500 | 52,500 | |
Stock Option Awards | |||||
Antidilutive Securities Excluded From And Dilutive Securities Included In Computation Of Earnings Per Share [Line Items] | |||||
Number of stock option awards outstanding | 1,741,750 | 1,495,750 | 1,741,750 | 1,495,750 | |
Number of stock options granted during the period | 246,000 | ||||
Shares issued, exercise price | $ 5 | ||||
Dilutive shares included in computation of earnings per share | 102,490 | 47,446 | |||
Management | Common Class B Units | |||||
Antidilutive Securities Excluded From And Dilutive Securities Included In Computation Of Earnings Per Share [Line Items] | |||||
Anti-dilutive securities excluded from computation of earnings per share | 833,346 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
Income Taxes [Line Items] | ||||
Net operating loss carry back expiration period | 5 years | |||
Income tax benefit (expense) | $ (64) | $ 495 | $ 5,742 | $ 238 |
Net operating loss current benefit related to carryback | $ 508 | |||
Net effective tax rate | 17.90% | (3.60%) | ||
Federal statutory rate | 21.00% | |||
Recognized rate of benefit due to the impact of discrete tax items | 4.90% | |||
Deferred tax assets valuation allowance | 248 | $ 248 | ||
Other Long-term Liabilities | ||||
Income Taxes [Line Items] | ||||
Employer portion of accrued social security taxes under the CARES Act | $ 2,143 | $ 2,143 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) $ in Thousands | 9 Months Ended |
Sep. 27, 2020USD ($)Lease | |
Commitments And Contingencies [Line Items] | |
Payments made to date relative to contingent leases | $ 0 |
Wendy's Operations | |
Commitments And Contingencies [Line Items] | |
Number of secondarily liable leases | Lease | 5 |
Estimated amount of secondarily liable lease payments due | $ 823 |
Wendy's Operations | Minimum [Member] | |
Commitments And Contingencies [Line Items] | |
Remaining lease term | 1 year |
Wendy's Operations | Maximum | |
Commitments And Contingencies [Line Items] | |
Remaining lease term | 5 years |
Mrs. Winner's Chicken and Biscuit Restaurant Operations | |
Commitments And Contingencies [Line Items] | |
Number of secondarily liable leases | Lease | 1 |
Estimated amount of secondarily liable lease payments due | $ 281 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | |
Mar. 29, 2020USD ($)Restaurant | Jun. 28, 2020USD ($) | Sep. 27, 2020USD ($) | Dec. 29, 2019USD ($) | |
Schedule Of Assets Used To Fund The Trust [Line Items] | ||||
Impairment charge related to long-lived assets | $ 689 | |||
Number of restaurants closed | Restaurant | 1 | |||
Impairment charge related to goodwill | $ 15,737 | $ 15,737 | ||
Impairment of indefinite-lived intangible assets | 0 | $ 0 | $ 0 | |
Lyndhurst Grill Location, Cleveland, Ohio | ||||
Schedule Of Assets Used To Fund The Trust [Line Items] | ||||
Remaining book value of long-lived assets after sale of location | 0 | |||
Fair Value Non-Recurring Basis | ||||
Schedule Of Assets Used To Fund The Trust [Line Items] | ||||
Non-financial assets measured at fair value | $ 0 | |||
Level 3 | ||||
Schedule Of Assets Used To Fund The Trust [Line Items] | ||||
Remaining carrying value of goodwill after impairment | $ 0 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - Fair Value Measurements Recurring - USD ($) $ in Thousands | Sep. 27, 2020 | Dec. 29, 2019 |
Level 1 | ||
Schedule of Assets Measured at Fair Value on a Recurring Basis | ||
Assets held in trust | $ 3,685 | $ 3,399 |
Level 1 | Cash and Cash Equivalents (as Held in the Trust) | ||
Schedule of Assets Measured at Fair Value on a Recurring Basis | ||
Assets held in trust | 96 | 71 |
Level 1 | Corporate Bonds (as Held in the Trust) | ||
Schedule of Assets Measured at Fair Value on a Recurring Basis | ||
Assets held in trust | 2,242 | 2,195 |
Level 1 | Mutual and Money Market Funds | ||
Schedule of Assets Measured at Fair Value on a Recurring Basis | ||
Nonqualified deferred compensation plan assets | 1,071 | 833 |
Level 1 | U.S. Government Obligations (as Held in the Trust) | ||
Schedule of Assets Measured at Fair Value on a Recurring Basis | ||
Assets held in trust | 276 | 300 |
Level 2 | ||
Schedule of Assets Measured at Fair Value on a Recurring Basis | ||
Assets held in trust | 2,272 | 2,253 |
Level 2 | Cash Surrender Value - Life Insurance (as Held in the Trust) | ||
Schedule of Assets Measured at Fair Value on a Recurring Basis | ||
Assets held in trust | $ 2,272 | $ 2,253 |
Recent Accounting Pronounceme_2
Recent Accounting Pronouncements - Additional Information (Details) | Sep. 27, 2020 |
ASU 2017-04 | |
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |
Change in Accounting Principle, Accounting Standards Update, Adopted [true false] | true |
Change in Accounting Principle, Accounting Standards Update, Early Adoption [true false] | true |
Change in Accounting Principle, Accounting Standards Update, Immaterial Effect [true false] | false |
ASU 2018-13 | |
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |
Change in Accounting Principle, Accounting Standards Update, Adopted [true false] | true |
Change in Accounting Principle, Accounting Standards Update, Early Adoption [true false] | true |
Change in Accounting Principle, Accounting Standards Update, Immaterial Effect [true false] | true |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Details) - Black Knight Advisory Services, LLC - USD ($) $ in Thousands | Jan. 31, 2019 | Nov. 30, 2018 | Mar. 31, 2019 | Dec. 30, 2018 | Sep. 28, 2015 |
Related Party Transaction [Line Items] | |||||
Management consulting agreement, termination date | Nov. 30, 2018 | ||||
Annual fee as percentage of EBITDA | 3.00% | ||||
Management fee paid | $ 705 | ||||
Management consulting agreement termination payment | $ 4,560 | ||||
Common Class B Units | |||||
Related Party Transaction [Line Items] | |||||
Common unit, granted | 1,500,024 | ||||
Common Class B Units | Maximum | |||||
Related Party Transaction [Line Items] | |||||
Exchange period upon termination of management consulting agreement | 90 days |
Revenue - Disaggregation of Rev
Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
Disaggregation Of Revenue [Line Items] | ||||
Net sales | $ 46,230 | $ 56,867 | $ 130,804 | $ 183,830 |
Restaurant [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Net sales | 46,158 | 56,835 | 130,446 | 183,485 |
Gift Card Breakage [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Net sales | $ 72 | $ 32 | $ 358 | $ 345 |
Revenue - Additional Informatio
Revenue - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
Revenue From Contract With Customer [Abstract] | ||||
Gift card redemptions during the period | $ 620 | $ 779 | $ 2,433 | $ 3,208 |
Current period gift card redemptions from the unearned revenue balance at the beginning of the period | 1,786 | 2,197 | ||
Gift cards sold during the period | $ 488 | $ 607 | $ 1,441 | $ 1,954 |
Leases - Additional Information
Leases - Additional Information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 27, 2020USD ($) | Jun. 28, 2020USD ($) | Sep. 27, 2020USD ($)Agreement | |
Leases [Abstract] | |||
Right of use assets in exchange for new lease liability | $ | $ 4,515 | ||
Lease term, including option periods | 30 years | 30 years | |
Lease incentive payment | $ | $ 527 | ||
Percentage of rent payment deferrals associated with COVID-19 landlord granted rent concessions | 50.00% | 50.00% | |
Number of COVID-19 related rent concession agreements | Agreement | 14 | ||
Number of rent concession agreements qualified for special accounting treatment | Agreement | 12 | ||
Number of agreements as COVID-19 related lease modifications | Agreement | 2 | ||
Extension of lease renewal term | 10 years | ||
Cash paid for amounts included in the measurement of lease liabilities | $ | $ 1,763 | $ 6,190 |
Leases - Schedule of Maturities
Leases - Schedule of Maturities of Lease Liabilities for Operating Leases (Details) $ in Thousands | Sep. 27, 2020USD ($) |
Leases [Abstract] | |
2020 | $ 1,925 |
2021 | 9,917 |
2022 | 9,731 |
2023 | 9,745 |
2024 | 9,402 |
2025 and thereafter | 96,391 |
Total minimum lease payments | 137,111 |
Less: Imputed interest | 52,193 |
Present value of lease liabilities | $ 84,918 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Details) - USD ($) $ in Thousands | 1 Months Ended | 9 Months Ended | |
Oct. 31, 2020 | Sep. 27, 2020 | Sep. 29, 2019 | |
Subsequent Event [Line Items] | |||
Repayments of debt | $ 16,350 | $ 3,750 | |
Subsequent Event | Development Line of Credit | Fourth Amended and Restated Loan Agreement | |||
Subsequent Event [Line Items] | |||
Repayments of debt | $ 10,000 | ||
Line of credit facility, outstanding | $ 20,000 |