Cover Page
Cover Page - shares | 9 Months Ended | |
Oct. 01, 2023 | Nov. 03, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Oct. 01, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-33174 | |
Entity Registrant Name | CARROLS RESTAURANT GROUP, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 83-3804854 | |
Entity Address, Address Line One | 968 James Street | |
Entity Address, City or Town | Syracuse, | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 13203 | |
City Area Code | 315 | |
Local Phone Number | 424-0513 | |
Title of 12(b) Security | Common Stock, par value $.01 per share | |
Trading Symbol | TAST | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 54,496,225 | |
Entity Central Index Key | 0000809248 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Small Business | true |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Oct. 01, 2023 | Jan. 01, 2023 |
Current assets: | ||
Cash and cash equivalents | $ 73,020 | $ 18,364 |
Trade and other receivables | 22,616 | 19,933 |
Inventories | 13,076 | 14,417 |
Prepaid expenses and other current assets | 18,625 | 15,562 |
Total current assets | 127,337 | 68,276 |
Property and equipment, net | 300,388 | 312,346 |
Franchise rights, net | 302,109 | 312,804 |
Goodwill | 107,751 | 107,751 |
Franchise agreements, net | 26,461 | 28,256 |
Operating leases | 749,679 | 763,935 |
Other assets | 11,921 | 14,350 |
Total assets | 1,625,646 | 1,607,718 |
Current liabilities: | ||
Current portion of long-term debt and finance lease liabilities | 7,236 | 7,341 |
Current portion of operating lease liabilities | 48,811 | 47,408 |
Accounts payable | 31,779 | 30,491 |
Accrued interest | 5,128 | 9,643 |
Accrued payroll, related taxes and benefits | 53,482 | 49,934 |
Accrued real estate taxes | 9,468 | 8,896 |
Other liabilities | 37,946 | 25,687 |
Total current liabilities | 193,850 | 179,400 |
Long-term debt and finance lease liabilities, net of current portion | 462,800 | 479,756 |
Operating lease liabilities | 764,554 | 776,465 |
Deferred income taxes, net | 12,188 | 7,665 |
Other liabilities | 10,206 | 13,590 |
Total liabilities | 1,443,598 | 1,456,876 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock, par value $.01 | 0 | 0 |
Voting common stock, par value $.01 | 539 | 530 |
Additional paid-in capital | 296,668 | 292,708 |
Accumulated deficit | (108,532) | (136,968) |
Accumulated other comprehensive income | 7,798 | 8,702 |
Treasury stock, at cost | (14,425) | (14,130) |
Total stockholders' equity | 182,048 | 150,842 |
Total liabilities and stockholders' equity | $ 1,625,646 | $ 1,607,718 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Oct. 01, 2023 | Jan. 01, 2023 |
Statement of Financial Position [Abstract] | ||
Property and equipment, accumulated depreciation | $ 566,700 | $ 535,359 |
Franchise rights, accumulated amortization | 171,262 | 161,426 |
Franchise agreements, accumulated amortization | $ 18,681 | $ 16,975 |
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Preferred stock, shares issued | 100 | 100 |
Preferred stock, shares outstanding | 100 | 100 |
Voting common stock, par value | $ 0.01 | $ 0.01 |
Voting common stock, shares authorized | 100,000,000 | 100,000,000 |
Voting common stock, shares issued | 56,747,962 | 54,928,225 |
Common stock, shares, outstanding | 51,602,340 | 50,903,111 |
Condensed Consolidated Statemen
Condensed Consolidated Statements Of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2023 | Oct. 02, 2022 | Oct. 01, 2023 | Oct. 02, 2022 | |
Revenues: | ||||
Restaurant sales | $ 475,761 | $ 443,961 | $ 1,406,146 | $ 1,285,382 |
Operating expenses: | ||||
Food, beverage and packaging costs | 129,984 | 138,012 | 392,110 | 401,244 |
Restaurant wages and related expenses | 153,712 | 148,838 | 455,305 | 439,773 |
Restaurant rent expense (Note 6) | 32,207 | 31,244 | 96,221 | 93,487 |
Other restaurant operating expenses | 74,685 | 70,237 | 217,528 | 204,676 |
Advertising expense | 19,323 | 17,841 | 56,799 | 51,446 |
General and administrative expenses (including stock-based compensation of $1,870, $940, $3,969 and $3,817, respectively) | 26,165 | 22,572 | 76,493 | 65,416 |
Depreciation and amortization | 18,291 | 19,284 | 55,568 | 58,897 |
Impairment and other lease charges (Note 4) | 1,591 | 1,196 | 5,680 | 19,868 |
Other income, net (Note 14) | (3,638) | (1,750) | (6,463) | (1,109) |
Total operating expenses | 452,320 | 447,474 | 1,349,241 | 1,333,698 |
Income (loss) from operations | 23,441 | (3,513) | 56,905 | (48,316) |
Interest expense | 7,189 | 7,896 | 23,089 | 22,968 |
Income (loss) before income taxes | 16,252 | (11,409) | 33,816 | (71,284) |
Provision (benefit) for income taxes | 3,634 | (2,712) | 5,380 | (14,842) |
Net income (loss) | $ 12,618 | $ (8,697) | $ 28,436 | $ (56,442) |
Basic net income (loss) per share (in dollars per share) | $ 0.20 | $ (0.17) | $ 0.44 | $ (1.11) |
Diluted net income (loss) per share (in shares) | $ 0.20 | $ (0.17) | $ 0.44 | $ (1.11) |
Weighted average common shares outstanding: | ||||
Weighted average common shares outstanding (in shares) | 51,560,307 | 50,805,461 | 51,506,367 | 50,689,730 |
Shares used in computing diluted net income (loss) per share (in shares) | 62,827,875 | 50,805,461 | 62,124,464 | 50,689,730 |
Other comprehensive income (loss), net of tax: | ||||
Net income (loss) | $ 12,618 | $ (8,697) | $ 28,436 | $ (56,442) |
Change in valuation of interest rate swap (Note 7) | (472) | 2,905 | (904) | 7,782 |
Comprehensive income (loss) | $ 12,146 | $ (5,792) | $ 27,532 | $ (48,660) |
Consolidated Statements Of Comp
Consolidated Statements Of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2023 | Oct. 02, 2022 | Oct. 01, 2023 | Oct. 02, 2022 | |
Stock-based compensation | $ 1,870 | $ 940 | $ 3,969 | $ 3,817 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Stockholder's Equity - USD ($) $ in Thousands | Total | Common Stock | Preferred Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Treasury Stock |
Beginning balance (in shares) at Jan. 02, 2022 | 52,037,511 | 100 | (2,104,953) | ||||
Beginning balance at Jan. 02, 2022 | $ 214,224 | $ 520 | $ 0 | $ 287,816 | $ (61,396) | $ 1,411 | $ (14,127) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Stock-based compensation | 1,941 | 1,941 | |||||
Vesting of non-vested shares (in shares) | 856,039 | ||||||
Vesting of non-vested shares and RSUs | 0 | $ 9 | (9) | ||||
Net income (loss) | (21,269) | (21,269) | |||||
Change in valuation of interest rate swap | 4,282 | 4,282 | |||||
Ending balance (in shares) at Apr. 03, 2022 | 52,893,550 | 100 | (2,104,953) | ||||
Ending balance at Apr. 03, 2022 | 199,178 | $ 529 | $ 0 | 289,748 | (82,665) | 5,693 | $ (14,127) |
Beginning balance (in shares) at Jan. 02, 2022 | 52,037,511 | 100 | (2,104,953) | ||||
Beginning balance at Jan. 02, 2022 | 214,224 | $ 520 | $ 0 | 287,816 | (61,396) | 1,411 | $ (14,127) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income (loss) | (56,442) | ||||||
Ending balance (in shares) at Oct. 02, 2022 | 52,910,414 | 100 | |||||
Ending balance at Oct. 02, 2022 | 169,381 | $ 529 | $ 0 | 291,624 | (117,838) | 9,193 | $ (14,127) |
Beginning balance (in shares) at Apr. 03, 2022 | 52,893,550 | 100 | (2,104,953) | ||||
Beginning balance at Apr. 03, 2022 | 199,178 | $ 529 | $ 0 | 289,748 | (82,665) | 5,693 | $ (14,127) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Stock-based compensation | 936 | 936 | |||||
Vesting of non-vested shares (in shares) | 16,864 | ||||||
Vesting of non-vested shares and RSUs | 0 | ||||||
Net income (loss) | (26,476) | (26,476) | |||||
Change in valuation of interest rate swap | (595) | 595 | |||||
Ending balance (in shares) at Jul. 03, 2022 | 52,910,414 | 100 | (2,104,953) | ||||
Ending balance at Jul. 03, 2022 | 174,233 | $ 529 | $ 0 | 290,684 | (109,141) | 6,288 | $ (14,127) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Stock-based compensation | 940 | 940 | |||||
Net income (loss) | (8,697) | (8,697) | |||||
Change in valuation of interest rate swap | 2,905 | 2,905 | |||||
Ending balance (in shares) at Oct. 02, 2022 | 52,910,414 | 100 | |||||
Ending balance at Oct. 02, 2022 | $ 169,381 | $ 529 | $ 0 | 291,624 | (117,838) | 9,193 | $ (14,127) |
Beginning balance (in shares) at Jan. 01, 2023 | 50,903,111 | 53,010,414 | 100 | (2,107,303) | |||
Beginning balance at Jan. 01, 2023 | $ 150,842 | $ 530 | $ 0 | 292,708 | (136,968) | 8,702 | $ (14,130) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Stock-based compensation | 1,097 | 1,097 | |||||
Vesting of non-vested shares (in shares) | 767,359 | ||||||
Vesting of non-vested shares and RSUs | 0 | $ 8 | (8) | ||||
Net income (loss) | 864 | 864 | |||||
Repurchase of treasury stock (in shares) | (144,434) | ||||||
Purchase of treasury stock | (295) | $ (295) | |||||
Change in valuation of interest rate swap | (1,137) | (1,137) | |||||
Ending balance (in shares) at Apr. 02, 2023 | 53,777,773 | 100 | (2,251,737) | ||||
Ending balance at Apr. 02, 2023 | $ 151,371 | $ 538 | $ 0 | 293,797 | (136,104) | 7,565 | $ (14,425) |
Beginning balance (in shares) at Jan. 01, 2023 | 50,903,111 | 53,010,414 | 100 | (2,107,303) | |||
Beginning balance at Jan. 01, 2023 | $ 150,842 | $ 530 | $ 0 | 292,708 | (136,968) | 8,702 | $ (14,130) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income (loss) | $ 28,436 | ||||||
Ending balance (in shares) at Oct. 01, 2023 | 51,602,340 | 53,854,077 | 100 | (2,251,737) | |||
Ending balance at Oct. 01, 2023 | $ 182,048 | $ 539 | $ 0 | 296,668 | (108,532) | 7,798 | $ (14,425) |
Beginning balance (in shares) at Apr. 02, 2023 | 53,777,773 | 100 | (2,251,737) | ||||
Beginning balance at Apr. 02, 2023 | 151,371 | $ 538 | $ 0 | 293,797 | (136,104) | 7,565 | $ (14,425) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Stock-based compensation | 1,002 | 1,002 | |||||
Vesting of non-vested shares (in shares) | 31,343 | ||||||
Vesting of non-vested shares and RSUs | 0 | ||||||
Net income (loss) | 14,954 | 14,954 | |||||
Change in valuation of interest rate swap | 705 | 705 | |||||
Ending balance (in shares) at Jul. 02, 2023 | 53,809,116 | 100 | (2,251,737) | ||||
Ending balance at Jul. 02, 2023 | 168,032 | $ 538 | $ 0 | 294,799 | (121,150) | 8,270 | $ (14,425) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Stock-based compensation | 1,870 | 1,870 | |||||
Vesting of non-vested shares (in shares) | 44,961 | ||||||
Vesting of non-vested shares and RSUs | $ 1 | (1) | |||||
Net income (loss) | 12,618 | 12,618 | |||||
Change in valuation of interest rate swap | $ (472) | (472) | |||||
Ending balance (in shares) at Oct. 01, 2023 | 51,602,340 | 53,854,077 | 100 | (2,251,737) | |||
Ending balance at Oct. 01, 2023 | $ 182,048 | $ 539 | $ 0 | $ 296,668 | $ (108,532) | $ 7,798 | $ (14,425) |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholder's Equity Parentheticals - USD ($) $ in Thousands | 3 Months Ended | ||||
Oct. 01, 2023 | Jul. 02, 2023 | Apr. 02, 2023 | Jul. 03, 2022 | Apr. 03, 2022 | |
Statement of Stockholders' Equity [Abstract] | |||||
Other comprehensive income, tax | $ 274 | $ 41 | $ 260 | $ 211 | $ 816 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements Of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 01, 2023 | Oct. 02, 2022 | |
Cash flows provided by (used in) operating activities: | ||
Net income (loss) | $ 28,436 | $ (56,442) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
(Gain) loss on disposals of property and equipment, including sale-leaseback transactions | (1,936) | 1,375 |
Stock-based compensation | 3,969 | 3,817 |
Impairment and other lease charges (Note 4) | 5,680 | 19,868 |
Depreciation and amortization | 55,568 | 58,897 |
Amortization of deferred financing costs | 1,625 | 1,625 |
Amortization of discount on debt | 98 | 95 |
Deferred income taxes | 5,098 | (14,842) |
Changes in other operating assets and liabilities | 5,174 | (16,535) |
Net cash provided by (used in) operating activities | 103,712 | (2,142) |
Cash flows used for investing activities: | ||
New restaurant development | (4,044) | (7,220) |
Restaurant remodeling | (8,295) | (7,251) |
Other restaurant capital expenditures | (15,746) | (12,325) |
Corporate and restaurant information systems | (4,437) | (2,948) |
Total capital expenditures | (32,522) | (29,744) |
Proceeds from sale of other assets | 0 | 864 |
Properties purchased for sale-leaseback | (1,790) | (3,996) |
Proceeds from sale-leaseback transactions | 1,321 | 4,052 |
Proceeds from insurance recoveries | 2,220 | 58 |
Net cash used for investing activities | (30,771) | (28,766) |
Cash flows (used in) provided by financing activities: | ||
Principal payments on Term B Loans | (3,188) | (3,188) |
Borrowings under revolving credit facility | 11,000 | 91,500 |
Repayments under revolving credit facility | (23,500) | (81,500) |
Principal payments on finance lease liabilities | (2,302) | (1,818) |
Purchase of treasury shares | (295) | 0 |
Net cash (used in) provided by financing activities | (18,285) | 4,994 |
Net increase (decrease) in cash and cash equivalents | 54,656 | (25,914) |
Cash and cash equivalents, beginning of period | 18,364 | 29,151 |
Cash and cash equivalents, end of period | 73,020 | 3,237 |
Supplemental disclosures: | ||
Interest paid on long-term debt | 26,585 | 25,210 |
Interest paid on lease financing obligations | 0 | 77 |
Interest on lease liabilities | 585 | 505 |
Accruals for capital expenditures | 2,306 | 1,916 |
Finance lease obligations incurred | 0 | 9,085 |
Gain on sale-leaseback transactions | 1,217 | 430 |
Accruals for costs associated with issuance of long term debt | 27,519 | 19,461 |
Operating cash flows related to operating leases | 77,415 | 76,804 |
Income taxes paid | $ 229 | $ 0 |
Business Description
Business Description | 9 Months Ended |
Oct. 01, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business Description | Business Description At October 1, 2023, Carrols Restaurant Group, Inc. ("Carrols Restaurant Group") operated, as franchisee, 1,019 Burger King ® restaurants in 23 Northeastern, Midwestern, Southcentral and Southeastern states and 61 Popeyes ® |
Significant Accounting Policies
Significant Accounting Policies | 9 Months Ended |
Oct. 01, 2023 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies Basis of Consolidation. The accompanying condensed consolidated financial statements include the accounts of the Company and its direct and indirect wholly-owned subsidiaries. All intercompany transactions have been eliminated in consolidation. Fiscal Year. The Company uses a 52-53 week fiscal year ending on the Sunday closest to December 31. The three and nine months ended October 1, 2023 and October 2, 2022 contained thirteen and thirty-nine weeks, respectively. The 2023 fiscal year will end December 31, 2023 and will contain 52 weeks. Basis of Presentation. The unaudited condensed consolidated financial statements as of and for the three and nine months ended October 1, 2023 and October 2, 2022 have been prepared without an audit pursuant to the rules and regulations of the Securities and Exchange Commission and do not include certain of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all normal and recurring adjustments considered necessary for a fair presentation of such unaudited condensed consolidated financial statements have been included. The results of operations for the three and nine months ended October 1, 2023 are not necessarily indicative of the results to be expected for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements contained in the Company's Annual Report on Form 10-K for the year ended January 1, 2023. The January 1, 2023 consolidated balance sheet data is derived from those audited consolidated financial statements. Use of Estimates. The preparation of the unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant items subject to such estimates include accrued occupancy costs, insurance liabilities, lease accounting matters, the valuation of acquired assets and liabilities, interest rate swap valuation, the valuation of deferred income tax assets and liabilities, and the evaluation for impairment of goodwill, long-lived assets and franchise rights. Actual results could differ from those estimates. Segment Information. Operating segments are components of an entity for which discrete financial information is available and is regularly reviewed by the chief operating decision maker in order to allocate resources and assess performance. The Company's chief operating decision-maker, our President and Chief Executive Officer ("CEO"), currently evaluates the Company's operations from a number of different operational perspectives; however, resource allocation decisions are determined based on the chief operating decision-maker's evaluation of the total Company operations. The Company derives all significant revenues from a single operating segment, its restaurant business. Accordingly, the Company views the operating results of its restaurants as one reportable segment. Cash and Cash Equivalents. The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. At October 1, 2023, the Company had $30.4 million of cash invested in money market funds classified as cash equivalents on the condensed consolidated balance sheets. The Company did not have any cash invested in money market funds classified as cash equivalents on the condensed consolidated balance sheets as of January 1, 2023. Food, Beverage and Packaging Costs. The Company includes food, beverage and packaging costs and delivery charges, net of any vendor purchase discounts and rebates, in food, beverage, and packaging costs. Fair Value of Financial Instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. In determining fair value, the accounting standards establish a three-level hierarchy for inputs used in measuring fair value as follows: Level 1 inputs are quoted prices in active markets for identical assets or liabilities; Level 2 inputs are observable for the asset or liability, either directly or indirectly, including quoted prices in active markets for similar assets or liabilities; and Level 3 inputs are unobservable and reflect the Company's own assumptions. Financial instruments include cash and cash equivalents, trade and other receivables, accounts payable and long-term debt. The carrying amounts of cash and cash equivalents, trade and other receivables and accounts payable approximate fair value because of the short-term nature of these financial instruments. Borrowings under the Company's Senior Credit Facilities (including its term B loans) accrue interest at a floating rate tied to a standard short-term borrowing index selected at the Company's option, plus an applicable margin. The Company's liability for its Senior Credit Facilities and 5.875% Senior Notes due 2029 are carried at historical cost in the accompanying balance sheets. The fair value of our term B loans and 5.875% Senior Notes due 2029 is based on recent trading activity, which are Level 2 inputs in the fair value hierarchy. As of October 1, 2023, the term B loans traded at 96.9% of par value and the 5.875% Senior Notes due 2029 traded at 82.8% of par value. The Company recognizes its derivative arrangements on the balance sheet at fair value, which is considered a Level 2 input. The Company's only derivative is an interest rate swap (the "Swap") which is designated as a cash flow hedge. Accordingly, the entire change in the fair value of the cash flow hedges included in the assessment of hedge effectiveness is recognized in accumulated other comprehensive income. The amounts recorded in other comprehensive income will subsequently be reclassified to earnings as an increase or decrease to interest expense as realized through receipts or payments. The Company classifies cash inflows and outflows from derivatives within operating activities on the condensed consolidated statements of cash flows. The Swap had an asset value of $7.1 million as of October 1, 2023 and it is classified as Level 2 within the fair value hierarchy. The Company's counterparties under this arrangement provided the Company with quarterly statements of the market values of these instruments based on significant inputs that were observable or could be derived principally from, or corroborated by, observable market data for substantially the full term of the asset or liability. The impact on the derivative liabilities for the Company and the counterparties' non-performance risk to the derivative trades was considered when measuring the fair value of derivative liabilities. Fair value measurements of non-financial assets and non-financial liabilities are primarily used in the impairment analysis of long-lived assets, goodwill and intangible assets. Long-lived assets and definite-lived intangible assets are measured at fair value on a nonrecurring basis using Level 3 inputs. As described in Note 4, the Company recorded long-lived asset impairment charges of $0.6 million and $1.0 million during the three and nine months ended October 1, 2023, respectively, and $0.4 million and $1.8 million during the three and nine months ended October 2, 2022, respectively. The Company also recorded $16.7 million in goodwill impairment charges in the second quarter of 2022. Impairment of Long-Lived Assets and Other Lease Charges. The Company reviews its long-lived assets, principally property and equipment, for impairment at the restaurant level. If an indicator of impairment exists for any of its assets, an estimate of the undiscounted future cash flows over the life of the primary asset for each restaurant is compared to that long-lived asset's carrying value. If the carrying value is greater than the undiscounted cash flow, the Company then determines the fair value of the asset and if an asset is determined to be impaired, the loss is measured by the excess of the carrying amount of the asset over its fair value. For closed restaurant locations, the Company reviews the future minimum lease payments and related ancillary costs from the date of the restaurant closure to the end of the remaining lease term and records a lease charge for any right-of-use ("ROU") lease asset impairment or lease-related costs during the remaining term, net of any estimated sublease recoveries. The Company determined the fair value of restaurant equipment, for those restaurants reviewed for impairment, based on current economic conditions. The Company determines the fair value of ROU lease assets based on an assessment of market rents and a discounted future cash flow model. The Company re-evaluates the ROU lease asset at the time the restaurant is no longer determined to be usable to the Company, which is generally when the restaurant is closed. These fair value asset measurements rely on significant unobservable inputs and are considered Level 3 in the fair value hierarchy. Recently Issued Accounting Pronouncements. In the normal course of business, the Company evaluates all new Accounting Standards Updates ("ASU") and other accounting pronouncements issued by the Financial Accounting Standards Board ("FASB"), Securities and Exchange Commission ("SEC"), or other authoritative accounting bodies to determine the potential impact they may have on its Consolidated Financial Statements. The Company does not expect any of the recently issued accounting pronouncements, which have not already been adopted, to have a material impact on its Consolidated Financial Statements. Subsequent Events. The Company reviewed and evaluated subsequent events through the issuance date of the Company's unaudited condensed consolidated financial statements. See "Subsequent Events" footnote 15 for the Company's evaluation. |
Intangible Assets (Notes)
Intangible Assets (Notes) | 9 Months Ended |
Oct. 01, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Intangible Assets Franchise Rights. Amounts allocated to franchise rights for each acquisition of Burger King and Popeyes restaurants are amortized using the straight-line method over the average remaining term of the acquired franchise agreements plus one twenty-year renewal period. The Company assesses the potential impairment of franchise rights whenever events or changes in circumstances indicate that the carrying value may not be recoverable, including as a result of closures of restaurants that were part of an acquisition, a shortfall in undiscounted operating cash flows over the projected remaining life of the franchise rights to the carrying value of such franchise rights for each acquisition group, or other indicators of impairment. If an indicator of impairment exists, an estimate of the aggregate undiscounted cash flows from the acquired restaurants is compared to the respective carrying value of franchise rights for each acquisition. If an asset is determined to be impaired, the loss is measured by the excess of the carrying amount of the asset over its fair value. No impairment charges were recorded related to the Company's franchise rights for the three and nine months ended October 1, 2023 and October 2, 2022. The change in franchise rights for each of the three and nine months ended October 1, 2023 was from amortization expense during the period. Amortization expense related to franchise rights was $3.5 million for each of the three months ended October 1, 2023 and October 2, 2022, respectively, and $10.4 million and $10.5 million for the nine months ended October 1, 2023 and October 2, 2022, respectively. The Company expects annual amortization expense to be $13.9 million in fiscal 2023 through fiscal 2028. Goodwill . The Company is required to review goodwill for impairment annually, or more frequently when events and circumstances indicate that the carrying amount may be impaired. If the determined fair value of the reporting unit is less than the related carrying amount, an impairment loss is recognized. The Company performs its annual impairment assessment as of the end of the eighth month of its fiscal year. Using both the income approach and the market approach, the Company compares the fair value of its Burger King reporting unit to its carrying value. As part of this goodwill impairment assessment, the Company considers certain qualitative factors, such as the Company's performance, business forecasts and expansion plans, a discount rate approximating the Company's weighted average cost of capital, general economic conditions, and evaluation of peer company multiples, among other factors. Given the nature of the qualitative and quantitative factors considered, there is a degree of uncertainty associated with these judgments and estimates. Notably, the business forecasts and market conditions considered within the Company's annual goodwill impairment test reflect the Company's long-standing history of operating restaurants in various business cycles. The forecasts reflect a normalization of commodity costs and restaurant labor margins, that we have addressed through recent pricing and promotional discounting changes, and reflect continued normalization of these costs over time. During the third quarter of 2023, the Company performed its annual analysis of its remaining goodwill for the Burger King reporting unit. There were no goodwill impairment losses recorded during the three and nine months ended October 1, 2023. There were no goodwill impairment losses recorded during the three months ended October 2, 2022 and $16.7 million of goodwill impairment losses were recorded during the nine months ended October 2, 2022. The non-cash goodwill impairment charge in 2022 represented a full write-down of the goodwill for the Company's Popeyes reporting unit and is included in impairment and other lease charges on the condensed consolidated statements of comprehensive loss. |
Impairment Of Long-Lived Assets
Impairment Of Long-Lived Assets And Other Lease Charges (Notes) | 9 Months Ended |
Oct. 01, 2023 | |
Asset Impairment Charges [Abstract] | |
Impairment of Long-Lived Assets and Other Lease Charges | Impairment of Long-Lived Assets and Other Lease Charges During the three months ended October 1, 2023, the Company recorded impairment and other lease charges of $1.6 million which included $0.3 million of initial impairment charges for one underperforming restaurant, capital expenditures at previously impaired restaurants of $0.4 million and $1.0 million of other lease charges primarily related to one restaurant closed during the third quarter of 2023. During the nine months ended October 1, 2023, the Company recorded impairment and other lease charges of $5.7 million, which included $0.3 million of initial impairment charges for one underperforming restaurant, capital expenditures at previously impaired restaurants of $0.7 million and $4.7 million of other lease charges related to seven restaurants closed during the period. During the three months ended October 2, 2022, the Company recorded impairment and other lease charges of $1.2 million, which included $0.3 million of initial impairment charges for three underperforming restaurants, capital expenditures at previously impaired restaurants of $0.1 million and $0.8 million of other lease charges primarily related to one restaurant closed during the third quarter of $0.4 million. During the nine months ended October 2, 2022, the Company recorded impairment and other lease charges of $3.2 million, which included $1.4 million of initial impairment charges for ten underperforming restaurants, capital expenditures at previously impaired restaurants of $0.4 million , and other lease charges of $1.5 million primarily related to six restaurants closed during the period of $1.0 million. |
Other Liabilities, Long-Term (N
Other Liabilities, Long-Term (Notes) | 9 Months Ended |
Oct. 01, 2023 | |
Other Liabilities, Noncurrent [Abstract] | |
Other Liabilities, Long-Term | Other Liabilities, Long-Term Other liabilities, long-term, at October 1, 2023 and January 1, 2023 consisted of the following: October 1, 2023 January 1, 2023 Accrued occupancy costs $ 1,514 $ 1,797 Accrued workers' compensation and general liability claims 3,768 5,239 Deferred compensation 2,788 3,002 Accrued post retirement benefits 1,254 1,347 Other 882 2,205 $ 10,206 $ 13,590 |
Leases
Leases | 9 Months Ended |
Oct. 01, 2023 | |
Leases [Abstract] | |
Leases | Leases The Company utilizes land and buildings in its operations under various lease agreements. The Company does not consider any one of these individual leases material to the Company's operations. Initial lease terms are generally for twenty years and provide for renewal options with rent escalations. The exercise of such renewal options is generally at the Company's sole discretion. The Company evaluates renewal options at lease commencement and upon any lease amendments or remodeling activity to determine if such options are reasonably certain to be exercised based on economic factors. Certain leases also require variable rent, determined as a percentage of sales as defined by the terms of the applicable lease agreement. For most locations, the Company is obligated for occupancy-related costs including payment of property taxes, insurance and utilities. Right-of-use lease assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make payments in exchange for that right of use. As the rate implicit within our leases is not readily determinable, the Company uses market and term-specific incremental borrowing rates which consider the rate of interest it expects to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. ROU assets are also reduced by lease incentives, increased by initial direct costs and adjusted by favorable lease assets and unfavorable lease liabilities. Variable lease components represent amounts that are contractually fixed as a percentage of sales and are recognized in expense as incurred. Leases with an initial term of 12 months or less are not recorded on the condensed consolidated balance sheets and are recognized as lease expense on a straight-line basis over the lease term. The Company does not account for lease components (e.g., fixed payments including rent) separately from non-lease components (e.g., common area maintenance). The Company also utilizes certain restaurant equipment under various finance lease agreements with initial terms of generally three For certain leases where rent escalates based upon a change in a financial index, such as the Consumer Price Index, the difference between the index at lease inception and the subsequent fluctuations in that index are included in variable lease costs. Additionally, because the Company has elected to not separate lease and non-lease components, in limited instances variable costs also include payments to the landlord for common area maintenance, real estate taxes, insurance and other operating expenses. Lease expense is recognized on a straight-line basis over the lease term, with variable lease payments recognized in the period those costs are incurred. Lease Cost The components and classification of lease expense for the three and nine months ended October 1, 2023 and October 2, 2022 are as follows: Three Months Ended Nine Months Ended Lease cost Classification October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022 Operating lease cost (1) Restaurant rent expense $ 26,347 $ 26,274 $ 79,065 $ 78,970 Operating lease cost (2) General and administrative 307 231 948 704 Variable lease cost Restaurant rent expense 5,860 4,970 17,156 14,517 Finance lease cost: Amortization of right-of-use assets Depreciation and amortization 822 818 2,469 1,975 Interest on lease liabilities Interest expense 182 227 585 505 Total lease cost $ 33,518 $ 32,520 $ 100,223 $ 96,671 (1) Includes short-term leases which are not material. |
Leases | Leases The Company utilizes land and buildings in its operations under various lease agreements. The Company does not consider any one of these individual leases material to the Company's operations. Initial lease terms are generally for twenty years and provide for renewal options with rent escalations. The exercise of such renewal options is generally at the Company's sole discretion. The Company evaluates renewal options at lease commencement and upon any lease amendments or remodeling activity to determine if such options are reasonably certain to be exercised based on economic factors. Certain leases also require variable rent, determined as a percentage of sales as defined by the terms of the applicable lease agreement. For most locations, the Company is obligated for occupancy-related costs including payment of property taxes, insurance and utilities. Right-of-use lease assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make payments in exchange for that right of use. As the rate implicit within our leases is not readily determinable, the Company uses market and term-specific incremental borrowing rates which consider the rate of interest it expects to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. ROU assets are also reduced by lease incentives, increased by initial direct costs and adjusted by favorable lease assets and unfavorable lease liabilities. Variable lease components represent amounts that are contractually fixed as a percentage of sales and are recognized in expense as incurred. Leases with an initial term of 12 months or less are not recorded on the condensed consolidated balance sheets and are recognized as lease expense on a straight-line basis over the lease term. The Company does not account for lease components (e.g., fixed payments including rent) separately from non-lease components (e.g., common area maintenance). The Company also utilizes certain restaurant equipment under various finance lease agreements with initial terms of generally three For certain leases where rent escalates based upon a change in a financial index, such as the Consumer Price Index, the difference between the index at lease inception and the subsequent fluctuations in that index are included in variable lease costs. Additionally, because the Company has elected to not separate lease and non-lease components, in limited instances variable costs also include payments to the landlord for common area maintenance, real estate taxes, insurance and other operating expenses. Lease expense is recognized on a straight-line basis over the lease term, with variable lease payments recognized in the period those costs are incurred. Lease Cost The components and classification of lease expense for the three and nine months ended October 1, 2023 and October 2, 2022 are as follows: Three Months Ended Nine Months Ended Lease cost Classification October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022 Operating lease cost (1) Restaurant rent expense $ 26,347 $ 26,274 $ 79,065 $ 78,970 Operating lease cost (2) General and administrative 307 231 948 704 Variable lease cost Restaurant rent expense 5,860 4,970 17,156 14,517 Finance lease cost: Amortization of right-of-use assets Depreciation and amortization 822 818 2,469 1,975 Interest on lease liabilities Interest expense 182 227 585 505 Total lease cost $ 33,518 $ 32,520 $ 100,223 $ 96,671 (1) Includes short-term leases which are not material. |
Long-Term Debt (Notes)
Long-Term Debt (Notes) | 9 Months Ended |
Oct. 01, 2023 | |
Long-Term Debt, Unclassified [Abstract] | |
Long-Term Debt | Long-term Debt Long-term debt at October 1, 2023 and January 1, 2023 consisted of the following: October 1, 2023 January 1, 2023 Senior Credit Facility: Term B Loans $ 164,438 $ 167,625 Revolving credit borrowings — 12,500 Senior Notes Due 2029 300,000 300,000 Finance lease liabilities 10,544 12,826 Total Funded debt 474,982 492,951 Less: current portion of long-term debt and finance lease liabilities (7,236) (7,341) Less: unamortized debt issuance costs (4,592) (5,401) Less: unamortized original issue discount (354) (453) Total Long-term debt $ 462,800 $ 479,756 Senior Credit Facilities. On April 30, 2019, the Company entered into senior secured credit facilities in an aggregate principal amount of $550.0 million, consisting of (i) a Term Loan B Facility in an aggregate principal amount of $425.0 million (the "Term Loan B Facility") maturing on April 30, 2026 and (ii) a revolving credit facility (including a sub-facility of $35.0 million for standby letters of credit) in an aggregate principal amount of $125.0 million maturing on April 30, 2024 (the "Revolving Credit Facility" and, together with the Term Loan B Facility, the "Senior Credit Facilities"). As of October 1, 2023, the Senior Credit Facilities, as amended, provide for an aggregate maximum commitment available for borrowings under the Revolving Credit Facility of $215.0 million. The Revolving Credit Facility, as amended, matures on January 29, 2026. The Company's obligations under the Senior Credit Facilities are guaranteed by its subsidiaries and are secured by first priority liens on substantially all of the assets of the Company and its subsidiaries, including a pledge of all of the capital stock and equity interests of its subsidiaries. Under the Senior Credit Facilities, the Company is required to make mandatory prepayments of borrowings in the event of dispositions of assets, debt issuances and insurance and condemnation proceeds (all subject to certain exceptions). The Senior Credit Facilities contain certain covenants, including, without limitation, those limiting the Company's and its subsidiaries' ability to, among other things, incur indebtedness, incur liens, sell or acquire assets or businesses, change the character of its business in all material respects, engage in transactions with related parties, make certain investments, make certain restricted payments or pay dividends. In addition, the Senior Credit Facilities require the Company to meet a First Lien Leverage Ratio (as defined in the Senior Credit Facilities) under certain circumstances. The Company is only required to maintain a First Lien Leverage Ratio (as defined in the Senior Credit Facilities) of not greater than 5.75 to 1.00 (as measured on a most recent four quarter basis) if, and only if, on the last day of any fiscal quarter, the sum of the aggregate principal amount of outstanding revolving credit borrowings under the Revolving Credit Facility and the aggregate face amount of letters of credit issued under the Revolving Credit Facility (excluding undrawn letters of credit in an aggregate face amount up to $12.0 million) exceed 35% of the aggregate borrowing capacity under the Revolving Credit Facility. The Senior Credit Facilities contain customary default provisions, including that the lenders may terminate their obligation to advance and may declare the unpaid balance of borrowings, or any part thereof, immediately due and payable upon the occurrence and during the continuance of customary events of default which include, without limitation, payment default, covenant default, bankruptcy default, cross-default on other indebtedness, judgment default and the occurrence of a change of control. As of October 1, 2023, there were no revolving credit borrowings outstanding and $10.5 million of letters of credit issued under the Revolving Credit Facility. After reserving for issued letters of credit and outstanding revolving credit borrowings, $204.5 million was available for revolving credit borrowings under the Senior Credit Facilities at October 1, 2023. The Term Loan B Facility requires quarterly installment payments, which began on September 30, 2019. Amounts outstanding at October 1, 2023 are due and payable as follows: (i) ten remaining quarterly installments of $1.1 million; (ii) one final payment of $153.8 million on April 30, 2026. At October 1, 2023, borrowings under the Revolving Credit Facility and Term Loan B Facility each bore interest at a rate per annum equal to (a) the Alternate Base Rate (as defined in the Senior Credit Facilities) plus 2.25% or (b) Adjusted Term SOFR (as defined in the Senior Credit Facilities) plus 3.25% (subject to the interest rate swap as described below). The weighted average interest rate for borrowings on long-term debt balances was 5.7% for both the three and nine months ended October 1, 2023, and 5.4% and 5.3% for the three and nine months ended October 2, 2022, respectively. Senior Notes due 2029. On June 28, 2021, the Company issued $300.0 million principal amount of 5.875% Senior Notes due 2029 (the "Notes") in a private placement. Carrols Restaurant Group and certain of its subsidiaries (the "Guarantors") entered into the Indenture (the "Indenture") dated as of June 28, 2021 with the Bank of New York Mellon Trust Company governing the Notes. The Indenture provides that the Notes will mature on July 1, 2029 and will bear interest at the rate of 5.875% per annum, payable semi-annually on July 1 and January 1 of each year, beginning on January 1, 2022. The entire principal amount of the Notes will be due and payable in full on the maturity date. The Indenture further provides that the Company (i) may redeem some or all of the Notes at any time after July 1, 2024 at the redemption prices described therein, (ii) may redeem up to 40% of the Notes using the proceeds of certain equity offerings completed before July 1, 2024 and (iii) must offer to purchase the Notes if it sells certain of its assets or if specific kinds of changes in control occur, all as set forth in the Indenture. The Notes are senior unsecured obligations of Carrols Restaurant Group and are guaranteed on an unsecured basis by the Guarantors. The Indenture contains certain covenants that limit the ability of Carrols Restaurant Group and the Guarantors to, among other things: incur indebtedness or issue preferred stock; incur liens; pay dividends or make distributions in respect of capital stock or make certain other restricted payments or investments; sell assets; agree to payment restrictions affecting Restricted Subsidiaries (as defined in the Indenture); enter into transactions with affiliates; or merge, consolidate or sell substantially all of the assets. Such restrictions are subject to certain exceptions and qualifications all as set forth in the Indenture. The Company was in compliance with all such covenants as of October 1, 2023. Interest Rate Swap. In March 2020, the Company entered into an interest rate swap agreement with certain of its lenders under the Senior Credit Facilities to mitigate the risk of increases in the variable interest rate related to term loan borrowings under the Senior Credit Facilities. The agreement matures on February 28, 2025. The interest rate swap originally fixed the interest rate on 50% of outstanding borrowings under the Senior Credit Facility at 0.915% plus the applicable margin in its Senior Credit Facilities with the differences settled monthly. The original notional amount of $220.0 million was reduced to a notional amount of $120.0 million and the fixed rate of interest was changed from 0.915% plus the applicable margin to 0.854% plus the applicable margin in 2022 in connection with the transition from LIBOR to SOFR as the benchmark rate on the Company's Senior Credit Facilities. The Company received $1.3 million and $3.7 million to settle the interest rate swap during the three and nine months ended October 1, 2023, respectively, and received $0.4 million and $0.1 million, net, to settle the interest rate swap during the three and nine months ended October 2, 2022, respectively. |
Income Taxes (Notes)
Income Taxes (Notes) | 9 Months Ended |
Oct. 01, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The provision (benefit) for income taxes for the three and nine months ended October 1, 2023 and October 2, 2022 was comprised of the following: Three Months Ended Nine Months Ended October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022 Current $ 129 $ — $ 282 $ — Deferred 4,837 (3,394) 6,859 (21,010) Change in valuation allowance (1,332) 682 (1,761) 6,168 Provision (benefit) for income taxes $ 3,634 $ (2,712) $ 5,380 $ (14,842) Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for income tax purposes. The provision for income taxes for the three and nine months ended October 1, 2023 was derived using an estimated effective annual income tax rate for all of 2023 of 12.3%,which is inclusive of the estimated change in the Company's valuation allowance on its deferred tax assets and excludes other discrete tax adjustments. The difference compared to the statutory rate for 2023 is primarily attributable to non-refundable business credits and also is impacted, to a lesser extent, by certain permanent non-deductible expenses, both of which are not directly related to the amount of pre-tax income recorded in the period, as well as changes in the valuation allowance. The income tax provision for the nine months ended October 1, 2023 included $1.2 million of tax expense from net discrete tax adjustments. The benefit for income taxes for the three and nine months ended October 2, 2022 was derived using an estimated effective annual income tax rate for all of 2022 of 20.7%, which is inclusive of the estimated change in the Company's deferred tax assets valuation allowance and excludes other discrete tax adjustments. The difference compared to the statutory rate for 2022 is attributed to various nondeductible tax expenses and non-refundable business credits which are not directly related to the amount of pre-tax loss recorded in the period as well as the valuation allowance charge. The three and nine months ended October 2, 2022 contained $0.1 million of tax benefit from net discrete tax adjustments. The Company's federal net operating loss carryforwards generated prior to December 31, 2017 expire beginning in 2035. Federal net operating losses generated subsequent to 2017 have no expiration date. As of October 1, 2023, the Company had federal net operating loss carryforwards of approximately $125.9 million, general business credits ("GBC") carryforwards of $43.9 million and approximately $170.5 million in state net operating loss carryforwards. The Company's GBC carryforwards begin to expire in 2032 and state net operating loss carryforwards begin to expire in 2023. The Company performs an assessment of positive and negative evidence regarding the realization of its deferred income tax assets as required by ASC 740. Under ASC 740, the weight given to negative and positive evidence is commensurate only to the extent that such evidence can be objectively verified. ASC 740 prescribes that objective historical evidence, in particular the Company's three-year cumulative loss position at October 1, 2023, be given greater weight than subjective evidence, including the Company's forecast of future taxable income, which include assumptions that cannot be objectively verified. In determining the likelihood of future realization of the deferred income tax assets as of October 1, 2023 and January 1, 2023 the Company considered both positive and negative evidence and weighted the effect of such evidence based upon its objectivity. At October 1, 2023 and January 1, 2023, the Company determined that a valuation allowance was needed for certain federal income tax credits and state operating loss carryforwards in the amount of $42.3 million and $44.3 million, respectively, as they may expire prior to their utilization by the Company. The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective evidence such as projections for growth. The Company recorded an income tax benefit of $1.3 million and $1.8 million in the three and nine months ended October 1, 2023, respectively, relative to this valuation reserve. The Company's policy is to recognize interest and/or penalties related to uncertain tax positions in income tax expense. At October 1, 2023 and January 1, 2023, the Company had no unrecognized tax benefits and no accrued interest related to uncertain tax positions. The tax years 2020 - 2023 remain open to examination by the major taxing jurisdictions to which the Company is subject. Although it is not reasonably possible to estimate the amount by which unrecognized tax benefits may increase within the next twelve months due to the uncertainties regarding the timing of examinations, the Company does not expect unrecognized tax benefits to significantly change in the next twelve months. |
Stock-Based Compensation (Notes
Stock-Based Compensation (Notes) | 9 Months Ended |
Oct. 01, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based CompensationStock-based compensation expense for the three months ended October 1, 2023 and October 2, 2022 was $1.9 million and $0.9 million, respectively, and for the nine months ended October 1, 2023 and October 2, 2022 was $4.0 million and $3.8 million, respectively. As of October 1, 2023, the total unrecognized stock-based compensation expense relating to time-vested restricted shares and performance-based restricted stock units was approximately $12.6 million and the Company expects to record an additional $1.7 million in stock-based compensation expense related to the vesting of these awards in the remainder of 2023. The remaining weighted average vesting period for non-vested shares was 1.9 years and restricted stock units was 2.4 years. Time-based Non-vested Shares. During the nine months ended October 1, 2023, the Company granted 1,425,235 non-vested shares of common stock to certain employees and officers of the Company and 384,807 non-vested shares of common stock to the outside directors of the Company. These shares generally vest in equal installments over their three-year service period, provided the participant has continuously remained an employee, officer or director of the Company. A summary of all non-vested common share activity for the nine months ended October 1, 2023 was as follows: Shares Weighted Average Grant Date Price Non-vested at January 1, 2023 1,767,811 $ 3.79 Granted 1,810,042 $ 2.50 Vested (822,368) $ 4.15 Forfeited (11,600) $ 2.48 Non-vested at October 1, 2023 2,743,885 $ 2.84 The fair value of time-vested shares is based on the closing price on the date of grant. Performance-based Restricted Shares. On April 1, 2022, 600,000 performance-based restricted shares were granted to the Company's former CEO of which 450,000 shares were forfeited on December 31, 2022. The remaining shares will fully vest on the third anniversary of the grant date based on the achievement of contractually defined EBITDA and share price growth targets. The fair value of the market-based restricted shares was determined using a Monte Carlo simulation valuation model and the shares were expensed over the applicable service period based on the probability of the Company's attainment of the contractually defined performance targets. This probability of performance attainment is assessed quarterly and if the Company estimates that it is not probable that the performance conditions will be satisfied, adjustments to prior expense will be recorded at that time. Performance-based Restricted Stock Units. On July 1, 2023, the Company granted 797,915 performance-based restricted stock units to its executive officers. The number of performance-based restricted stock units that will ultimately vest and be received by the participants is based on achievement of contractually defined EBITDA growth targets to be measured over the period ending fiscal 2025. The Company estimates the fair-value of performance-based restricted stock units based on the closing stock price on the date of the grant which was $5.04. The probability of performance attainment is assessed quarterly and if the Company estimates that it is not probable that the performance conditions will be satisfied, adjustments to prior expense will be recorded at that time. Stock Options. The Company has issued options to purchase shares of its common stock to certain employees and officers of the Company. These options became exercisable and were expensed over their three-year vesting period. The options expire seven years from the date of the grant and were issued with an exercise price equal to the fair market value of the stock price on the date of grant, or $7.12 per share. The following is a summary of all stock option activity for the nine months ended October 1, 2023: Options Weighted Average Exercise Price Average Remaining Contractual Life (in years) Aggregate Intrinsic Value (1) Options outstanding at January 1, 2023 975,500 Forfeited — Options Outstanding at October 1, 2023 975,500 $7.12 3.9 $— Vested or expected to vest at October 1, 2023 975,500 $7.12 3.9 $— Options exercisable at October 1, 2023 975,500 $7.12 3.9 $— (1) The aggregate intrinsic value is calculated using the difference between the market price of the Company's common stock at October 1, 2023 of $6.59 and the grant price for only those awards that have a grant price that is less than the market price of the Company's common stock at October 1, 2023. There were no awards having a grant price less than the market price of the Company's common stock at October 1, 2023. Time-Based Restricted Stock Units. The Company has issued time-based restricted stock units ("RSUs") on shares of the Company's common shares to certain officers of the Company. The following is a summary of all RSU activity for the nine months ended October 1, 2023: Units Non-vested at January 1, 2023 38,770 Vested (21,295) Non-vested at October 1, 2023 17,475 |
Commitments And Contingencies (
Commitments And Contingencies (Notes) | 9 Months Ended |
Oct. 01, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies Disclosure | Commitments and Contingencies Lease Guarantees. Fiesta Restaurant Group, Inc. ("Fiesta"), a former wholly-owned subsidiary of the Company, was spun-off in 2012 to the Company's stockholders. As of October 1, 2023, the Company is a guarantor under 17 leases from the time when Fiesta was its subsidiary, which have lease terms expiring on various dates through 2030. As of October 1, 2023, the guarantees include eight Fiesta restaurant property leases and nine Taco Cabana leases of which all but one Fiesta-owned restaurant is still operating. Eight of these guarantees are for leases with Pollo Operations, Inc, a wholly owned subsidiary of Fiesta, and nine of the guarantees are for leases with Texas Taco Cabana, L.P., an indirect subsidiary of Taco Cabana, Inc. (together with all direct and indirect subsidiaries, "Taco"). Taco was a wholly owned subsidiary of Fiesta until August 16, 2021 when Fiesta sold all of its outstanding capital stock of Taco Cabana, Inc. to YTC Enterprises, LLC, an affiliate of Yadav Enterprises, Inc. The Company is fully liable for all obligations under the terms of the leases in the event that a tenant fails to pay any sums due under the lease, subject to indemnification provisions of the Separation and Distribution Agreement entered into in connection with the spin-off of Fiesta. The maximum potential amount of future undiscounted rental payments the Company could be required to make under these leases at October 1, 2023 was $8.9 million, of which $5.4 million pertains to Fiesta restaurant property leases and $3.5 million pertains to Taco restaurant property leases. The obligations under these leases will generally continue to decrease over time as these operating leases expire, except for any execution of renewal options that exist under the original leases. No payments related to these guarantees have been made by the Company to date and none are expected to be required to be made in the future. The Company has not recorded a liability for these guarantees in accordance with ASC 460 - Guarantees as Fiesta has indemnified the Company for all such obligations and the Company did not believe it was probable it would be required to perform under any of the guarantees or direct obligations. Litigation. The Company is party to various litigation matters that arise in the ordinary course of business. The Company does not believe that the outcome of any of these matters will have a material adverse effect on its consolidated financial statements. Supplier Concentrations . The Company primarily utilizes four distributors, McLane Company Inc., Lineage Foodservice Solutions, LLC, Reinhart Food Service LLC and Performance Foodservice, to supply its Burger King restaurants with the majority of its foodstuffs. As of October 1, 2023, such distributors supplied 31%, 30%, 29% and 10%, respectively, of the Company's Burger King restaurants. Additionally, one bakery supplies the rolls used in approximately 50% of the Company's Burger King restaurants. The Company utilizes five distributors for its Popeyes restaurants, five for poultry products and four for all other products. For the Company's Popeyes restaurants, one distributor, Customized Distribution Services, supplies poultry products to 53% of its restaurants and supplies non-poultry products to 57% of its restaurants. |
Transactions with Related Parti
Transactions with Related Parties (Notes) | 9 Months Ended |
Oct. 01, 2023 | |
Related Party Transactions [Abstract] | |
Transactions with Related Parties | Transactions with Related Parties In connection with an acquisition of restaurants from Burger King Corporation ("BKC"), a subsidiary of Restaurant Brands International Inc. ("RBI"), in 2012, Carrols Restaurant Group issued to BKC 100 shares of Series A Convertible Preferred Stock, which was exchanged for 100 shares of newly issued Series B Convertible Preferred Stock ("Series B Preferred Stock") in 2018. The Series B Preferred Stock was further exchanged for 100 shares of newly issued Series D Convertible Preferred Stock in 2022. These preferred shares are convertible into 9,414,580 shares of common stock, which as of October 1, 2023 represents approximately 14.7% of the outstanding shares of the Company's common stock after giving effect to the conversion of the Series D Preferred Stock and excluding shares held in treasury. Pursuant to the Certificate of Designation of the Series D Preferred Stock (the "Certificate of Designation"), the BKC Stockholders are entitled to elect two representatives on the Company's Board of Directors. The approval of the BKC Stockholders is also required before the Company can take certain actions, including, among other things, amending the Company's certificate of incorporation or bylaws, declaring or paying a special cash dividend, amending the size of the Company's Board of Directors, or engaging in any business other than the ownership and operation of Burger King restaurants, in each case as more particularly described in the Certificate of Designation. The Company operates its Burger King restaurants under franchise agreements with BKC and its Popeyes restaurants under franchise agreements with Popeyes Louisiana Kitchen, Inc. ("PLK"), both subsidiaries of RBI. These franchise agreements generally provide for an initial term of twenty years and currently have an initial franchise fee of $50,000. With BKC's and PLK's respective approval, the Company can elect to extend franchise agreements for additional 20-year terms, provided that the restaurant meets the current restaurant image standard and the Company is not in default under terms of the franchise agreement. In addition to the initial franchise fee, the Company generally pays BKC a monthly royalty at a rate of 4.5% of Burger King restaurant sales and PLK a weekly royalty at a rate of 5.0% of Popeyes restaurant sales. Royalty expense was $21.3 million and $19.7 million in the three months ended October 1, 2023 and October 2, 2022, respectively, and $62.8 million and $57.0 million in the nine months ended October 1, 2023 and October 2, 2022, respectively, and is included in other restaurant operating expenses in the condensed consolidated statements of comprehensive loss. Beginning in May of 2021, the Company also pays a monthly fee to BKC for use of its digital platform, which was $0.8 million and $2.2 million in the three and nine months ended October 1, 2023, respectively, and $0.6 million and $1.5 million in the three and nine months ended October 2, 2022, respectively, and is included in other restaurant operating expenses in the condensed consolidated statements of comprehensive loss. The Company is also generally required to contribute 4.0% of restaurant sales from its restaurants to an advertising fund utilized by BKC and PLK for advertising, promotional programs and public relations activities, and additional amounts for local advertising in markets that approve such advertising. Advertising expense associated with these expenditures was $18.8 million and $17.4 million in the three months ended October 1, 2023 and October 2, 2022, respectively, and $55.2 million and $50.3 million in the nine months ended October 1, 2023 and October 2, 2022, respectively. As of October 1, 2023 and October 2, 2022, the Company leased 218 and 221 of its restaurant locations from BKC, respectively. As of October 1, 2023 and October 2, 2022, the terms and conditions of the leases with BKC are identical to those between BKC and their third party lessors for 96 and 95 restaurants, respectively. Aggregate rent under these BKC leases was $7.4 million and $6.9 million for the three months ended October 1, 2023 and October 2, 2022, respectively, and $21.8 million and $20.4 million for the nine months ended October 1, 2023 and October 2, 2022, respectively. The Company does not believe that such lease terms have been significantly affected by the fact that the Company and BKC are deemed to be related parties. As of October 1, 2023 and January 1, 2023, the Company owed BKC and PLK $20.5 million and $16.0 million, respectively, related to the payment of advertising, royalties, digital fees, rent and real estate taxes, which is normally remitted on a monthly basis. These costs are included in accounts payable, other current liabilities, and accrued real estate taxes on the accompanying consolidated balance sheets. The Company, Carrols Corporation, Carrols LLC, and BKC entered into an Amended Area Development Agreement on January 4, 2021 (the "Amended ADA"). Under the Amended ADA, Carrols LLC has agreed to open, build and operate a total of 50 new Burger King restaurants, 80% of which must be in Kentucky, Tennessee and Indiana. This includes four Burger King restaurants by September 30, 2021 (which were completed in 2021), 10 additional Burger King restaurants by September 30, 2022 (of which six were completed in 2022), 12 additional Burger King restaurants by September 30, 2023, 12 additional Burger King restaurants by September 30, 2024 and 12 additional Burger King restaurants by September 30, 2025. There is a 90-day cure period to meet the required restaurant development each development year. The Company is in ongoing discussions with BKC regarding its development plans, and does not believe the penalties, if any, associated with not meeting these commitments will be material. In addition, pursuant to the Amended ADA, BKC granted Carrols LLC franchise pre-approval to build new Burger King restaurants or acquire Burger King restaurants from Burger King franchisees with respect to 500 Burger King restaurants in the aggregate in (i) Kentucky, Tennessee and Indiana (excluding certain geographic areas in Indiana) and (ii) (a) 16 states, which include Arkansas, Indiana, Kentucky, Louisiana, Maine, Maryland, Michigan, Mississippi, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Vermont and Virginia (subject to certain exceptions for certain limited geographic areas within certain states) and (b) any other geographic locations that Carrols LLC enters after the commencement date of the Amended ADA pursuant to BKC procedures subject to certain limitations. This pre-approval may be suspended as long as the Company is not in compliance with its development commitments described above. In 2022, the Company entered an agreement with BKC in connection with their "Reclaim the Flame" investment plan. Pursuant to this initiative, BKC has agreed to fund $120 million in additional advertising expenditures over the period October 1, 2022 through December 31, 2024. Following the franchisor's investment period in 2023 and 2024, participating franchisees have agreed to increase their advertising fund contributions by 50 basis points through 2026 if a restaurant-level profitability threshold for the Burger King system is met for the full fiscal year 2024, and further through 2028 if a secondary restaurant-level profitability threshold is met for the full fiscal year 2026. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Oct. 01, 2023 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders' Equity Stock Repurchase Program. On August 2, 2019, the Company's Board of Directors approved a stock repurchase plan ("Repurchase Program") under which the Company may repurchase up to $25.0 million of its outstanding common stock. The authorization became effective August 2, 2019. In August 2023, the Company's Board of Directors approved an extension of the Company's Repurchase Program with approximately $11.0 million of its original $25.0 million in capacity remaining which is set to expire on August 2, 2025, unless terminated earlier by the Board of Directors. Purchases under the Repurchase Program may be made from time to time in open market transactions at prevailing market prices or in privately negotiated transactions (including, without limitation, the use of Rule 10b5-1 plans) in compliance with applicable federal securities laws, including Rule 10b-18 under the Securities Exchange Act of 1934, as amended. The Company has no obligation to repurchase stock under the Repurchase Program, and the timing, actual number and value of shares purchased will depend on the Company's stock price, trading volume, general market and economic conditions, and other factors. |
Net income (Loss) Per Share
Net income (Loss) Per Share | 9 Months Ended |
Oct. 01, 2023 | |
Earnings Per Share [Abstract] | |
Net Income (Loss) Per Share | Net Income (Loss) per Share The Company applies the two-class method to calculate and present net income (loss) per share. The Company's non-vested restricted share awards and Series D Convertible Preferred Stock contain non-forfeitable rights to dividends and are considered participating securities for purposes of computing net loss per share pursuant to the two-class method. Under the two-class method, net earnings are reduced by the amount of dividends declared (whether paid or unpaid) and the remaining undistributed earnings are then allocated to common stock and participating securities, based on their respective rights to receive dividends. As the Company incurred a net loss for the three and nine months ended October 2, 2022, and losses are not allocated to participating securities under the two-class method, such method is not applicable for the aforementioned interim reporting period. Basic net income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of shares of common stock outstanding for the reporting period. Diluted net income (loss) per share reflects additional shares of common stock outstanding, where applicable, calculated using the treasury stock method or the two-class method. The following table sets forth the calculation of basic and diluted net income (loss) per share: Three Months Ended Nine Months Ended October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022 Basic net income (loss) per share: Net income (loss) $ 12,618 $ (8,697) $ 28,436 $ (56,442) Less: Income attributable to non-vested shares (696) — (1,364) — Less: Income attributable to preferred stock (1,841) — (4,181) — Net income (loss) available to common stockholders $ 10,081 $ (8,697) $ 22,891 $ (56,442) Weighted average common shares outstanding 51,560,307 50,805,461 51,506,367 50,689,730 Basic net income (loss) per share $ 0.20 $ (0.17) $ 0.44 $ (1.11) Diluted net income (loss) per share: Net income (loss) $ 12,618 $ (8,697) $ 28,436 $ (56,442) Shares used in computing diluted net income (loss) per share 51,560,307 50,805,461 51,506,367 50,689,730 Dilutive effect of preferred stock and non-vested shares 11,267,568 — 10,618,097 — Shares used in computing diluted net income (loss) per share 62,827,875 50,805,461 62,124,464 50,689,730 Diluted net income (loss) per share $ 0.20 $ (0.17) $ 0.44 $ (1.11) Shares excluded from diluted net income (loss) per share computations (1) — 11,921,161 — 11,921,161 (1) Shares issuable upon conversion of preferred stock and non-vested shares (including non-vested restricted stock units) were excluded from the computation of diluted net loss per share because their effect would have been anti-dilutive in such periods. |
Other Expense Income, net (Note
Other Expense Income, net (Notes) | 9 Months Ended |
Oct. 01, 2023 | |
Other Income and Expenses [Abstract] | |
Other Expense Income, net | Other Income, net Other income, net, for the three months ended October 1, 2023 was $3.6 million, and included a settlement with BKC under the territorial rights provision of our franchise agreement of $4.3 million and a loss on disposal of assets of $0.6 million. Other income, net, for the nine months ended October 1, 2023 was $6.5 million, and included a settlement with BKC under the territorial rights provision of our franchise agreement of $4.3 million, net gains from insurance recoveries of $1.8 million, a gain of $0.8 million from the derecognition of a lease financing obligation associated with a prior sale leaseback transaction, a gain on sale leaseback transactions of $0.4 million, a gain from condemnation of a property of $0.3 million and a loss on disposal of assets of $1.0 million. The three months ended October 2, 2022 included other income, net, of $1.8 million, which included a loss on sale-leaseback transactions of $0.5 million and a gain from a settlement with a vendor of $2.5 million |
Subsequent Events (Notes)
Subsequent Events (Notes) | 9 Months Ended |
Oct. 01, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent EventsIn October of 2023, Fiesta was acquired by affiliates of Garnett Station Partners, LLC ("GSP"). Matthew Perelman and Alexander Sloane, each a member of the Company’s Board of Directors, are affiliates of GSP and affiliates of Cambridge Franchise Holdings, LLC which owns approximately 26.4% of the outstanding shares of the Company's common stock. As disclosed in footnote 10, Fiesta is a former wholly-owned subsidiary of the Company and the Company remains guarantor on eight Fiesta restaurant property leases.In November of 2023, the Company's entered into an agreement with BKC to remodel 64 restaurants in total between 2023 and 2024 in connection with their "Reclaim the Flame" remodel incentive program. On November 9, 2023, the Company announced that its Board of Directors has declared a regular quarterly cash dividend of $0.02 per share on all issued and outstanding shares of the Company's common stock, including common stock issuable on the conversion of our Series D Convertible Preferred Stock, that will be paid on December 15, 2023 to stockholders of record as of the close of business on November 21, 2023. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Oct. 01, 2023 | Jul. 02, 2023 | Apr. 02, 2023 | Oct. 02, 2022 | Jul. 03, 2022 | Apr. 03, 2022 | Oct. 01, 2023 | Oct. 02, 2022 | |
Pay vs Performance Disclosure | ||||||||
Net income (loss) | $ 12,618 | $ 14,954 | $ 864 | $ (8,697) | $ (26,476) | $ (21,269) | $ 28,436 | $ (56,442) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended | 9 Months Ended |
Oct. 01, 2023 shares | Oct. 01, 2023 shares | |
Trading Arrangements, by Individual | ||
Non-Rule 10b5-1 Arrangement Adopted | false | |
Rule 10b5-1 Arrangement Terminated | false | |
Non-Rule 10b5-1 Arrangement Terminated | false | |
Matthew Perelman and Alexander Sloane [Member] | ||
Trading Arrangements, by Individual | ||
Material Terms of Trading Arrangement | On September 14, 2023, Cambridge Franchise Holdings, LLC ("CFH") entered into a Master Forward Confirmation Agreement (the “ Second Master Forward Confirmation ”) (A) intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act and (B) covering up to the lesser of (i) 3,285,622 shares of common stock, par value $0.01 per share, of the Company (such shares, the “ Second Forward Shares ”) and (ii) the maximum number of Second Forward Shares permitted to be sold under Rule 144 of the Securities Act. Pursuant to a first Supplemental Confirmation, dated September 14, 2023, and supplementing the Second Master Forward Confirmation (the “ Delayed Start Supplemental Confirmation ”), the first date on which any sales in connection with the Delayed Start Supplemental Confirmation will be executed will be on or after the later of (A) the third business day after the Company files its Quarterly Report on Form 10-Q for the third fiscal quarter of 2023 and (B) December 14, 2023. The Second Master Forward Confirmation will remain in effect until the date on which the Second Forward Shares have been sold under the Second Forward Master Confirmation. Matthew Perelman and Alexander Sloane are members of the Company's Board of Directors and are the managing principals of Cambridge Franchise Partners, LLC, which is the sole member and manager of CFH. Accordingly, each of Mr. Perelman and Mr. Sloane may be deemed to be the beneficial owner of the Second Forward Shares owned directly by CFH. | |
Name | Matthew Perelman and Alexander Sloane | |
Title | Board of Directors | |
Rule 10b5-1 Arrangement Adopted | true | |
Adoption Date | September 14, 2023 | |
Aggregate Available | 3,285,622 | 3,285,622 |
Anthony Hull [Member] | ||
Trading Arrangements, by Individual | ||
Material Terms of Trading Arrangement | On September 14, 2023, Anthony Hull, Vice President, Chief Financial Officer and Treasurer of the Company, entered into a 10b5-1 sales plan (the “Hull 10b5-1 Sales Plan”) intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act. The Hull 10b5-1 Sales Plan provides for the sale of up to 75,000 shares of the Company’s common stock and will remain in effect until the earlier of (1) December 31, 2025 and (2) the date on which an aggregate 75,000 shares of the Company’s common stock have been sold under the Hull 10b5-1 Sales Plan. The first date on which any sales in connection with the Hull 10b5-1 Sales Plan will be executed will be on the later of (A) the third business day after the Company files its Quarterly Report on Form 10-Q for the third fiscal quarter of 2023 and (B) December 14, 2023. | |
Name | Anthony Hull | |
Title | Vice President, Chief Financial Officer and Treasurer | |
Rule 10b5-1 Arrangement Adopted | true | |
Adoption Date | September 14, 2023 | |
Aggregate Available | 75,000 | 75,000 |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 9 Months Ended |
Oct. 01, 2023 | |
Accounting Policies [Abstract] | |
Basis of Consolidation | Basis of Consolidation. The accompanying condensed consolidated financial statements include the accounts of the Company and its direct and indirect wholly-owned subsidiaries. All intercompany transactions have been eliminated in consolidation. |
Fiscal Year | Fiscal Year. The Company uses a 52-53 week fiscal year ending on the Sunday closest to December 31. The three and nine months ended October 1, 2023 and October 2, 2022 contained thirteen and thirty-nine weeks, respectively. The 2023 fiscal year will end December 31, 2023 and will contain 52 weeks. |
Basis of Presentation | Basis of Presentation. The unaudited condensed consolidated financial statements as of and for the three and nine months ended October 1, 2023 and October 2, 2022 have been prepared without an audit pursuant to the rules and regulations of the Securities and Exchange Commission and do not include certain of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all normal and recurring adjustments considered necessary for a fair presentation of such unaudited condensed consolidated financial statements have been included. The results of operations for the three and nine months ended October 1, 2023 are not necessarily indicative of the results to be expected for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements contained in the Company's Annual Report on Form 10-K for the year ended January 1, 2023. The January 1, 2023 consolidated balance sheet data is derived from those audited consolidated financial statements. |
Use of Estimates | Use of Estimates. The preparation of the unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant items subject to such estimates include accrued occupancy costs, insurance liabilities, lease accounting matters, the valuation of acquired assets and liabilities, interest rate swap valuation, the valuation of deferred income tax assets and liabilities, and the evaluation for impairment of goodwill, long-lived assets and franchise rights. Actual results could differ from those estimates. |
Segment Information | Segment Information. Operating segments are components of an entity for which discrete financial information is available and is regularly reviewed by the chief operating decision maker in order to allocate resources and assess performance. The Company's chief operating decision-maker, our President and Chief Executive Officer ("CEO"), currently evaluates the Company's operations from a number of different operational perspectives; however, resource allocation decisions are determined based on the chief operating decision-maker's evaluation of the total Company operations. The Company derives all significant revenues from a single operating segment, its restaurant business. Accordingly, the Company views the operating results of its restaurants as one reportable segment. |
Cash and Cash Equivalents | Cash and Cash Equivalents. |
Food, Beverage and Packaging Costs | Food, Beverage and Packaging Costs. The Company includes food, beverage and packaging costs and delivery charges, net of any vendor purchase discounts and rebates, in food, beverage, and packaging costs. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. In determining fair value, the accounting standards establish a three-level hierarchy for inputs used in measuring fair value as follows: Level 1 inputs are quoted prices in active markets for identical assets or liabilities; Level 2 inputs are observable for the asset or liability, either directly or indirectly, including quoted prices in active markets for similar assets or liabilities; and Level 3 inputs are unobservable and reflect the Company's own assumptions. Financial instruments include cash and cash equivalents, trade and other receivables, accounts payable and long-term debt. The carrying amounts of cash and cash equivalents, trade and other receivables and accounts payable approximate fair value because of the short-term nature of these financial instruments. Borrowings under the Company's Senior Credit Facilities (including its term B loans) accrue interest at a floating rate tied to a standard short-term borrowing index selected at the Company's option, plus an applicable margin. The Company's liability for its Senior Credit Facilities and 5.875% Senior Notes due 2029 are carried at historical cost in the accompanying balance sheets. The fair value of our term B loans and 5.875% Senior Notes due 2029 is based on recent trading activity, which are Level 2 inputs in the fair value hierarchy. As of October 1, 2023, the term B loans traded at 96.9% of par value and the 5.875% Senior Notes due 2029 traded at 82.8% of par value. The Company recognizes its derivative arrangements on the balance sheet at fair value, which is considered a Level 2 input. The Company's only derivative is an interest rate swap (the "Swap") which is designated as a cash flow hedge. Accordingly, the entire change in the fair value of the cash flow hedges included in the assessment of hedge effectiveness is recognized in accumulated other comprehensive income. The amounts recorded in other comprehensive income will subsequently be reclassified to earnings as an increase or decrease to interest expense as realized through receipts or payments. The Company classifies cash inflows and outflows from derivatives within operating activities on the condensed consolidated statements of cash flows. The Swap had an asset value of $7.1 million as of October 1, 2023 and it is classified as Level 2 within the fair value hierarchy. The Company's counterparties under this arrangement provided the Company with quarterly statements of the market values of these instruments based on significant inputs that were observable or could be derived principally from, or corroborated by, observable market data for substantially the full term of the asset or liability. The impact on the derivative liabilities for the Company and the counterparties' non-performance risk to the derivative trades was considered when measuring the fair value of derivative liabilities. Fair value measurements of non-financial assets and non-financial liabilities are primarily used in the impairment analysis of long-lived assets, goodwill and intangible assets. Long-lived assets and definite-lived intangible assets are measured at fair value on a nonrecurring basis using Level 3 inputs. As described in Note 4, the Company recorded long-lived asset impairment charges of $0.6 million and $1.0 million during the three and nine months ended October 1, 2023, respectively, and $0.4 million and $1.8 million during the three and nine months ended October 2, 2022, respectively. The Company also recorded $16.7 million in goodwill impairment charges in the second quarter of 2022. Impairment of Long-Lived Assets and Other Lease Charges. The Company reviews its long-lived assets, principally property and equipment, for impairment at the restaurant level. If an indicator of impairment exists for any of its assets, an estimate of the undiscounted future cash flows over the life of the primary asset for each restaurant is compared to that long-lived asset's carrying value. If the carrying value is greater than the undiscounted cash flow, the Company then determines the fair value of the asset and if an asset is determined to be impaired, the loss is measured by the excess of the carrying amount of the asset over its fair value. For closed restaurant locations, the Company reviews the future minimum lease payments and related ancillary costs from the date of the restaurant closure to the end of the remaining lease term and records a lease charge for any right-of-use ("ROU") lease asset impairment or lease-related costs during the remaining term, net of any estimated sublease recoveries. The Company determined the fair value of restaurant equipment, for those restaurants reviewed for impairment, based on current economic conditions. The Company determines the fair value of ROU lease assets based on an assessment of market rents and a discounted future cash flow model. The Company re-evaluates the ROU lease asset at the time the restaurant is no longer determined to be usable to the Company, which is generally when the restaurant is closed. These fair value asset measurements rely on significant unobservable inputs and are considered Level 3 in the fair value hierarchy. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements. In the normal course of business, the Company evaluates all new Accounting Standards Updates ("ASU") and other accounting pronouncements issued by the Financial Accounting Standards Board ("FASB"), Securities and Exchange Commission ("SEC"), or other authoritative accounting bodies to determine the potential impact they may have on its Consolidated Financial Statements. The Company does not expect any of the recently issued accounting pronouncements, which have not already been adopted, to have a material impact on its Consolidated Financial Statements. |
Subsequent Events | Subsequent Events. The Company reviewed and evaluated subsequent events through the issuance date of the Company's unaudited condensed consolidated financial statements. |
Intangible Assets (Policies)
Intangible Assets (Policies) | 9 Months Ended |
Oct. 01, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Franchise Rights | Franchise Rights. Amounts allocated to franchise rights for each acquisition of Burger King and Popeyes |
Stock-Based Compensation Polici
Stock-Based Compensation Policies (Policies) | 9 Months Ended |
Oct. 01, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | The fair value of time-vested shares is based on the closing price on the date of grant. |
Net income (Loss) Per Share (Po
Net income (Loss) Per Share (Policies) | 9 Months Ended |
Oct. 01, 2023 | |
Earnings Per Share [Abstract] | |
Earnings Per Share, Policy | The Company applies the two-class method to calculate and present net income (loss) per share. The Company's non-vested restricted share awards and Series D Convertible Preferred Stock contain non-forfeitable rights to dividends and are considered participating securities for purposes of computing net loss per share pursuant to the two-class method. Under the two-class method, net earnings are reduced by the amount of dividends declared (whether paid or unpaid) and the remaining undistributed earnings are then allocated to common stock and participating securities, based on their respective rights to receive dividends. As the Company incurred a net loss for the three and nine months ended October 2, 2022, and losses are not allocated to participating securities under the two-class method, such method is not applicable for the aforementioned interim reporting period. Basic net income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of shares of common stock outstanding for the reporting period. Diluted net income (loss) per share reflects additional shares of common stock outstanding, where applicable, calculated using the treasury stock method or the two-class method. |
Other Liabilities, Long-Term (T
Other Liabilities, Long-Term (Tables) | 9 Months Ended |
Oct. 01, 2023 | |
Other Liabilities, Noncurrent [Abstract] | |
Schedule of Other Assets and Other Liabilities | Other liabilities, long-term, at October 1, 2023 and January 1, 2023 consisted of the following: October 1, 2023 January 1, 2023 Accrued occupancy costs $ 1,514 $ 1,797 Accrued workers' compensation and general liability claims 3,768 5,239 Deferred compensation 2,788 3,002 Accrued post retirement benefits 1,254 1,347 Other 882 2,205 $ 10,206 $ 13,590 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Oct. 01, 2023 | |
Leases [Abstract] | |
Lease, Cost | The components and classification of lease expense for the three and nine months ended October 1, 2023 and October 2, 2022 are as follows: Three Months Ended Nine Months Ended Lease cost Classification October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022 Operating lease cost (1) Restaurant rent expense $ 26,347 $ 26,274 $ 79,065 $ 78,970 Operating lease cost (2) General and administrative 307 231 948 704 Variable lease cost Restaurant rent expense 5,860 4,970 17,156 14,517 Finance lease cost: Amortization of right-of-use assets Depreciation and amortization 822 818 2,469 1,975 Interest on lease liabilities Interest expense 182 227 585 505 Total lease cost $ 33,518 $ 32,520 $ 100,223 $ 96,671 (1) Includes short-term leases which are not material. |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Oct. 01, 2023 | |
Long-Term Debt, Unclassified [Abstract] | |
Schedule of Long-term Debt Instruments | Long-term debt at October 1, 2023 and January 1, 2023 consisted of the following: October 1, 2023 January 1, 2023 Senior Credit Facility: Term B Loans $ 164,438 $ 167,625 Revolving credit borrowings — 12,500 Senior Notes Due 2029 300,000 300,000 Finance lease liabilities 10,544 12,826 Total Funded debt 474,982 492,951 Less: current portion of long-term debt and finance lease liabilities (7,236) (7,341) Less: unamortized debt issuance costs (4,592) (5,401) Less: unamortized original issue discount (354) (453) Total Long-term debt $ 462,800 $ 479,756 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Oct. 01, 2023 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense (Benefit) | The provision (benefit) for income taxes for the three and nine months ended October 1, 2023 and October 2, 2022 was comprised of the following: Three Months Ended Nine Months Ended October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022 Current $ 129 $ — $ 282 $ — Deferred 4,837 (3,394) 6,859 (21,010) Change in valuation allowance (1,332) 682 (1,761) 6,168 Provision (benefit) for income taxes $ 3,634 $ (2,712) $ 5,380 $ (14,842) |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Oct. 01, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Summary of Nonvested Share Activity | A summary of all non-vested common share activity for the nine months ended October 1, 2023 was as follows: Shares Weighted Average Grant Date Price Non-vested at January 1, 2023 1,767,811 $ 3.79 Granted 1,810,042 $ 2.50 Vested (822,368) $ 4.15 Forfeited (11,600) $ 2.48 Non-vested at October 1, 2023 2,743,885 $ 2.84 |
Share-based Payment Arrangement, Restricted Stock and Restricted Stock Unit, Activity | The following is a summary of all RSU activity for the nine months ended October 1, 2023: Units Non-vested at January 1, 2023 38,770 Vested (21,295) Non-vested at October 1, 2023 17,475 |
Share-based Payment Arrangement, Option, Activity | The following is a summary of all stock option activity for the nine months ended October 1, 2023: Options Weighted Average Exercise Price Average Remaining Contractual Life (in years) Aggregate Intrinsic Value (1) Options outstanding at January 1, 2023 975,500 Forfeited — Options Outstanding at October 1, 2023 975,500 $7.12 3.9 $— Vested or expected to vest at October 1, 2023 975,500 $7.12 3.9 $— Options exercisable at October 1, 2023 975,500 $7.12 3.9 $— (1) The aggregate intrinsic value is calculated using the difference between the market price of the Company's common stock at October 1, 2023 of $6.59 and the grant price for only those awards that have a grant price that is less than the market price of the Company's common stock at October 1, 2023. There were no awards having a grant price less than the market price of the Company's common stock at October 1, 2023. |
Net income (Loss) Per Share (Ta
Net income (Loss) Per Share (Tables) | 9 Months Ended |
Oct. 01, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table sets forth the calculation of basic and diluted net income (loss) per share: Three Months Ended Nine Months Ended October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022 Basic net income (loss) per share: Net income (loss) $ 12,618 $ (8,697) $ 28,436 $ (56,442) Less: Income attributable to non-vested shares (696) — (1,364) — Less: Income attributable to preferred stock (1,841) — (4,181) — Net income (loss) available to common stockholders $ 10,081 $ (8,697) $ 22,891 $ (56,442) Weighted average common shares outstanding 51,560,307 50,805,461 51,506,367 50,689,730 Basic net income (loss) per share $ 0.20 $ (0.17) $ 0.44 $ (1.11) Diluted net income (loss) per share: Net income (loss) $ 12,618 $ (8,697) $ 28,436 $ (56,442) Shares used in computing diluted net income (loss) per share 51,560,307 50,805,461 51,506,367 50,689,730 Dilutive effect of preferred stock and non-vested shares 11,267,568 — 10,618,097 — Shares used in computing diluted net income (loss) per share 62,827,875 50,805,461 62,124,464 50,689,730 Diluted net income (loss) per share $ 0.20 $ (0.17) $ 0.44 $ (1.11) Shares excluded from diluted net income (loss) per share computations (1) — 11,921,161 — 11,921,161 (1) Shares issuable upon conversion of preferred stock and non-vested shares (including non-vested restricted stock units) were excluded from the computation of diluted net loss per share because their effect would have been anti-dilutive in such periods. |
Business Description (Details)
Business Description (Details) | Oct. 01, 2023 |
Burger King Corporate | |
Entity Information [Line Items] | |
Number of Restaurants | 1,019 |
Number of States in which Entity Operates | 23 |
Popeyes | |
Entity Information [Line Items] | |
Number of Restaurants | 61 |
Number of States in which Entity Operates | 6 |
Significant Accounting Polici_3
Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Oct. 01, 2023 | Oct. 02, 2022 | Jul. 03, 2022 | Oct. 01, 2023 | Oct. 02, 2022 | Jan. 01, 2023 | |
Debt Instrument [Line Items] | ||||||
Money market funds | $ 30,400,000 | $ 30,400,000 | $ 0 | |||
Impairment and other lease charges (Note 4) | 1,591,000 | $ 1,196,000 | 5,680,000 | $ 19,868,000 | ||
Asset impairment | $ 600,000 | $ 400,000 | 1,000,000 | $ 1,800,000 | ||
Goodwill, impairment loss | $ 16,700,000 | $ 0 | ||||
Senior Loans | ||||||
Debt Instrument [Line Items] | ||||||
Loans traded, portion of par value, percentage | 0.828 | 0.828 | ||||
Senior Loans | Senior Unsecured Notes Due 2029 | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, rate | 5.875% | 5.875% | ||||
Term Loan B Facility | ||||||
Debt Instrument [Line Items] | ||||||
Loans traded, portion of par value, percentage | 96.9 | 96.9 |
Intangible Assets (Details)
Intangible Assets (Details) | 3 Months Ended | 9 Months Ended | |||
Oct. 01, 2023 USD ($) | Oct. 02, 2022 USD ($) | Jul. 03, 2022 USD ($) | Oct. 01, 2023 USD ($) period | Oct. 02, 2022 USD ($) | |
Finite-Lived Intangible Assets [Line Items] | |||||
Franchise agreement, number of renewal periods | period | 1 | ||||
Franchise agreement, term | 20 years | ||||
Amortization of intangible assets, franchise rights | $ 3,500,000 | $ 3,500,000 | $ 10,400,000 | $ 10,500,000 | |
Goodwill, impairment loss | $ 16,700,000 | 0 | |||
Franchise Rights | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Impairment of intangible assets (excluding goodwill) | 0 | $ 0 | 0 | $ 0 | |
Second Fiscal Year | 13,900,000 | 13,900,000 | |||
Next fiscal year | 13,900,000 | 13,900,000 | |||
Fourth Fiscal Year | 13,900,000 | 13,900,000 | |||
Fifth Fiscal Year | 13,900,000 | 13,900,000 | |||
Third Fiscal Year | $ 13,900,000 | $ 13,900,000 |
Impairment Of Long-Lived Asse_2
Impairment Of Long-Lived Assets And Other Lease Charges (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2023 USD ($) restaurant | Oct. 02, 2022 USD ($) restaurant | Oct. 01, 2023 USD ($) restaurant | Oct. 02, 2022 USD ($) restaurant | |
Impaired Long-Lived Assets Held and Used [Line Items] | ||||
Impairment and other lease charges | $ 1,600 | $ 1,200 | $ 5,700 | $ 3,200 |
Impairment and other lease charges (Note 4) | $ 1,591 | $ 1,196 | $ 5,680 | $ 19,868 |
Number of restaurants closed | restaurant | 1 | |||
Asset impairment charges, number of restaurants | restaurant | 1 | 3 | 1 | 6 |
Asset Impairment Charges, Number of Underperforming Restaurants | restaurant | 10 | |||
Closed Restaurants | ||||
Impaired Long-Lived Assets Held and Used [Line Items] | ||||
Number of restaurants closed | restaurant | 1 | 7 | ||
Initial Impairment Charge | ||||
Impaired Long-Lived Assets Held and Used [Line Items] | ||||
Impairment and other lease charges (Note 4) | $ 300 | $ 300 | $ 300 | $ 1,400 |
Previously Impaired | ||||
Impaired Long-Lived Assets Held and Used [Line Items] | ||||
Impairment and other lease charges (Note 4) | 700 | 400 | ||
Capital Expenditures At Underperforming Restaurants | ||||
Impaired Long-Lived Assets Held and Used [Line Items] | ||||
Impairment and other lease charges (Note 4) | 400 | 100 | ||
Other Lease Charges | ||||
Impaired Long-Lived Assets Held and Used [Line Items] | ||||
Impairment and other lease charges (Note 4) | $ 1,000 | 800 | $ 4,700 | 1,500 |
Long-lived assets impairment and other lease charges | $ 400 | $ 1,000 |
Other Liabilities, Long-Term (D
Other Liabilities, Long-Term (Details) - USD ($) $ in Thousands | Oct. 01, 2023 | Jan. 01, 2023 |
Other Liabilities, Noncurrent [Abstract] | ||
Accrued occupancy costs | $ 1,514 | $ 1,797 |
Accrued workers' compensation and general liability claims | 3,768 | 5,239 |
Deferred compensation | 2,788 | 3,002 |
Total long-term lease liabilities | 1,254 | 1,347 |
Other | 882 | 2,205 |
Other Liabilities | $ 10,206 | $ 13,590 |
Leases (Details)
Leases (Details) | Oct. 01, 2023 |
Lessee, Lease, Description [Line Items] | |
Lessee, operating lease, term of contract | 20 years |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Lessee, Finance Lease, Term of Contract | 3 years |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Lessee, Finance Lease, Term of Contract | 8 years |
Leases - Cost (Details)
Leases - Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2023 | Oct. 02, 2022 | Oct. 01, 2023 | Oct. 02, 2022 | |
Loans and Leases Receivable Disclosure [Line Items] | ||||
Variable lease cost | $ 5,860 | $ 4,970 | $ 17,156 | $ 14,517 |
Amortization of right-of-use assets | 822 | 818 | 2,469 | 1,975 |
Interest on lease liabilities | 182 | 227 | 585 | 505 |
Total lease cost | 33,518 | 32,520 | 100,223 | 96,671 |
Restaurant Rent Expense | ||||
Loans and Leases Receivable Disclosure [Line Items] | ||||
Operating lease cost | 26,347 | 26,274 | 79,065 | 78,970 |
General and Administrative Expense | ||||
Loans and Leases Receivable Disclosure [Line Items] | ||||
Operating lease cost | $ 307 | $ 231 | $ 948 | $ 704 |
Long-Term Debt Debt Balances (D
Long-Term Debt Debt Balances (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2023 | Oct. 02, 2022 | Oct. 02, 2022 | Jan. 01, 2023 | |
Debt Instrument [Line Items] | ||||
Debt Instrument, Interest Rate During Period | 5.70% | 5.40% | 5.30% | |
Finance lease liabilities | $ 10,544 | $ 12,826 | ||
Long-term Debt | 474,982 | 492,951 | ||
Less: current portion | (7,236) | (7,341) | ||
Less: deferred financing costs | (4,592) | (5,401) | ||
Debt Instrument, Unamortized Discount | (354) | (453) | ||
Long-term debt, net of current portion | 462,800 | 479,756 | ||
Term Loan B Facility | ||||
Debt Instrument [Line Items] | ||||
Long-term Line of Credit | 164,438 | 167,625 | ||
Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Long-term Line of Credit | 0 | 12,500 | ||
Senior Unsecured Notes Due 2029 | ||||
Debt Instrument [Line Items] | ||||
Long-term Debt | $ 300,000 | $ 300,000 |
Long-Term Debt Narrative (Detai
Long-Term Debt Narrative (Details) | 3 Months Ended | 9 Months Ended | ||||||||||
Apr. 30, 2026 USD ($) | Jun. 28, 2021 | Jun. 28, 2020 | Oct. 01, 2023 USD ($) | Oct. 02, 2022 USD ($) | Oct. 01, 2023 USD ($) | Oct. 02, 2022 USD ($) | Jul. 02, 2023 | Jan. 01, 2023 USD ($) | Nov. 12, 2021 USD ($) | Dec. 13, 2019 USD ($) | Apr. 30, 2019 USD ($) | |
Debt Instrument, Redemption [Line Items] | ||||||||||||
First Lien Leverage Ratio | 5.75 | |||||||||||
Undrawn letters of credit, maximum amount | $ 12,000,000 | |||||||||||
Letters of Credit Outstanding, Amount | $ 10,500,000 | $ 10,500,000 | ||||||||||
Line of Credit Facility, Remaining Borrowing Capacity | $ 204,500,000 | 204,500,000 | ||||||||||
Debt Instrument, Interest Rate During Period | 5.70% | 5.40% | 5.30% | |||||||||
Borrowings under revolving credit facility | 11,000,000 | $ 91,500,000 | ||||||||||
Debt Instrument, Redemption Price, Percentage | 40% | |||||||||||
Derivative Asset, Notional Amount | $ 220,000,000 | 220,000,000 | $ 120,000,000 | |||||||||
Proceeds from interest rate swap | 1,300,000 | $ 400,000 | 3,700,000 | $ 100,000 | ||||||||
Accrued Interest Rate Swap, Noncurrent, Fair Value | $ 7,100,000 | 7,100,000 | ||||||||||
Cash Flow Hedge Gain (Loss) to be Reclassified within Twelve Months | $ 5,500,000 | |||||||||||
Senior Secured Credit Facility | ||||||||||||
Debt Instrument, Redemption [Line Items] | ||||||||||||
Line of credit facility, maximum borrowing capacity | $ 550,000,000 | |||||||||||
Debt instrument, rate | 0.854% | 0.854% | 0.915% | |||||||||
Term Loan B Facility | ||||||||||||
Debt Instrument, Redemption [Line Items] | ||||||||||||
Line of credit facility, maximum borrowing capacity | 425,000,000 | |||||||||||
Long-term Line of Credit | $ 164,438,000 | $ 164,438,000 | $ 167,625,000 | |||||||||
Standby Letters of Credit | ||||||||||||
Debt Instrument, Redemption [Line Items] | ||||||||||||
Line of credit facility, maximum borrowing capacity | 35,000,000 | |||||||||||
Revolving Credit Facility | ||||||||||||
Debt Instrument, Redemption [Line Items] | ||||||||||||
Line of credit facility, maximum borrowing capacity | $ 125,000,000 | |||||||||||
Debt, Percent of Aggregate Amount of Borrowing | 35% | |||||||||||
Long-term Line of Credit | $ 0 | $ 0 | $ 12,500,000 | |||||||||
Revolving Credit Facility | Base Rate | ||||||||||||
Debt Instrument, Redemption [Line Items] | ||||||||||||
Debt Instrument, Basis Spread on Variable Rate | 2.25% | |||||||||||
Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | ||||||||||||
Debt Instrument, Redemption [Line Items] | ||||||||||||
Debt Instrument, Basis Spread on Variable Rate | 3.25% | |||||||||||
Term Loan B And B-1 Facility | ||||||||||||
Debt Instrument, Redemption [Line Items] | ||||||||||||
Debt, Number of Payments | 10 | 10 | ||||||||||
Repayment of Debt, Quarterly Payment | $ 1,100,000 | $ 1,100,000 | ||||||||||
Term Loan B And B-1 Facility | Forecast | ||||||||||||
Debt Instrument, Redemption [Line Items] | ||||||||||||
Repayments of Debt | $ 153,800,000 | |||||||||||
Senior Unsecured Notes Due 2029 | Senior Notes | ||||||||||||
Debt Instrument, Redemption [Line Items] | ||||||||||||
Debt Instrument, Face Amount | $ 300,000,000 | $ 300,000,000 | ||||||||||
Debt instrument, rate | 5.875% | 5.875% | ||||||||||
Seventh Amendment, Revolving Credit Facility | ||||||||||||
Debt Instrument, Redemption [Line Items] | ||||||||||||
Line of credit facility, maximum borrowing capacity | $ 215,000,000 | $ 215,000,000 |
Income Taxes Schedule of Compon
Income Taxes Schedule of Components of Income Tax Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2023 | Oct. 02, 2022 | Oct. 01, 2023 | Oct. 02, 2022 | |
Income Tax Disclosure [Abstract] | ||||
Current | $ 129 | $ 0 | $ 282 | $ 0 |
Deferred | 4,837 | (3,394) | 6,859 | (21,010) |
Change in valuation allowance | (1,332) | 682 | ||
Provision (benefit) for income taxes | $ 3,634 | $ (2,712) | $ 5,380 | $ (14,842) |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Oct. 01, 2023 | Oct. 02, 2022 | Oct. 01, 2023 | Oct. 02, 2022 | Jan. 01, 2023 | |
Income Tax Contingency [Line Items] | |||||
Deferred Tax Assets, Valuation Allowance | $ 42,300,000 | $ 42,300,000 | $ 44,300,000 | ||
Discrete tax expense | 12.30% | 20.70% | |||
Income Tax Expense (Benefit), Continuing Operations, Adjustment of Deferred Tax (Asset) Liability | $ 1,200,000 | $ 100,000 | $ 100,000 | ||
Operating Loss Carryforwards | 125,900,000 | 125,900,000 | |||
Deferred Tax Assets, Tax Credit Carryforwards, General Business | 43,900,000 | 43,900,000 | |||
Change in valuation allowance | 1,300,000 | 1,761,000 | $ (6,168,000) | ||
Unrecognized Tax Benefits | 0 | 0 | 0 | ||
Unrecognized Tax Benefits, Interest on Income Taxes Accrued | 0 | 0 | $ 0 | ||
State and Local Jurisdiction | |||||
Income Tax Contingency [Line Items] | |||||
Operating Loss Carryforwards | $ 170,500,000 | $ 170,500,000 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | |||||
Jul. 01, 2023 | Dec. 31, 2022 | Oct. 01, 2023 | Oct. 02, 2022 | Jul. 02, 2023 | Oct. 01, 2023 | Oct. 02, 2022 | Apr. 01, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Stock-based compensation | $ 1,870 | $ 940 | $ 3,969 | $ 3,817 | ||||
Unrecognized Stock-Based Compensation Expense, Non-vested Shares | 12,600 | 12,600 | ||||||
Expected Stock-Based Compensation, Remainder of Fiscal Year | $ 1,700 | $ 1,700 | ||||||
Weighted Average Remaining Vesting Period, Non-Vested Shares | 1 year 10 months 24 days | |||||||
Granted (in dollars per share) | $ 7.12 | |||||||
Number of shares vested (in shares) | 822,368 | |||||||
Share price (in dollars per share) | $ 6.59 | $ 6.59 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures in Period | 0 | |||||||
Granted (in shares) | 1,810,042 | |||||||
Restricted Stock | Certain Employees and Officers | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Number of Shares Available for Grant | 1,425,235 | 1,425,235 | ||||||
Restricted Stock | Outside Directors | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Number of Shares Available for Grant | 384,807 | 384,807 | ||||||
Restricted Stock Units (RSUs) | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Weighted Average Remaining Vesting Period, Non-Vested Shares | 2 years 4 months 24 days | |||||||
Number of shares vested (in shares) | 21,295 | |||||||
Share-based Payment Arrangement, Option | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period | 7 years | |||||||
Incentive Stock Options (ISOs) | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 3 years | |||||||
Performance Based Restricted Stock | Chief Executive Officer | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Number of Shares Available for Grant | 600,000 | |||||||
Shares granted to CEO (in shares) | 450,000 | |||||||
Performance Based Restricted Stock | Executive Officers | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Number of Shares Available for Grant | 797,915 | |||||||
Stock price (dollars per share) | $ 5.04 |
Stock-Based Compensation Summar
Stock-Based Compensation Summary of Non-Vested Stock Activity (Details) | 9 Months Ended |
Oct. 01, 2023 $ / shares shares | |
Nonvested share activity [Roll Forward] | |
Nonvested, beginning of period (in shares) | shares | 1,767,811 |
Granted (in shares) | shares | 1,810,042 |
Vested (in shares) | shares | (822,368) |
Forfeited (in shares) | shares | (11,600) |
Nonvested, end of period (in shares) | shares | 2,743,885 |
Weighted Average Grant Date Price | |
Nonvested, beginning of period (in dollars per share) | $ / shares | $ 3.79 |
Granted (in dollars per share) | $ / shares | 2.50 |
Vested (in dollars per share) | $ / shares | 4.15 |
Forfeited (in dollars per share) | $ / shares | 2.48 |
Nonvested, end of period (in dollars per share) | $ / shares | $ 2.84 |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of Stock Options Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | 9 Months Ended |
Jul. 02, 2023 | Oct. 01, 2023 | |
Options | ||
Options outstanding at January 1, 2023 | 975,500 | 975,500 |
Forfeited (in shares) | 0 | |
Options Outstanding at October 1, 2023 | 975,500 | |
Vested or expected to vest at October 1, 2023 | 975,500 | |
Options exercisable at October 1, 2023 | 975,500 | |
Weighted Average Exercise Price | ||
Options outstanding at January 1, 2023 | ||
Granted (in dollars per share) | $ 7.12 | |
Forfeited (in dollars per share) | ||
Vested or expected to vest at October 1, 2023 | 7.12 | |
Options exercisable at October 1, 2023 | 7.12 | |
Options Outstanding at October 1, 2023 | $ 7.12 | |
Average Remaining Contractual Life (in years) | ||
Options Outstanding at October 1, 2023 | 3 years 10 months 24 days | |
Vested or expected to vest at October 1, 2023 | 3 years 10 months 24 days | |
Options exercisable at October 1, 2023 | 3 years 10 months 24 days | |
Aggregate Intrinsic Value | ||
Options Outstanding at October 1, 2023 | $ 0 | |
Vested or expected to vest at October 1, 2023 | 0 | |
Options exercisable at October 1, 2023 | $ 0 | |
Share price (in dollars per share) | $ 6.59 |
Stock-Based Compensation Summ_2
Stock-Based Compensation Summary of RSU Activity (Details) (Details) - shares | 3 Months Ended | 9 Months Ended |
Oct. 01, 2023 | Oct. 01, 2023 | |
Options | ||
Vested | (822,368) | |
Restricted Stock Units (RSUs) | ||
Options | ||
Non-vested at January 1, 2023 | 38,770 | |
Vested | (21,295) | |
Non-vested at October 1, 2023 | 17,475 | 17,475 |
Commitments And Contingencies_2
Commitments And Contingencies (Details) | 3 Months Ended | 9 Months Ended |
Oct. 01, 2023 USD ($) lease bakery distributor | Oct. 01, 2023 USD ($) lease bakery distributor | |
Guarantor Obligations [Line Items] | ||
Maximum potential future undiscounted rental payments | $ | $ 8,900,000 | $ 8,900,000 |
Guarantor Obligations, Payments Made | $ | $ 0 | |
Guarantor Obligations, Expected Future Payments | $ | $ 0 | |
Number Of Distributors | distributor | 5 | 5 |
Number Of Bakeries | bakery | 1 | 1 |
McLane Company Inc. | Revenue Benchmark | Supplier Concentration Risk | ||
Guarantor Obligations [Line Items] | ||
Concentration Risk, Percentage | 31% | |
McLane Company Inc. | Revenue Benchmark | Supplier Concentration Risk | Poultry Products | ||
Guarantor Obligations [Line Items] | ||
Concentration Risk, Percentage | 53% | |
McLane Company Inc. | Revenue Benchmark | Supplier Concentration Risk | Non-poultry Products | ||
Guarantor Obligations [Line Items] | ||
Concentration Risk, Percentage | 57% | |
Lineage Foodservice Solutions | Revenue Benchmark | Supplier Concentration Risk | ||
Guarantor Obligations [Line Items] | ||
Concentration Risk, Percentage | 30% | |
Reinhart Food Service LLC | Revenue Benchmark | Supplier Concentration Risk | ||
Guarantor Obligations [Line Items] | ||
Concentration Risk, Percentage | 29% | |
Burger King | Revenue Benchmark | Supplier Concentration Risk | ||
Guarantor Obligations [Line Items] | ||
Concentration Risk, Percentage | 10% | |
Bakery | Revenue Benchmark | Supplier Concentration Risk | ||
Guarantor Obligations [Line Items] | ||
Concentration Risk, Percentage | 50% | |
Property Lease Guarantee | ||
Guarantor Obligations [Line Items] | ||
Property leases | 17 | 17 |
Property Leases | 8 | 8 |
Property Lease Guarantee | Texas Taco Cabana, L.P. | ||
Guarantor Obligations [Line Items] | ||
Property Leases | 9 | 9 |
Property Lease Guarantee | Pollo Operations, Inc | ||
Guarantor Obligations [Line Items] | ||
Property Leases | 8 | 8 |
Closed Restaurants | ||
Guarantor Obligations [Line Items] | ||
Property leases, still in operation | 1 | 1 |
Taco Cabana leases | ||
Guarantor Obligations [Line Items] | ||
Property Leases | 9 | 9 |
Transactions with Related Par_2
Transactions with Related Parties (Details) $ in Thousands | 1 Months Ended | 2 Months Ended | 3 Months Ended | 9 Months Ended | |||||||||
Jul. 02, 2023 USD ($) | May 31, 2023 USD ($) | Jan. 01, 2023 USD ($) restaurant shares | Oct. 01, 2023 USD ($) Rate shares | Oct. 02, 2022 USD ($) | Oct. 01, 2023 USD ($) yr Rate shares | Oct. 02, 2022 USD ($) | Sep. 30, 2025 restaurant | Sep. 30, 2024 restaurant | Sep. 30, 2023 restaurant | Sep. 30, 2022 restaurant | Sep. 30, 2021 restaurant | Jan. 04, 2021 restaurant state | |
Related Party Transaction [Line Items] | |||||||||||||
Preferred stock, shares issued | shares | 100 | 100 | 100 | ||||||||||
Convertible Preferred Stock, Common Shares Issuable upon Conversion (in shares) | shares | 9,414,580 | 9,414,580 | |||||||||||
Board of directors, number of members | 2 | 2 | |||||||||||
Franchise agreement, term | 20 years | ||||||||||||
Franchise Term | yr | 20 | ||||||||||||
Monthly Digital Platform Fee | $ 800 | $ 600 | $ 2,200 | $ 1,500 | |||||||||
Other liabilities | $ 25,687 | 37,946 | 37,946 | ||||||||||
Area Development Agreement, Restaurants To Be Opened, Built, And Operated | restaurant | 12 | 10 | 4 | 50 | |||||||||
Area Development Agreement, Percentage Of New Restaurants To Be In Kentucky, Tennessee And Indiana | 80% | ||||||||||||
Restaurants completed | restaurant | 6 | ||||||||||||
Area Development Agreement, Number Of Restaurants To Be Acquired | restaurant | 500 | ||||||||||||
Area Development Agreement, Number Of States | state | 16 | ||||||||||||
Forecast | Subsequent Event | |||||||||||||
Related Party Transaction [Line Items] | |||||||||||||
Area Development Agreement, Restaurants To Be Opened, Built, And Operated | restaurant | 12 | 12 | |||||||||||
Burger King Corporate | |||||||||||||
Related Party Transaction [Line Items] | |||||||||||||
Technology Equipment, Right Of Use | $ 3,400 | $ 12,200 | |||||||||||
Repairs, Replacements, and Improvements Provided | $ 10,500 | $ 10,500 | |||||||||||
Burger King Corporate | Royalty Agreement Terms | |||||||||||||
Related Party Transaction [Line Items] | |||||||||||||
Related Party Transaction, Rate | Rate | 4.50% | ||||||||||||
Popeyes | Royalty Agreement Terms | |||||||||||||
Related Party Transaction [Line Items] | |||||||||||||
Related Party Transaction, Rate | Rate | 5% | ||||||||||||
Affiliated Entity | |||||||||||||
Related Party Transaction [Line Items] | |||||||||||||
Preferred stock, ownership percentage if converted | Rate | 14.70% | 14.70% | |||||||||||
Initial Franchise Fees | $ 50 | ||||||||||||
Royalty Expense | $ 21,300 | 19,700 | 62,800 | 57,000 | |||||||||
Advertising Expense | $ 18,800 | $ 17,400 | $ 55,200 | $ 50,300 | |||||||||
Property leases | 218 | 221 | 218 | 221 | |||||||||
Operating lease cost | $ 7,400 | $ 6,900 | $ 21,800 | $ 20,400 | |||||||||
Affiliated Entity | Selling and Marketing Expense | |||||||||||||
Related Party Transaction [Line Items] | |||||||||||||
Related Party Transaction, Rate | Rate | 4% | ||||||||||||
Affiliated Entity | Burger King Corporate | |||||||||||||
Related Party Transaction [Line Items] | |||||||||||||
Maximum borrowing capacity | $ 120,000 | ||||||||||||
BKC | |||||||||||||
Related Party Transaction [Line Items] | |||||||||||||
Other liabilities | 16,000 | $ 20,500 | 20,500 | ||||||||||
PLK | |||||||||||||
Related Party Transaction [Line Items] | |||||||||||||
Other liabilities | $ 16,000 | $ 20,500 | $ 20,500 | ||||||||||
Related Party | |||||||||||||
Related Party Transaction [Line Items] | |||||||||||||
Property leases | 96 | 95 | 96 | 95 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - Repurchase Program - USD ($) $ in Millions | Aug. 31, 2023 | Aug. 02, 2019 |
Class of Stock [Line Items] | ||
Stock Repurchase Program, Authorized Amount | $ 25 | |
Stock Repurchase Program, Remaining Authorized Repurchase Amount | $ 11 |
Net income (Loss) Per Share (De
Net income (Loss) Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Oct. 01, 2023 | Jul. 02, 2023 | Apr. 02, 2023 | Oct. 02, 2022 | Jul. 03, 2022 | Apr. 03, 2022 | Oct. 01, 2023 | Oct. 02, 2022 | |
Earnings Per Share, Basic [Abstract] | ||||||||
Net income (loss) | $ 12,618 | $ 14,954 | $ 864 | $ (8,697) | $ (26,476) | $ (21,269) | $ 28,436 | $ (56,442) |
Net income (loss) available to common stockholders | $ 10,081 | $ (8,697) | $ 22,891 | $ (56,442) | ||||
Weighted average common shares outstanding | 51,560,307 | 50,805,461 | 51,506,367 | 50,689,730 | ||||
Basic net income (loss) per share (in dollars per share) | $ 0.20 | $ (0.17) | $ 0.44 | $ (1.11) | ||||
Diluted net income (loss) per share: | ||||||||
Net income (loss) | $ 12,618 | $ 14,954 | $ 864 | $ (8,697) | $ (26,476) | $ (21,269) | $ 28,436 | $ (56,442) |
Weighted average common shares outstanding (in shares) | 51,560,307 | 50,805,461 | 51,506,367 | 50,689,730 | ||||
Dilutive effect of preferred stock and non-vested shares (in shares) | 11,267,568 | 0 | 10,618,097 | 0 | ||||
Shares used in computing diluted net income (loss) per share (in shares) | 62,827,875 | 50,805,461 | 62,124,464 | 50,689,730 | ||||
Diluted net income (loss) per share (in shares) | $ 0.20 | $ (0.17) | $ 0.44 | $ (1.11) | ||||
Shares excluded from diluted net income (loss) per share computations (in shares) | 0 | 11,921,161 | 0 | 11,921,161 | ||||
Restricted Stock | ||||||||
Earnings Per Share, Basic [Abstract] | ||||||||
Undistributed Earnings (Loss) Allocated to Participating Securities, Basic | $ 696 | $ 0 | $ 1,364 | $ 0 | ||||
Preferred Stock | ||||||||
Earnings Per Share, Basic [Abstract] | ||||||||
Undistributed Earnings (Loss) Allocated to Participating Securities, Basic | $ 1,841 | $ 0 | $ 4,181 | $ 0 |
Other Expense Income, net (Deta
Other Expense Income, net (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2023 | Oct. 02, 2022 | Oct. 01, 2023 | Oct. 02, 2022 | |
Other Income and Expenses [Abstract] | ||||
Other income, net (Note 14) | $ (3,638) | $ (1,750) | $ (6,463) | $ (1,109) |
Gain from settlement | (4,300) | (4,300) | ||
Gain from insurance recoveries | (1,800) | |||
Gain on previous sale-leaseback transactions | (400) | |||
Loss on disposal of assets | $ 600 | 1,000 | 1,000 | |
Gain on derecognition of lease financing obligation | (800) | |||
Gain from condemnation | (300) | |||
Litigation Settlement, Amount Awarded from Other Party | 2,500 | 2,500 | ||
Gain on sale-leaseback transactions | $ 500 | $ 1,217 | $ 430 |
Subsequent Events (Details)
Subsequent Events (Details) | Nov. 09, 2023 $ / shares | Oct. 31, 2023 | Oct. 01, 2023 lease |
Property Lease Guarantee | |||
Subsequent Event [Line Items] | |||
Property Leases | lease | 8 | ||
Subsequent Event | |||
Subsequent Event [Line Items] | |||
Percentage owned | 0.264 | ||
Subsequent Event | Quarterly | |||
Subsequent Event [Line Items] | |||
Dividends declared (dollars per share) | $ / shares | $ 0.02 |