x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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84-1303469
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(State or other jurisdiction of
incorporation or organization)
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(IRS Employer
Identification No.)
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520 Zang Street, Suite D
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80021
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Broomfield, CO
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(Address of Principal Executive Offices)
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(Zip Code)
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Title of each class
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Name of each exchange on which registered
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Common stock, par value $0.01 per share
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Nasdaq (Global Select Market)
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Large accelerated filer o
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Accelerated filer x
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Non-accelerated filer o
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Smaller reporting company x
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(Do not check if a smaller reporting company)
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Emerging growth company o
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Page
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PART I
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ITEM 1.
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ITEM 1A.
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ITEM 1B.
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ITEM 2.
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ITEM 3.
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ITEM 4.
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PART II
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ITEM 5.
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ITEM 6.
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ITEM 7.
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ITEM 7A.
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ITEM 8.
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ITEM 9.
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ITEM 9A.
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ITEM 9B.
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PART III
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ITEM 10.
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ITEM 11.
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ITEM 12.
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ITEM 13.
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ITEM 14.
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PART IV
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ITEM 15.
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ITEM 16.
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SIGNATURES
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EXHIBITS
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•
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Focusing on our global flavors and menu offerings. We believe that our globally-inspired menu, focused on noodle and pasta dishes, differentiates us from other restaurants. We also believe this global variety, which includes a range of healthy to indulgent dishes that are cooked to order with fresh, high-quality ingredients, remains a competitive strength. We believe we have significant potential to build awareness for the zucchini offering with additional dishes and we are testing our next evolution of the better-for-you platform and anticipate introducing a new vegetable-infused noodle to our menu in 2019.
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•
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Improving efficiencies and unit-level margins. We believe that there is significant opportunity to improve our operational consistency as well as our overall unit level margins. In 2016, we reduced the size of our core menu items, removing menu items that did not sell well and were challenging for our teams to execute. During 2017, we improved several processes inside our restaurants, such as the introduction of a produce chopper to improve consistency and labor efficiency in our restaurants. In 2018, we completed the national roll out of self-bussing stations, which we believe will reduce labor hours and improve cleanliness in our restaurants. We also believe that we have opportunity in our supply chain and food preparation procedures to reduce inbound ingredient costs and improve labor efficiency.
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•
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Enhancing convenience for our customers. We believe there is significant opportunity to increase convenience for our customers. In 2017, we launched our NoodlesREWARDS program, a loyalty program that allows our customers the convenience of ordering their favorites quickly and easily as they earn rewards for free or discounted food. In 2018, we completed a national roll out of dedicated pickup areas for customers who order and pay ahead so that they can have a faster and more convenient takeout experience. Finally, we have continued to expand our delivery program through select third-party providers, which offers an additional level of convenience for our customers.
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•
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Improving manager selection, training and development of our teams. We have increased our focus on the selection, training and development of our restaurant teams. We use assessment tools in management hiring, and we have implemented certain changes to our restaurant compensation program to encourage team member retention. We have rolled out training tools and learning management systems to improve execution and encourage career development within our teams. Finally, we utilize a thorough, disciplined process of sharing best practices throughout the organization.
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•
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Our Menu Offerings. We focus some of our marketing efforts on new menu offerings to broaden our appeal to our customers. We promote these items through a variety of formats including public relations events, social media marketing, television appearances, radio promotions, and messaging to our NoodlesREWARDS members. In addition to increasing brand awareness, these promotions also encourage prompt consumer action, resulting in more immediate increases in our customer traffic.
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•
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Online, Social and Other Media Tools. We rely on our website, www.noodles.com, to promote our business and increase brand awareness. The information on or available through our website is not, and should not be considered, a part of this report. Our customers are encouraged to sign up to receive communications through our NoodlesREWARDS program, updating them on new menu offerings and promotional opportunities. As of January 1, 2019, more than 2.0 million of our customers have signed up to receive communication through our rewards and e-club programs. We also communicate with our customers using social media, such as our Facebook and Instagram pages, our YouTube and Vimeo channels and our Twitter feed. Our online and social media engagement provides exciting opportunities to engage with our customers. Additionally, our media tools also include print and online advertising and direct mail, as well as mass communications including radio and out of home.
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•
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Digital Advertising. We use targeted digital advertising in many of our markets. We believe this helps to increase top of mind awareness with potential customers and drives both frequency and trial. In addition, digital advertising provides us with the opportunity to promote specific product platforms and offerings such as online ordering.
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•
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Creating New Meal Occasions. We also focus on ways Noodles & Company can serve customers at different times and in new places. For example, our Kids Meal menu was created for the future foodies of the world: children aged ten and under are invited to design their own meal made fresh-to-order, with quality ingredients, by choosing their entrée, two sides and a drink for around $5. Customers who want to feed a large group can enjoy our catering options comprised of main entrées, sides and desserts. We market these offerings in a variety of ways, including through in-restaurant posters, email, NoodlesREWARDS messages, Facebook posts and other communications outside of our restaurants.
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•
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Making Noodles & Company Easier to Use. Some of our marketing efforts focus on making our restaurants easier to use. We seek to deliver superior customer service at every opportunity, generating consumer awareness of menu offerings with in-restaurant communications such as displays of our menu offerings that are visible upon entry and table top cards that highlight healthy food offerings. We also continue to implement initiatives to improve convenience for our customers, such as expanding the availability of third-party delivery and introducing dedicated pick-up shelving to increase the speed of the to-go transaction.
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State
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Company-
owned |
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Franchised
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Total
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|||
Arizona
|
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5
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|
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—
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|
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5
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California
|
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20
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|
|
—
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|
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20
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Colorado
|
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60
|
|
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—
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|
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60
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Connecticut
|
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—
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|
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4
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|
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4
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District of Columbia
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1
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|
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—
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|
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1
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Florida
|
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5
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|
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1
|
|
|
6
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Idaho
|
|
5
|
|
|
—
|
|
|
5
|
|
Illinois
|
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48
|
|
|
5
|
|
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53
|
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Indiana
|
|
23
|
|
|
—
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|
|
23
|
|
Iowa
|
|
10
|
|
|
1
|
|
|
11
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|
Kansas
|
|
10
|
|
|
—
|
|
|
10
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Kentucky
|
|
1
|
|
|
4
|
|
|
5
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|
Maryland
|
|
23
|
|
|
—
|
|
|
23
|
|
Michigan
|
|
—
|
|
|
23
|
|
|
23
|
|
Minnesota
|
|
45
|
|
|
1
|
|
|
46
|
|
Missouri
|
|
3
|
|
|
8
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|
|
11
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Montana
|
|
—
|
|
|
2
|
|
|
2
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Nebraska
|
|
—
|
|
|
6
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|
|
6
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New York
|
|
—
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|
|
1
|
|
|
1
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North Carolina
|
|
13
|
|
|
—
|
|
|
13
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|
North Dakota
|
|
—
|
|
|
3
|
|
|
3
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|
Ohio
|
|
17
|
|
|
—
|
|
|
17
|
|
Oregon
|
|
6
|
|
|
—
|
|
|
6
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Pennsylvania
|
|
9
|
|
|
—
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|
|
9
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|
South Dakota
|
|
—
|
|
|
3
|
|
|
3
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|
Tennessee
|
|
4
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|
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—
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|
|
4
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Utah
|
|
15
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|
|
—
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|
|
15
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Virginia
|
|
26
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|
|
—
|
|
|
26
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Washington
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2
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|
|
—
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|
|
2
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Wisconsin
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|
43
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|
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3
|
|
|
46
|
|
|
|
394
|
|
|
65
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|
|
459
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ITEM 5.
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Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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Fiscal Year
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||||||||||||||||||
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2018
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2017
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2016
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2015
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2014
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(in thousands)
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Revenue:
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Restaurant revenue
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$
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453,671
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$
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451,599
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$
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482,544
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$
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450,482
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$
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398,993
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Franchising royalties and fees
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4,170
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4,893
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4,930
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4,969
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4,748
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|||||
Total revenue
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457,841
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456,492
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487,474
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455,451
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403,741
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Costs and Expenses:
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Restaurant operating costs (exclusive of depreciation and amortization, shown separately below):
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Cost of sales
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121,102
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121,473
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130,630
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120,455
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107,217
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|||||
Labor
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149,746
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150,161
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161,219
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143,145
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120,492
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|||||
Occupancy
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49,020
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51,877
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55,912
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50,300
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42,540
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|||||
Other restaurant operating costs
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65,575
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|
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64,091
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73,011
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63,549
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52,580
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|||||
General and administrative(1)(2)
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46,092
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39,746
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55,654
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37,244
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|
|
31,394
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Depreciation and amortization
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22,872
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|
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24,613
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|
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28,134
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27,802
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|
|
24,787
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|||||
Pre-opening
|
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50
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935
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|
3,131
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|
|
4,407
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|
|
4,425
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|||||
Restaurant impairments, closure costs and asset disposals (3)
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7,142
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37,446
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|
47,311
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29,616
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|
|
1,391
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|||||
Total costs and expenses
|
|
461,599
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|
|
490,342
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|
|
555,002
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|
|
476,518
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|
|
384,826
|
|
|||||
(Loss) income from operations
|
|
(3,758
|
)
|
|
(33,850
|
)
|
|
(67,528
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)
|
|
(21,067
|
)
|
|
18,915
|
|
|||||
Debt extinguishment expense
|
|
626
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Interest expense, net
|
|
4,305
|
|
|
3,839
|
|
|
2,916
|
|
|
1,432
|
|
|
365
|
|
|||||
(Loss) income before income taxes
|
|
(8,689
|
)
|
|
(37,689
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)
|
|
(70,444
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)
|
|
(22,499
|
)
|
|
18,550
|
|
|||||
(Benefit) provision for income taxes
|
|
(248
|
)
|
|
(207
|
)
|
|
1,233
|
|
|
(8,734
|
)
|
|
7,122
|
|
|||||
Net (loss) income
|
|
(8,441
|
)
|
|
(37,482
|
)
|
|
(71,677
|
)
|
|
(13,765
|
)
|
|
11,428
|
|
|||||
Accretion of preferred stock to redemption value (4)
|
|
—
|
|
|
(7,967
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net (loss) income attributable to common stockholders
|
|
$
|
(8,441
|
)
|
|
$
|
(45,449
|
)
|
|
$
|
(71,677
|
)
|
|
$
|
(13,765
|
)
|
|
$
|
11,428
|
|
(1)
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General and administrative expenses in 2016 include a $10.6 million charge for estimated losses associated with claims and anticipated claims by payment card companies from the data security incident, a $2.7 million charge for severance expenses and a $3.0 million charge for an employment-related litigation settlement.
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(2)
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General and administrative expenses in 2018 include a charge of $3.4 million for the final assessment related to data breach liabilities, and a $0.3 million charge for a litigation settlement related to a Delaware gift card matter.
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(3)
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Restaurant impairments, closure costs and asset disposals include $1.5 million, $16.2 million, $41.6 million and $25.4 million of charges in 2018, 2017, 2016 and 2015, respectively related to one restaurant in 2018, 34 restaurants in 2017, 54 restaurants in 2016 and 39 restaurants in 2015 that were identified as impaired. Additionally, we recognized $4.1 million, $20.1 million, $2.3 million and $3.1 million in 2018, 2017, 2016 and 2015, respectively, of closure costs which are also included in restaurant impairments, closure costs and asset disposals. The closure costs recognized during 2018 include closure costs of 19 restaurants closed throughout 2018, most of which were at or approaching the expiration of their leases, 2017 includes closure costs of 55 restaurants closed during the first quarter of 2017 and 2015 includes closure costs of the 16 restaurants closed in the fourth quarter of 2015. Restaurant impairments and closure costs in 2018, 2017, 2016 and 2015 presented above include amounts related to restaurants previously impaired or closed.
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(4)
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Represents the accretion of the preferred stock issued to L Catterton to its full redemption value. See Note 8, Stockholders’ Equity for additional information.
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|
|
Fiscal Year
|
||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
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|
(in thousands, except share and per share data and restaurants)
|
||||||||||||||||||
(Loss) earnings per Class A and Class B common share, combined:
|
|
|
|
|
|
|
|
|
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|
||||||||||
Basic
|
|
$
|
(0.20
|
)
|
|
$
|
(1.20
|
)
|
|
$
|
(2.58
|
)
|
|
$
|
(0.48
|
)
|
|
$
|
0.38
|
|
Diluted
|
|
$
|
(0.20
|
)
|
|
$
|
(1.20
|
)
|
|
$
|
(2.58
|
)
|
|
$
|
(0.48
|
)
|
|
$
|
0.37
|
|
Weighted average Class A and Class B common shares outstanding, combined:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
42,329,556
|
|
|
37,759,497
|
|
|
27,808,708
|
|
|
28,938,901
|
|
|
29,717,304
|
|
|||||
Diluted
|
|
42,329,556
|
|
|
37,759,497
|
|
|
27,808,708
|
|
|
28,938,901
|
|
|
31,001,099
|
|
|||||
Selected Operating Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Company-owned restaurants at end of period
|
|
394
|
|
|
412
|
|
|
457
|
|
|
422
|
|
|
386
|
|
|||||
Franchise-owned restaurants at end of period
|
|
65
|
|
|
66
|
|
|
75
|
|
|
70
|
|
|
53
|
|
|||||
Company-owned:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Average unit volumes (1)
|
|
$
|
1,119
|
|
|
$
|
1,072
|
|
|
$
|
1,075
|
|
|
$
|
1,103
|
|
|
$
|
1,147
|
|
Comparable restaurant sales (2)
|
|
3.4
|
%
|
|
(2.7
|
)%
|
|
(0.9
|
)%
|
|
(0.2
|
)%
|
|
0.3
|
%
|
|||||
Restaurant contribution (3)
|
|
$
|
68,228
|
|
|
$
|
63,997
|
|
|
$
|
61,772
|
|
|
$
|
73,033
|
|
|
$
|
76,164
|
|
Restaurant contribution margin (3)
|
|
15.0
|
%
|
|
14.2
|
%
|
|
12.8
|
%
|
|
16.2
|
%
|
|
19.1
|
%
|
|
|
As of
|
||||||||||||||||||
|
|
January 1, 2019
|
|
January 2, 2018
|
|
January 3, 2017
|
|
December 29, 2015
|
|
December 30, 2014
|
||||||||||
|
|
(in thousands)
|
||||||||||||||||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total current assets
|
|
$
|
23,351
|
|
|
$
|
22,058
|
|
|
$
|
25,788
|
|
|
$
|
25,401
|
|
|
$
|
22,776
|
|
Total assets
|
|
172,032
|
|
|
185,233
|
|
|
209,461
|
|
|
239,961
|
|
|
238,539
|
|
|||||
Total current liabilities
|
|
33,147
|
|
|
43,869
|
|
|
49,033
|
|
|
32,914
|
|
|
25,831
|
|
|||||
Total long-term debt
|
|
44,183
|
|
|
57,624
|
|
|
84,676
|
|
|
67,732
|
|
|
27,136
|
|
|||||
Total liabilities
|
|
119,351
|
|
|
149,372
|
|
|
183,643
|
|
|
146,189
|
|
|
98,424
|
|
|||||
Total stockholders' equity
|
|
52,681
|
|
|
35,861
|
|
|
25,818
|
|
|
93,772
|
|
|
140,115
|
|
(1)
|
Average unit volumes (“AUVs”) consist of average annualized sales of all company-owned restaurants over the trailing 12 periods.
|
(2)
|
Comparable restaurant sales represent year-over-year sales for restaurants open for at least 18 full periods.
|
(3)
|
Restaurant contribution represents restaurant revenue less restaurant operating costs, which are the cost of sales, labor, occupancy and other operating items. Restaurant contribution margin represents restaurant contribution as a percentage of restaurant revenue. Restaurant contribution and restaurant contribution margin are non-GAAP measures that are neither required by, nor presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”), and the calculations thereof may not be comparable to similar measures reported by other companies. These measures are supplemental measures of the operating performance of our restaurants and are not reflective of the underlying performance of our business because corporate-level expenses are excluded from these measures.
|
|
|
Fiscal Year
|
||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
|
|
(in thousands)
|
||||||||||||||||||
(Loss) income from operations
|
|
$
|
(3,758
|
)
|
|
$
|
(33,850
|
)
|
|
$
|
(67,528
|
)
|
|
$
|
(21,067
|
)
|
|
$
|
18,915
|
|
Less: Franchising royalties and fees
|
|
4,170
|
|
|
4,893
|
|
|
4,930
|
|
|
4,969
|
|
|
4,748
|
|
|||||
Add: General and administrative
|
|
46,092
|
|
|
39,746
|
|
|
55,654
|
|
|
37,244
|
|
|
31,394
|
|
|||||
Depreciation and amortization
|
|
22,872
|
|
|
24,613
|
|
|
28,134
|
|
|
27,802
|
|
|
24,787
|
|
|||||
Pre-opening
|
|
50
|
|
|
935
|
|
|
3,131
|
|
|
4,407
|
|
|
4,425
|
|
|||||
Restaurant impairments, closure costs and asset disposals
|
|
7,142
|
|
|
37,446
|
|
|
47,311
|
|
|
29,616
|
|
|
1,391
|
|
|||||
Restaurant contribution
|
|
$
|
68,228
|
|
|
$
|
63,997
|
|
|
$
|
61,772
|
|
|
$
|
73,033
|
|
|
$
|
76,164
|
|
•
|
consumer recognition of our brand and our ability to respond to changing consumer preferences;
|
•
|
overall economic trends, particularly those related to consumer spending;
|
•
|
our ability to operate restaurants effectively and efficiently to meet consumer expectations;
|
•
|
pricing;
|
•
|
the number of restaurant transactions, per-person spend and average check amount;
|
•
|
marketing and promotional efforts;
|
•
|
abnormal weather patterns;
|
•
|
food safety and foodborne illness concerns;
|
•
|
local competition;
|
•
|
trade area dynamics;
|
•
|
introduction of new and seasonal menu items and limited time offerings; and
|
•
|
opening new restaurants in the vicinity of existing locations.
|
|
|
Fiscal Year
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
(in thousands)
|
||||||||||
Net loss
|
|
$
|
(8,441
|
)
|
|
$
|
(37,482
|
)
|
|
$
|
(71,677
|
)
|
Depreciation and amortization
|
|
22,872
|
|
|
24,613
|
|
|
28,134
|
|
|||
Interest expense, net
|
|
4,305
|
|
|
3,839
|
|
|
2,916
|
|
|||
(Benefit) provision for income taxes
|
|
(248
|
)
|
|
(207
|
)
|
|
1,233
|
|
|||
EBITDA
|
|
$
|
18,488
|
|
|
$
|
(9,237
|
)
|
|
$
|
(39,394
|
)
|
Restaurant impairments, closure costs and asset disposals (1)
|
|
7,142
|
|
|
37,446
|
|
|
47,311
|
|
|||
Litigation settlements and data breach assessments (2)
|
|
3,796
|
|
|
(401
|
)
|
|
13,622
|
|
|||
Fees and costs related to the registration statement and related transactions (3)
|
|
53
|
|
|
679
|
|
|
—
|
|
|||
Loss on extinguishment of debt (4)
|
|
626
|
|
|
—
|
|
|
—
|
|
|||
Severance costs (5)
|
|
278
|
|
|
581
|
|
|
2,034
|
|
|||
Stock-based compensation expense (6)
|
|
2,979
|
|
|
1,513
|
|
|
2,319
|
|
|||
Adjusted EBITDA
|
|
$
|
33,362
|
|
|
$
|
30,581
|
|
|
$
|
25,892
|
|
(1)
|
Restaurant impairments and closure costs in all periods presented above include amounts related to restaurants previously impaired or closed. Additionally, 2018 includes closure costs of the 19 restaurants closed during 2018 and the impairment of one restaurant, 2017 includes the closure costs related to the 55 restaurants closed in the first quarter of 2017 and the impairment of 34 restaurants, and 2016 includes the impairment of 54 restaurants. See Note 6, Restaurant Impairments, Closure Costs and Asset Disposals.
|
(2)
|
Fiscal year 2018 includes a charge of $3.4 million for the final settlement related to data breach liabilities, and a $0.3 million charge for a litigation settlement related to a Delaware gift card matter. Fiscal year 2017 includes a gain on an employment-related litigation settlement due to final settlement being less than what the Company had previously accrued. Fiscal year 2016 includes the initial charge of $10.6 million for estimated losses associated with claims and anticipated claims by payment card companies from a data security incident and a $3.0 million charge for estimated costs of the employment-related litigation settlement.
|
(3)
|
Fiscal year 2018 includes expenses related to the registration statement the Company filed in the second quarter of 2018. Fiscal year 2017 includes expenses related to the registration statement the Company filed in the first quarter of 2017, which registration statement was later withdrawn.
|
(4)
|
Fiscal year 2018 includes the loss on extinguishment of debt, which resulted from writing off certain remaining unamortized balances of debt issuance costs related to the our outstanding indebtedness with Bank of America, N.A. (the “Prior Credit Facility”) when it was repaid in full in the second quarter of 2018.
|
(5)
|
Fiscal year 2018 includes severance costs from departmental structural changes. Fiscal year 2017 includes severance costs related to the departure of our Chief Operations Officer and additional changes to operations departmental structure. Fiscal year 2016 includes severance costs related to the departures of our Chief Executive Officer and Chief Marketing Officer and from a reduction in headcount as a result of reducing new restaurant development.
|
(6)
|
Fiscal year 2018 includes additional expense due to the 2017 and 2018 annual grants both being granted in 2018. Fiscal year 2016 includes a $0.7 million charge for modifying the outstanding stock options for Kevin Reddy, who resigned from his positions as the Chairman of the Board and Chief Executive Officer of the Company in July 2016.
|
|
|
Fiscal Year
|
|||||||
|
|
2018
|
|
2017
|
|
2016
|
|||
Company-Owned Restaurants
|
|
|
|
|
|
|
|||
Beginning of period
|
|
412
|
|
|
457
|
|
|
422
|
|
Openings
|
|
1
|
|
|
12
|
|
|
38
|
|
Closures
|
|
(19
|
)
|
|
(57
|
)
|
|
(3
|
)
|
End of period
|
|
394
|
|
|
412
|
|
|
457
|
|
Franchise Restaurants
|
|
|
|
|
|
|
|||
Beginning of period
|
|
66
|
|
|
75
|
|
|
70
|
|
Openings
|
|
—
|
|
|
3
|
|
|
6
|
|
Closures
|
|
(1
|
)
|
|
(12
|
)
|
|
(1
|
)
|
End of period
|
|
65
|
|
|
66
|
|
|
75
|
|
Total restaurants
|
|
459
|
|
|
478
|
|
|
532
|
|
|
|
Fiscal Year
|
|||||||
|
|
2018
|
|
2017
|
|
2016
|
|||
Revenue:
|
|
|
|
|
|
|
|||
Restaurant revenue
|
|
99.1
|
%
|
|
98.9
|
%
|
|
99.0
|
%
|
Franchising royalties and fees
|
|
0.9
|
%
|
|
1.1
|
%
|
|
1.0
|
%
|
Total revenue
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Costs and expenses:
|
|
|
|
|
|
|
|||
Restaurant operating costs (exclusive of depreciation and amortization, shown separately below):
|
|
|
|
|
|
|
|||
Cost of sales
|
|
26.7
|
%
|
|
26.9
|
%
|
|
27.1
|
%
|
Labor
|
|
33.0
|
%
|
|
33.3
|
%
|
|
33.4
|
%
|
Occupancy
|
|
10.8
|
%
|
|
11.5
|
%
|
|
11.6
|
%
|
Other restaurant operating costs
|
|
14.5
|
%
|
|
14.2
|
%
|
|
15.1
|
%
|
General and administrative
|
|
10.1
|
%
|
|
8.7
|
%
|
|
11.4
|
%
|
Depreciation and amortization
|
|
5.0
|
%
|
|
5.4
|
%
|
|
5.8
|
%
|
Pre-opening
|
|
—
|
%
|
|
0.2
|
%
|
|
0.6
|
%
|
Restaurant impairments, closure costs and asset disposals
|
|
1.6
|
%
|
|
8.2
|
%
|
|
9.7
|
%
|
Total costs and expenses
|
|
100.8
|
%
|
|
107.4
|
%
|
|
113.9
|
%
|
Loss from operations
|
|
(0.8
|
)%
|
|
(7.4
|
)%
|
|
(13.9
|
)%
|
Loss on extinguishment of debt
|
|
0.1
|
%
|
|
—
|
%
|
|
—
|
%
|
Interest expense, net
|
|
1.0
|
%
|
|
0.9
|
%
|
|
0.6
|
%
|
Loss before income taxes
|
|
(1.9
|
)%
|
|
(8.3
|
)%
|
|
(14.5
|
)%
|
(Benefit) provision for income taxes
|
|
(0.1
|
)%
|
|
(0.1
|
)%
|
|
0.2
|
%
|
Net loss
|
|
(1.8
|
)%
|
|
(8.2
|
)%
|
|
(14.7
|
)%
|
|
|
Fiscal Year
|
|
Increase / (Decrease)
|
|||||||||||
|
|
2018
|
|
2017
|
|
$
|
|
%
|
|||||||
|
|
(in thousands)
|
|||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|||||||
Restaurant revenue
|
|
$
|
453,671
|
|
|
$
|
451,599
|
|
|
$
|
2,072
|
|
|
0.5
|
%
|
Franchising royalties and fees
|
|
4,170
|
|
|
4,893
|
|
|
(723
|
)
|
|
(14.8
|
)%
|
|||
Total revenue
|
|
457,841
|
|
|
456,492
|
|
|
1,349
|
|
|
0.3
|
%
|
|||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|||||||
Restaurant operating costs (exclusive of depreciation and amortization, shown separately below):
|
|
|
|
|
|
|
|
|
|||||||
Cost of sales
|
|
121,102
|
|
|
121,473
|
|
|
(371
|
)
|
|
(0.3
|
)%
|
|||
Labor
|
|
149,746
|
|
|
150,161
|
|
|
(415
|
)
|
|
(0.3
|
)%
|
|||
Occupancy
|
|
49,020
|
|
|
51,877
|
|
|
(2,857
|
)
|
|
(5.5
|
)%
|
|||
Other restaurant operating costs
|
|
65,575
|
|
|
64,091
|
|
|
1,484
|
|
|
2.3
|
%
|
|||
General and administrative
|
|
46,092
|
|
|
39,746
|
|
|
6,346
|
|
|
16.0
|
%
|
|||
Depreciation and amortization
|
|
22,872
|
|
|
24,613
|
|
|
(1,741
|
)
|
|
(7.1
|
)%
|
|||
Pre-opening
|
|
50
|
|
|
935
|
|
|
(885
|
)
|
|
(94.7
|
)%
|
|||
Restaurant impairments, closure costs and asset disposals
|
|
7,142
|
|
|
37,446
|
|
|
(30,304
|
)
|
|
(80.9
|
)%
|
|||
Total costs and expenses
|
|
461,599
|
|
|
490,342
|
|
|
(28,743
|
)
|
|
(5.9
|
)%
|
|||
Loss from operations
|
|
(3,758
|
)
|
|
(33,850
|
)
|
|
30,092
|
|
|
88.9
|
%
|
|||
Loss on extinguishment of debt
|
|
626
|
|
|
—
|
|
|
626
|
|
|
100.0
|
%
|
|||
Interest expense, net
|
|
4,305
|
|
|
3,839
|
|
|
466
|
|
|
12.1
|
%
|
|||
Loss before income taxes
|
|
(8,689
|
)
|
|
(37,689
|
)
|
|
29,000
|
|
|
76.9
|
%
|
|||
Benefit from income taxes
|
|
(248
|
)
|
|
(207
|
)
|
|
(41
|
)
|
|
19.8
|
%
|
|||
Net loss
|
|
$
|
(8,441
|
)
|
|
$
|
(37,482
|
)
|
|
$
|
29,041
|
|
|
77.5
|
%
|
Company-owned:
|
|
|
|
|
|
|
|
|
|||||||
Average unit volumes
|
|
$
|
1,119
|
|
|
$
|
1,072
|
|
|
$
|
47
|
|
|
4.4
|
%
|
Comparable restaurant sales
|
|
3.4
|
%
|
|
(2.7
|
)%
|
|
|
|
|
|
|
Fiscal Year
|
|
Increase / (Decrease)
|
|||||||||||
|
|
2017
|
|
2016
|
|
$
|
|
%
|
|||||||
|
|
(in thousands)
|
|||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|||||||
Restaurant revenue
|
|
$
|
451,599
|
|
|
$
|
482,544
|
|
|
$
|
(30,945
|
)
|
|
(6.4
|
)%
|
Franchising royalties and fees
|
|
4,893
|
|
|
4,930
|
|
|
(37
|
)
|
|
(0.8
|
)%
|
|||
Total revenue
|
|
456,492
|
|
|
487,474
|
|
|
(30,982
|
)
|
|
(6.4
|
)%
|
|||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|||||||
Restaurant operating costs (exclusive of depreciation and amortization, shown separately below):
|
|
|
|
|
|
|
|
|
|||||||
Cost of sales
|
|
121,473
|
|
|
130,630
|
|
|
(9,157
|
)
|
|
(7.0
|
)%
|
|||
Labor
|
|
150,161
|
|
|
161,219
|
|
|
(11,058
|
)
|
|
(6.9
|
)%
|
|||
Occupancy
|
|
51,877
|
|
|
55,912
|
|
|
(4,035
|
)
|
|
(7.2
|
)%
|
|||
Other restaurant operating costs
|
|
64,091
|
|
|
73,011
|
|
|
(8,920
|
)
|
|
(12.2
|
)%
|
|||
General and administrative
|
|
39,746
|
|
|
55,654
|
|
|
(15,908
|
)
|
|
(28.6
|
)%
|
|||
Depreciation and amortization
|
|
24,613
|
|
|
28,134
|
|
|
(3,521
|
)
|
|
(12.5
|
)%
|
|||
Pre-opening
|
|
935
|
|
|
3,131
|
|
|
(2,196
|
)
|
|
(70.1
|
)%
|
|||
Restaurant impairments, closure costs and asset disposals
|
|
37,446
|
|
|
47,311
|
|
|
(9,865
|
)
|
|
(20.9
|
)%
|
|||
Total costs and expenses
|
|
490,342
|
|
|
555,002
|
|
|
(64,660
|
)
|
|
(11.7
|
)%
|
|||
Loss from operations
|
|
(33,850
|
)
|
|
(67,528
|
)
|
|
33,678
|
|
|
(49.9
|
)%
|
|||
Interest expense, net
|
|
3,839
|
|
|
2,916
|
|
|
923
|
|
|
31.7
|
%
|
|||
Loss before income taxes
|
|
(37,689
|
)
|
|
(70,444
|
)
|
|
32,755
|
|
|
(46.5
|
)%
|
|||
(Benefit) provision for income taxes
|
|
(207
|
)
|
|
1,233
|
|
|
(1,440
|
)
|
|
*
|
|
|||
Net loss
|
|
$
|
(37,482
|
)
|
|
$
|
(71,677
|
)
|
|
$
|
34,195
|
|
|
(47.7
|
)%
|
Company-owned:
|
|
|
|
|
|
|
|
|
|||||||
Average unit volumes
|
|
$
|
1,072
|
|
|
$
|
1,075
|
|
|
$
|
(3
|
)
|
|
(0.3
|
)%
|
Comparable restaurant sales
|
|
(2.7
|
)%
|
|
(0.9
|
)%
|
|
|
|
|
*
|
Not meaningful.
|
|
Quarter Ended
|
||||||||||||||||||||||||||||||
|
January 1, 2019
|
|
October 2, 2018
|
|
July 3, 2018
|
|
April 3, 2018
|
|
January 2, 2018
|
|
October 3, 2017
|
|
July 4, 2017
|
|
April 4, 2017
|
||||||||||||||||
|
(in thousands, except restaurants, unaudited)
|
||||||||||||||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Restaurant revenue
|
$
|
112,055
|
|
|
$
|
115,552
|
|
|
$
|
116,451
|
|
|
$
|
109,613
|
|
|
$
|
111,424
|
|
|
$
|
113,020
|
|
|
$
|
111,628
|
|
|
$
|
115,527
|
|
Franchising royalties and fees
|
1,138
|
|
|
1,175
|
|
|
944
|
|
|
913
|
|
|
1,350
|
|
|
1,191
|
|
|
1,164
|
|
|
1,188
|
|
||||||||
Total revenue
|
$
|
113,193
|
|
|
$
|
116,727
|
|
|
$
|
117,395
|
|
|
$
|
110,526
|
|
|
$
|
112,774
|
|
|
$
|
114,211
|
|
|
$
|
112,792
|
|
|
$
|
116,715
|
|
Income (loss) from operations
|
$
|
950
|
|
|
$
|
2,132
|
|
|
$
|
(4,162
|
)
|
|
$
|
(2,678
|
)
|
|
$
|
87
|
|
|
$
|
(7,483
|
)
|
|
$
|
(808
|
)
|
|
$
|
(25,646
|
)
|
Net income (loss) (1)(2)
|
$
|
19
|
|
|
$
|
1,050
|
|
|
$
|
(5,935
|
)
|
|
$
|
(3,575
|
)
|
|
$
|
(487
|
)
|
|
$
|
(8,335
|
)
|
|
$
|
(1,815
|
)
|
|
$
|
(26,845
|
)
|
Net income (loss) attributable to common stockholders (3)
|
$
|
19
|
|
|
$
|
1,050
|
|
|
$
|
(5,935
|
)
|
|
$
|
(3,575
|
)
|
|
$
|
(487
|
)
|
|
$
|
(8,335
|
)
|
|
$
|
(8,816
|
)
|
|
$
|
(27,810
|
)
|
Selected Operating Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Company-owned restaurants at end of period
|
394
|
|
|
401
|
|
|
404
|
|
|
411
|
|
|
412
|
|
|
413
|
|
|
413
|
|
|
409
|
|
||||||||
Franchise-owned restaurants at end of period
|
65
|
|
|
65
|
|
|
65
|
|
|
65
|
|
|
66
|
|
|
66
|
|
|
73
|
|
|
73
|
|
||||||||
Company-owned:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Average unit volumes
|
$
|
1,119
|
|
|
$
|
1,107
|
|
|
$
|
1,092
|
|
|
$
|
1,080
|
|
|
$
|
1,072
|
|
|
$
|
1,066
|
|
|
$
|
1,065
|
|
|
$
|
1,067
|
|
Comparable restaurant sales
|
3.7
|
%
|
|
5.2
|
%
|
|
5.0
|
%
|
|
(0.3
|
)%
|
|
(0.9
|
)%
|
|
(3.8
|
)%
|
|
(3.9
|
)%
|
|
(2.5
|
)%
|
||||||||
Restaurant contribution margin
|
15.2
|
%
|
|
16.4
|
%
|
|
15.5
|
%
|
|
12.9
|
%
|
|
15.1
|
%
|
|
15.6
|
%
|
|
15.0
|
%
|
|
11.0
|
%
|
(1)
|
Fiscal year 2018 includes costs related to seven restaurants closed in the fourth quarter of 2018, three restaurants closed in the third quarter of 2018, seven restaurants closed in the second quarter of 2018 and two restaurants that closed in the first quarter of 2018, most of which were at or approaching the expiration of their leases. The closure costs recognized were $0.6 million in the fourth quarter of 2018, $1.5 million in the third quarter of 2018, $1.5 million in the second quarter of 2018 and $0.6 million in the first quarter of 2018. Each period in 2018 presented above includes ongoing costs of restaurants closed in previous years. See Note 6, Restaurant Impairments, Closure Costs and Asset Disposals, for additional disclosure on closures. Lastly, the second quarter of 2018 includes a $3.4 million charge for the final assessment related to the data breach liabilities.
|
(2)
|
Fiscal year 2017 includes the impact of impairing three restaurants in the fourth quarter of 2017, 18 restaurants in the third quarter of 2017, nine restaurants in the second quarter of 2017 and four restaurants in the first quarter of 2017. The impairment costs recognized were $1.1 million in the fourth quarter of 2017, $9.1 million in the third quarter of 2017, $4.0 million in the second quarter of 2017 and $1.9 million in the first quarter of 2017. Additionally, the first quarter of 2017 includes $19.9 million of closure costs primarily related to the 55 restaurants closed in the first quarter of 2017. See Note 6, Restaurant Impairments, Closure Costs and Asset Disposals, for additional disclosure on closures.
|
(3)
|
The net loss attributable to common stockholders in the first and second quarter of 2017 includes the impact of accretion of the preferred stock issued to L Catterton to its full redemption value. See Note 8, Stockholders’ Equity for additional information.
|
|
Quarter Ended
|
||||||||||||||||||||||||||||||
|
January 1, 2019
|
|
October 2, 2018
|
|
July 3, 2018
|
|
April 3, 2018
|
|
January 2, 2018
|
|
October 3, 2017
|
|
July 4, 2017
|
|
April 4, 2017
|
||||||||||||||||
|
(in thousands, unaudited)
|
||||||||||||||||||||||||||||||
Income (loss) from operations
|
$
|
950
|
|
|
$
|
2,132
|
|
|
$
|
(4,162
|
)
|
|
$
|
(2,678
|
)
|
|
$
|
87
|
|
|
$
|
(7,483
|
)
|
|
$
|
(808
|
)
|
|
$
|
(25,646
|
)
|
Less: Franchising royalties and fees
|
1,138
|
|
|
1,175
|
|
|
944
|
|
|
913
|
|
|
1,350
|
|
|
1,191
|
|
|
1,164
|
|
|
1,188
|
|
||||||||
Add: General and administrative
|
10,612
|
|
|
10,399
|
|
|
14,813
|
|
|
10,268
|
|
|
9,880
|
|
|
9,807
|
|
|
9,393
|
|
|
10,666
|
|
||||||||
Depreciation and amortization
|
5,465
|
|
|
5,790
|
|
|
5,797
|
|
|
5,820
|
|
|
5,884
|
|
|
6,183
|
|
|
6,279
|
|
|
6,267
|
|
||||||||
Pre-opening
|
—
|
|
|
—
|
|
|
3
|
|
|
47
|
|
|
75
|
|
|
69
|
|
|
246
|
|
|
545
|
|
||||||||
Restaurant impairments, closure costs and asset disposals
|
1,190
|
|
|
1,792
|
|
|
2,580
|
|
|
1,580
|
|
|
2,299
|
|
|
10,263
|
|
|
2,830
|
|
|
22,054
|
|
||||||||
Restaurant contribution
|
$
|
17,079
|
|
|
$
|
18,938
|
|
|
$
|
18,087
|
|
|
$
|
14,124
|
|
|
$
|
16,875
|
|
|
$
|
17,648
|
|
|
$
|
16,776
|
|
|
$
|
12,698
|
|
|
|
Fiscal Year Ended
|
||||||||||
|
|
January 1, 2019
|
|
January 2, 2018
|
|
January 3, 2017
|
||||||
|
|
(in thousands)
|
||||||||||
Net cash provided by operating activities
|
|
$
|
5,346
|
|
|
$
|
4,102
|
|
|
$
|
24,737
|
|
Net cash used in investing activities
|
|
(13,838
|
)
|
|
(20,828
|
)
|
|
(42,757
|
)
|
|||
Net cash provided by financing activities
|
|
9,786
|
|
|
18,265
|
|
|
17,904
|
|
|||
Effect of exchange rate changes on cash
|
|
—
|
|
|
(15
|
)
|
|
41
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
|
$
|
1,294
|
|
|
$
|
1,524
|
|
|
$
|
(75
|
)
|
|
|
|
|
Payments Due by Period
|
||||||||||||||||
|
|
Total
|
|
1 Year
|
|
2 - 3
Years
|
|
4 - 5
Years
|
|
After 5
Years
|
||||||||||
|
|
(in thousands)
|
||||||||||||||||||
Lease obligations (1)
|
|
$
|
227,352
|
|
|
$
|
42,652
|
|
|
$
|
75,235
|
|
|
$
|
55,051
|
|
|
$
|
54,414
|
|
Purchase obligations (2)
|
|
41,620
|
|
|
34,383
|
|
|
7,237
|
|
|
—
|
|
|
—
|
|
|||||
Long-term debt (3)
|
|
46,576
|
|
|
719
|
|
|
3,282
|
|
|
42,575
|
|
|
—
|
|
|||||
Other liabilities (4)
|
|
707
|
|
|
345
|
|
|
334
|
|
|
19
|
|
|
9
|
|
|||||
Total contractual obligations
|
|
$
|
316,255
|
|
|
$
|
78,099
|
|
|
$
|
86,088
|
|
|
$
|
97,645
|
|
|
$
|
54,423
|
|
(1)
|
We are obligated under non-cancellable leases for our restaurants, administrative offices and equipment. Some restaurant leases provide for contingent rental payments based on sales thresholds, which are excluded from this table. We also include capital leases for computer equipment of approximately $0.4 million.
|
(2)
|
We enter into various purchase obligations in the ordinary course of business. Our binding purchase obligations relate to volume commitments for beverage and food products.
|
(3)
|
Reflects the minimum required quarterly principal payments and full payment of our long-term debt at maturity of our credit facility in May 2022. Interest payments associated with variable-rate long-term debt have not been included in the table. Assuming that the remaining unpaid balance on the term loan after minimum required quarterly payments and our $21.9 million outstanding revolving line of credit as of January 1, 2019 are repaid at maturity, and utilizing a weighted-average of interest rates in effect as of January 1, 2019, our annual interest payments (including commitment fees and letter of credit fees) on variable-rate long-term debt as of January 1, 2019 is anticipated to be approximately $2.9 million, $2.8 million, $2.7 million and $0.9 million for 2019, 2020, 2021 and 2022, respectively. The future annual interest obligations noted herein are estimated only in relation to debt outstanding as of January 1, 2019 and do not reflect interest obligations on potential future debt. See “Liquidity and Capital Resources” for a discussion of the terms of the revolving credit facility.
|
(4)
|
Reflects the expected payments associated with our commitment under our non-qualified deferred compensation plan.
|
ITEM 8.
|
Financial Statements and Supplementary Data
|
Consolidated Financial Statements
|
|
|
|
January 1, 2019
|
|
January 2, 2018
|
||||
Assets
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
4,655
|
|
|
$
|
3,361
|
|
Accounts receivable
|
|
2,391
|
|
|
2,434
|
|
||
Inventories
|
|
9,646
|
|
|
9,929
|
|
||
Prepaid expenses and other assets
|
|
6,474
|
|
|
6,258
|
|
||
Income tax receivable
|
|
185
|
|
|
76
|
|
||
Total current assets
|
|
23,351
|
|
|
22,058
|
|
||
Property and equipment, net
|
|
138,774
|
|
|
152,593
|
|
||
Goodwill
|
|
6,400
|
|
|
6,400
|
|
||
Intangibles, net
|
|
1,291
|
|
|
1,565
|
|
||
Other assets, net
|
|
2,216
|
|
|
2,617
|
|
||
Total long-term assets
|
|
148,681
|
|
|
163,175
|
|
||
Total assets
|
|
$
|
172,032
|
|
|
$
|
185,233
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
7,854
|
|
|
$
|
10,929
|
|
Accrued payroll and benefits
|
|
13,391
|
|
|
11,719
|
|
||
Accrued expenses and other current liabilities
|
|
11,183
|
|
|
21,221
|
|
||
Current portion of long-term debt
|
|
719
|
|
|
—
|
|
||
Total current liabilities
|
|
33,147
|
|
|
43,869
|
|
||
Long-term debt, net
|
|
44,183
|
|
|
57,624
|
|
||
Deferred rent
|
|
37,334
|
|
|
38,872
|
|
||
Deferred tax liabilities, net
|
|
133
|
|
|
416
|
|
||
Other long-term liabilities
|
|
4,554
|
|
|
8,591
|
|
||
Total liabilities
|
|
119,351
|
|
|
149,372
|
|
||
Commitments and contingencies
|
|
|
|
|
|
|
||
Stockholders’ equity:
|
|
|
|
|
||||
Preferred stock—$0.01 par value, 1,000,000 shares authorized and undesignated as of January 1, 2019 and January 2, 2018; no shares issued or outstanding
|
|
—
|
|
|
—
|
|
||
Common stock—$0.01 par value, 180,000,000 shares authorized as of January 1, 2019 and January 2, 2018; 46,353,309 issued and 43,929,438 outstanding as of January 1, 2019 and 43,550,329 issued and 41,126,458 outstanding as of January 2, 2018
|
|
464
|
|
|
436
|
|
||
Treasury stock, at cost, 2,423,871 shares as of January 1, 2019 and January 2, 2018, respectively
|
|
(35,000
|
)
|
|
(35,000
|
)
|
||
Additional paid-in capital
|
|
198,352
|
|
|
171,613
|
|
||
Accumulated deficit
|
|
(111,135
|
)
|
|
(101,188
|
)
|
||
Total stockholders’ equity
|
|
52,681
|
|
|
35,861
|
|
||
Total liabilities and stockholders’ equity
|
|
$
|
172,032
|
|
|
$
|
185,233
|
|
|
|
Fiscal Year Ended
|
||||||||||
|
|
January 1, 2019
|
|
January 2, 2018
|
|
January 3, 2017
|
||||||
Revenue:
|
|
|
|
|
|
|
||||||
Restaurant revenue
|
|
$
|
453,671
|
|
|
$
|
451,599
|
|
|
$
|
482,544
|
|
Franchising royalties and fees
|
|
4,170
|
|
|
4,893
|
|
|
4,930
|
|
|||
Total revenue
|
|
457,841
|
|
|
456,492
|
|
|
487,474
|
|
|||
Costs and expenses:
|
|
|
|
|
|
|
||||||
Restaurant operating costs (exclusive of depreciation and amortization shown separately below):
|
|
|
|
|
|
|
||||||
Cost of sales
|
|
121,102
|
|
|
121,473
|
|
|
130,630
|
|
|||
Labor
|
|
149,746
|
|
|
150,161
|
|
|
161,219
|
|
|||
Occupancy
|
|
49,020
|
|
|
51,877
|
|
|
55,912
|
|
|||
Other restaurant operating costs
|
|
65,575
|
|
|
64,091
|
|
|
73,011
|
|
|||
General and administrative
|
|
46,092
|
|
|
39,746
|
|
|
55,654
|
|
|||
Depreciation and amortization
|
|
22,872
|
|
|
24,613
|
|
|
28,134
|
|
|||
Pre-opening
|
|
50
|
|
|
935
|
|
|
3,131
|
|
|||
Restaurant impairments, closure costs and asset disposals
|
|
7,142
|
|
|
37,446
|
|
|
47,311
|
|
|||
Total costs and expenses
|
|
461,599
|
|
|
490,342
|
|
|
555,002
|
|
|||
Loss from operations
|
|
(3,758
|
)
|
|
(33,850
|
)
|
|
(67,528
|
)
|
|||
Loss on extinguishment of debt
|
|
626
|
|
|
—
|
|
|
—
|
|
|||
Interest expense, net
|
|
4,305
|
|
|
3,839
|
|
|
2,916
|
|
|||
Loss before income taxes
|
|
(8,689
|
)
|
|
(37,689
|
)
|
|
(70,444
|
)
|
|||
(Benefit) provision for income taxes
|
|
(248
|
)
|
|
(207
|
)
|
|
1,233
|
|
|||
Net loss
|
|
(8,441
|
)
|
|
(37,482
|
)
|
|
(71,677
|
)
|
|||
Accretion of preferred stock to redemption value
|
|
—
|
|
|
(7,967
|
)
|
|
—
|
|
|||
Net loss attributable to common stockholders
|
|
$
|
(8,441
|
)
|
|
$
|
(45,449
|
)
|
|
$
|
(71,677
|
)
|
|
|
|
|
|
|
|
||||||
Loss per Class A and Class B common stock, combined
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
(0.20
|
)
|
|
$
|
(1.20
|
)
|
|
$
|
(2.58
|
)
|
Diluted
|
|
$
|
(0.20
|
)
|
|
$
|
(1.20
|
)
|
|
$
|
(2.58
|
)
|
Weighted average Class A and Class B common stock outstanding, combined
|
|
|
|
|
|
|
||||||
Basic
|
|
42,329,556
|
|
|
37,759,497
|
|
|
27,808,708
|
|
|||
Diluted
|
|
42,329,556
|
|
|
37,759,497
|
|
|
27,808,708
|
|
|
|
Fiscal Year Ended
|
||||||||||
|
|
January 1, 2019
|
|
January 2, 2018
|
|
January 3, 2017
|
||||||
Net loss
|
|
$
|
(8,441
|
)
|
|
$
|
(37,482
|
)
|
|
$
|
(71,677
|
)
|
Other comprehensive (loss) income:
|
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
|
—
|
|
|
(109
|
)
|
|
83
|
|
|||
Other comprehensive (loss) income
|
|
—
|
|
|
(109
|
)
|
|
83
|
|
|||
Comprehensive loss
|
|
$
|
(8,441
|
)
|
|
$
|
(37,591
|
)
|
|
$
|
(71,594
|
)
|
|
|
Common Stock(1) (2)
|
|
Treasury
|
|
Additional
Paid-In Capital |
|
Accumulated
Other Comprehensive Loss |
|
Retained
Earnings (Accumulated Deficit) |
|
Total
Stockholders’ Equity |
Temporary Equity
|
||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
||||||||||||||||||||||||
Balance—December 29, 2015
|
|
30,138,672
|
|
|
$
|
301
|
|
|
2,423,871
|
|
|
$
|
(35,000
|
)
|
|
$
|
120,634
|
|
|
$
|
(134
|
)
|
|
$
|
7,971
|
|
|
$
|
93,772
|
|
$
|
—
|
|
Proceeds from exercise of stock options and employee stock purchase plan
|
|
162,253
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
1,098
|
|
|
—
|
|
|
—
|
|
|
1,100
|
|
—
|
|
|||||||
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,540
|
|
|
—
|
|
|
—
|
|
|
2,540
|
|
—
|
|
|||||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(71,677
|
)
|
|
(71,677
|
)
|
—
|
|
|||||||
Other comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
83
|
|
|
—
|
|
|
83
|
|
—
|
|
|||||||
Balance—January 3, 2017
|
|
30,300,925
|
|
|
303
|
|
|
2,423,871
|
|
|
(35,000
|
)
|
|
124,272
|
|
|
(51
|
)
|
|
(63,706
|
)
|
|
25,818
|
|
—
|
|
|||||||
Issuance of preferred stock and warrants to L Catterton in connection with the private placement, net of transaction expenses
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,056
|
|
|
—
|
|
|
—
|
|
|
6,056
|
|
10,533
|
|
|||||||
Issuance of common stock in connection with the Mill Road private placement, net of transaction expenses
|
|
8,873,240
|
|
|
89
|
|
|
—
|
|
|
—
|
|
|
29,021
|
|
|
—
|
|
|
—
|
|
|
29,110
|
|
—
|
|
|||||||
Accretion of preferred stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,967
|
)
|
|
—
|
|
|
—
|
|
|
(7,967
|
)
|
7,967
|
|
|||||||
Conversion of preferred stock to L Catterton
|
|
4,252,873
|
|
|
43
|
|
|
—
|
|
|
—
|
|
|
18,457
|
|
|
—
|
|
|
—
|
|
|
18,500
|
|
(18,500
|
)
|
|||||||
Proceeds from exercise of stock options and employee stock purchase plan
|
|
123,291
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
82
|
|
|
—
|
|
|
—
|
|
|
83
|
|
—
|
|
|||||||
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,692
|
|
|
—
|
|
|
—
|
|
|
1,692
|
|
—
|
|
|||||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(37,482
|
)
|
|
(37,482
|
)
|
—
|
|
|||||||
Other comprehensive income, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
51
|
|
|
—
|
|
|
51
|
|
—
|
|
|||||||
Balance—January 2, 2018
|
|
43,550,329
|
|
|
436
|
|
|
2,423,871
|
|
|
(35,000
|
)
|
|
171,613
|
|
|
—
|
|
|
(101,188
|
)
|
|
35,861
|
|
—
|
|
|||||||
Issuance of common stock in connection with a public offering, net of transaction expenses
|
|
2,500,000
|
|
|
25
|
|
|
—
|
|
|
—
|
|
|
22,967
|
|
|
—
|
|
|
—
|
|
|
22,992
|
|
—
|
|
|||||||
Proceeds from exercise of stock options and employee stock purchase plan
|
|
302,980
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
746
|
|
|
—
|
|
|
—
|
|
|
749
|
|
—
|
|
|||||||
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,026
|
|
|
—
|
|
|
—
|
|
|
3,026
|
|
—
|
|
|||||||
Cumulative catch-up adjustment for ASC 606
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,506
|
)
|
|
(1,506
|
)
|
—
|
|
|||||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,441
|
)
|
|
(8,441
|
)
|
—
|
|
|||||||
Balance—January 1, 2019
|
|
46,353,309
|
|
|
$
|
464
|
|
|
2,423,871
|
|
|
$
|
(35,000
|
)
|
|
$
|
198,352
|
|
|
$
|
—
|
|
|
$
|
(111,135
|
)
|
|
$
|
52,681
|
|
$
|
—
|
|
(1)
|
Unless otherwise noted, activity relates to Class A common stock
|
(2)
|
On May 24, 2018, 1,522,098 shares of Class B common stock was converted into the same number of the Company’s Class A common stock. As a result of the conversion, no shares of the Company’s Class B common stock are outstanding as of the fiscal year ended January 1, 2019.
|
|
|
Fiscal Year Ended
|
||||||||||
|
|
January 1, 2019
|
|
January 2, 2018
|
|
January 3, 2017
|
||||||
Operating activities
|
|
|
|
|
|
|
||||||
Net loss
|
|
$
|
(8,441
|
)
|
|
$
|
(37,482
|
)
|
|
$
|
(71,677
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
|
|
|
||||||
Depreciation and amortization
|
|
22,872
|
|
|
24,613
|
|
|
28,134
|
|
|||
Deferred income taxes, net
|
|
(283
|
)
|
|
(228
|
)
|
|
1,099
|
|
|||
Restaurant impairments, closure costs and asset disposals
|
|
6,992
|
|
|
30,859
|
|
|
45,536
|
|
|||
Loss on extinguishment of debt
|
|
626
|
|
|
—
|
|
|
—
|
|
|||
Amortization of debt issuance costs
|
|
607
|
|
|
465
|
|
|
140
|
|
|||
Stock-based compensation
|
|
2,979
|
|
|
1,514
|
|
|
2,319
|
|
|||
Loss on liquidation of Canadian subsidiary
|
|
—
|
|
|
70
|
|
|
—
|
|
|||
Gain on insurance proceeds received for property damage
|
|
(370
|
)
|
|
—
|
|
|
(494
|
)
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
||||||
Accounts receivable
|
|
91
|
|
|
2,976
|
|
|
(443
|
)
|
|||
Inventories
|
|
(541
|
)
|
|
(387
|
)
|
|
(790
|
)
|
|||
Prepaid expenses and other assets
|
|
185
|
|
|
332
|
|
|
162
|
|
|||
Accounts payable
|
|
(1,580
|
)
|
|
(1,302
|
)
|
|
(2,440
|
)
|
|||
Deferred rent
|
|
(1,396
|
)
|
|
1,597
|
|
|
5,328
|
|
|||
Income taxes
|
|
(109
|
)
|
|
180
|
|
|
564
|
|
|||
Accrued expenses and other liabilities
|
|
(16,286
|
)
|
|
(19,105
|
)
|
|
17,299
|
|
|||
Net cash provided by operating activities
|
|
5,346
|
|
|
4,102
|
|
|
24,737
|
|
|||
Investing activities
|
|
|
|
|
|
|
||||||
Purchases of property and equipment
|
|
(14,338
|
)
|
|
(20,828
|
)
|
|
(43,335
|
)
|
|||
Insurance proceeds received for property damage
|
|
500
|
|
|
—
|
|
|
578
|
|
|||
Net cash used in investing activities
|
|
(13,838
|
)
|
|
(20,828
|
)
|
|
(42,757
|
)
|
|||
Financing activities
|
|
|
|
|
|
|
||||||
Net repayments from swing line loan
|
|
(101
|
)
|
|
(96
|
)
|
|
(1,649
|
)
|
|||
Proceeds from borrowings on long-term debt
|
|
74,889
|
|
|
10,532
|
|
|
19,800
|
|
|||
Payments on long-term debt
|
|
(87,030
|
)
|
|
(37,015
|
)
|
|
(1,000
|
)
|
|||
Debt issuance costs
|
|
(1,713
|
)
|
|
(938
|
)
|
|
(347
|
)
|
|||
Issuance of preferred stock and common stock warrants, net of transaction expenses (see Note 8)
|
|
—
|
|
|
16,589
|
|
|
—
|
|
|||
Issuance of common stock, net of transaction expenses (see Note 8)
|
|
22,992
|
|
|
29,110
|
|
|
—
|
|
|||
Proceeds from exercise of stock options and employee stock purchase plan
|
|
749
|
|
|
83
|
|
|
1,100
|
|
|||
Net cash provided by financing activities
|
|
9,786
|
|
|
18,265
|
|
|
17,904
|
|
|||
Effect of exchange rate changes on cash
|
|
—
|
|
|
(15
|
)
|
|
41
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
|
1,294
|
|
|
1,524
|
|
|
(75
|
)
|
|||
Cash and cash equivalents
|
|
|
|
|
|
|
||||||
Beginning of year
|
|
3,361
|
|
|
1,837
|
|
|
1,912
|
|
|||
End of year
|
|
$
|
4,655
|
|
|
$
|
3,361
|
|
|
$
|
1,837
|
|
Property and Equipment
|
|
Estimated Useful Lives
|
Leasehold improvements
|
|
Shorter of lease term or estimated useful life, not to exceed 20 years
|
Furniture and fixtures
|
|
3 to 15 years
|
Equipment
|
|
3 to 7 years
|
|
|
2018
|
|
2017
|
||||
Tenant improvement receivables
|
|
$
|
82
|
|
|
$
|
216
|
|
Vendor rebate receivables
|
|
639
|
|
|
869
|
|
||
Franchise and other receivables
|
|
1,670
|
|
|
1,349
|
|
||
|
|
$
|
2,391
|
|
|
$
|
2,434
|
|
|
|
2018
|
|
2017
|
||||
Prepaid occupancy related costs
|
|
$
|
4,053
|
|
|
$
|
4,091
|
|
Other prepaid expenses
|
|
2,416
|
|
|
2,126
|
|
||
Other current assets
|
|
5
|
|
|
41
|
|
||
|
|
$
|
6,474
|
|
|
$
|
6,258
|
|
|
|
2018
|
|
2017
|
||||
Leasehold improvements
|
|
$
|
197,571
|
|
|
$
|
199,211
|
|
Furniture, fixtures and equipment
|
|
121,479
|
|
|
120,234
|
|
||
Construction in progress
|
|
3,620
|
|
|
2,592
|
|
||
|
|
322,670
|
|
|
322,037
|
|
||
Accumulated depreciation and amortization
|
|
(183,896
|
)
|
|
(169,444
|
)
|
||
|
|
$
|
138,774
|
|
|
$
|
152,593
|
|
|
|
2018
|
|
2017
|
||||
Accrued payroll and related liabilities
|
|
$
|
6,333
|
|
|
$
|
6,594
|
|
Accrued bonus
|
|
4,250
|
|
|
1,947
|
|
||
Insurance liabilities
|
|
2,808
|
|
|
3,178
|
|
||
|
|
$
|
13,391
|
|
|
$
|
11,719
|
|
|
|
2018
|
|
2017
|
||||
Gift card liability
|
|
$
|
3,284
|
|
|
$
|
4,078
|
|
Occupancy related
|
|
917
|
|
|
1,286
|
|
||
Current portion of closed restaurant reserve (Note 6)
|
|
1,683
|
|
|
2,447
|
|
||
Utilities
|
|
1,582
|
|
|
1,705
|
|
||
Data breach liabilities (Note 14)
|
|
—
|
|
|
7,605
|
|
||
Other accrued expenses
|
|
3,717
|
|
|
4,100
|
|
||
|
|
$
|
11,183
|
|
|
$
|
21,221
|
|
|
|
2018
|
|
2017
|
||||
Balance at beginning of year
|
|
$
|
6,400
|
|
|
$
|
6,400
|
|
Acquisitions
|
|
—
|
|
|
—
|
|
||
Balance at end of year
|
|
$
|
6,400
|
|
|
$
|
6,400
|
|
|
|
2018
|
|
2017
|
||||
Amortized intangible assets:
|
|
|
|
|
||||
Reacquired franchise rights
|
|
$
|
1,125
|
|
|
$
|
1,271
|
|
Favorable leases
|
|
150
|
|
|
150
|
|
||
|
|
1,275
|
|
|
1,421
|
|
||
Accumulated Amortization
|
|
(436
|
)
|
|
(375
|
)
|
||
|
|
839
|
|
|
1,046
|
|
||
Non-amortized intangible assets:
|
|
|
|
|
||||
Trademark rights and transferable liquor licenses
|
|
452
|
|
|
519
|
|
||
|
|
$
|
1,291
|
|
|
$
|
1,565
|
|
2019
|
|
$
|
95
|
|
2020
|
|
92
|
|
|
2021
|
|
92
|
|
|
2022
|
|
89
|
|
|
2023
|
|
84
|
|
|
Thereafter
|
|
387
|
|
|
|
|
$
|
839
|
|
Year 1
|
$
|
719
|
|
Year 2
|
1,313
|
|
|
Year 3
|
1,969
|
|
|
Year 4
|
42,575
|
|
|
Total
|
$
|
46,576
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Restaurant impairments(1)
|
$
|
1,453
|
|
|
$
|
16,154
|
|
|
$
|
41,615
|
|
Closure costs(1)
|
4,149
|
|
|
20,052
|
|
|
2,251
|
|
|||
Loss on disposal of assets and other (2)
|
1,540
|
|
|
1,240
|
|
|
3,445
|
|
|||
|
$
|
7,142
|
|
|
$
|
37,446
|
|
|
$
|
47,311
|
|
(1)
|
Restaurant impairments and closure costs in all periods presented above include amounts related to restaurants previously impaired or closed.
|
(2)
|
Included in loss on disposal of assets and other for the fiscal year 2016 is a $1.1 million charge to reduce capitalized labor and overhead as a result of the reduced growth for new restaurant development.
|
|
|
2018
|
|
2017
|
||||
Closed restaurant reserves, beginning of period
|
|
$
|
8,179
|
|
|
$
|
1,880
|
|
Additions—restaurant closing costs recognized and accretion
|
|
2,843
|
|
|
18,341
|
|
||
Decreases—payments
|
|
(8,005
|
)
|
|
(12,042
|
)
|
||
Closed restaurant reserves, end of period
|
|
$
|
3,017
|
|
|
$
|
8,179
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Domestic loss
|
|
$
|
(8,689
|
)
|
|
$
|
(42,047
|
)
|
|
$
|
(67,626
|
)
|
Foreign income (loss)
|
|
—
|
|
|
4,358
|
|
|
(2,818
|
)
|
|||
|
|
$
|
(8,689
|
)
|
|
$
|
(37,689
|
)
|
|
$
|
(70,444
|
)
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Current tax provision:
|
|
|
|
|
|
|
||||||
Federal
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
State
|
|
35
|
|
|
21
|
|
|
134
|
|
|||
Foreign
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
|
35
|
|
|
21
|
|
|
134
|
|
|||
Deferred tax (benefit) provision:
|
|
|
|
|
|
|
||||||
Federal
|
|
(202
|
)
|
|
(252
|
)
|
|
(1,979
|
)
|
|||
State
|
|
(81
|
)
|
|
24
|
|
|
2,854
|
|
|||
Foreign
|
|
—
|
|
|
—
|
|
|
224
|
|
|||
|
|
(283
|
)
|
|
(228
|
)
|
|
1,099
|
|
|||
Total (benefit) provision for income taxes
|
|
$
|
(248
|
)
|
|
$
|
(207
|
)
|
|
$
|
1,233
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Federal income tax benefit at federal rate
|
|
$
|
(1,825
|
)
|
|
$
|
(12,814
|
)
|
|
$
|
(23,740
|
)
|
State income tax benefit, net of federal tax
|
|
(623
|
)
|
|
(1,790
|
)
|
|
(2,975
|
)
|
|||
Other permanent differences
|
|
70
|
|
|
674
|
|
|
996
|
|
|||
Foreign rate differential
|
|
—
|
|
|
(463
|
)
|
|
214
|
|
|||
Tax credits
|
|
(602
|
)
|
|
(808
|
)
|
|
(749
|
)
|
|||
Change in valuation allowance
|
|
2,600
|
|
|
(159
|
)
|
|
27,353
|
|
|||
Tax rate change
|
|
(248
|
)
|
|
13,632
|
|
|
—
|
|
|||
Deferred tax asset write-off
|
|
212
|
|
|
2,618
|
|
|
—
|
|
|||
Other items, net
|
|
168
|
|
|
(1,097
|
)
|
|
134
|
|
|||
(Benefit) provision for income taxes
|
|
$
|
(248
|
)
|
|
$
|
(207
|
)
|
|
$
|
1,233
|
|
Effective income tax rate
|
|
2.9
|
%
|
|
0.5
|
%
|
|
(1.8
|
)%
|
|
|
2018
|
|
2017
|
||||
Deferred tax assets
|
|
$
|
50,851
|
|
|
$
|
47,027
|
|
Deferred tax liabilities
|
|
(12,212
|
)
|
|
(11,632
|
)
|
||
Total deferred tax assets
|
|
38,639
|
|
|
35,395
|
|
||
Valuation allowance
|
|
(38,772
|
)
|
|
(35,811
|
)
|
||
Net deferred tax liabilities
|
|
$
|
(133
|
)
|
|
$
|
(416
|
)
|
|
|
2018
|
|
2017
|
||||
Deferred tax assets (liabilities):
|
|
|
|
|
||||
Loss carry forwards
|
|
$
|
32,896
|
|
|
$
|
26,991
|
|
Deferred rent and franchise revenue
|
|
10,433
|
|
|
10,486
|
|
||
Property, equipment and intangible assets
|
|
(10,472
|
)
|
|
(9,858
|
)
|
||
Stock-based compensation
|
|
1,242
|
|
|
1,086
|
|
||
Tax credit carry forwards
|
|
3,528
|
|
|
3,123
|
|
||
Interest expense
|
|
998
|
|
|
—
|
|
||
Inventory smallwares
|
|
(1,740
|
)
|
|
(1,774
|
)
|
||
Other accrued expenses
|
|
959
|
|
|
4,320
|
|
||
Other
|
|
795
|
|
|
1,021
|
|
||
Total net deferred tax assets
|
|
38,639
|
|
|
35,395
|
|
||
Valuation allowance
|
|
(38,772
|
)
|
|
(35,811
|
)
|
||
Net deferred tax liabilities
|
|
$
|
(133
|
)
|
|
$
|
(416
|
)
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Risk-free interest rate
|
|
2.7
|
%
|
|
2.0
|
%
|
|
1.2
|
%
|
|||
Expected term (average in years)
|
|
6.2
|
|
|
6.1
|
|
|
5.0
|
|
|||
Expected dividend yield
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Expected volatility
|
|
51.0
|
%
|
|
39.6
|
%
|
|
37.0
|
%
|
|||
Weighted-average Black-Scholes fair value per share at date of grant
|
|
$
|
5.11
|
|
|
$
|
1.74
|
|
|
$
|
2.85
|
|
|
|
Awards
|
|
Weighted-
Average Exercise Price |
|
Weighted-Average Remaining Contractual Term
|
|
Aggregate
Intrinsic Value (1) (in thousands) |
|||||
Outstanding—January 2, 2018
|
|
1,332,135
|
|
|
$
|
12.23
|
|
|
|
|
|
||
Granted
|
|
201,653
|
|
|
9.58
|
|
|
|
|
|
|||
Forfeited or expired
|
|
(231,743
|
)
|
|
14.09
|
|
|
|
|
|
|||
Exercised
|
|
(127,789
|
)
|
|
8.86
|
|
|
|
|
|
|||
Outstanding—January 1, 2019
|
|
1,174,256
|
|
|
$
|
11.78
|
|
|
6.46
|
|
$
|
667
|
|
Vested and expected to vest
|
|
1,155,755
|
|
|
$
|
11.79
|
|
|
6.43
|
|
$
|
662
|
|
Exercisable as of January 1, 2019
|
|
713,021
|
|
|
$
|
13.91
|
|
|
5.14
|
|
$
|
163
|
|
(1)
|
Aggregate intrinsic value represents the amount by which fair value of the Company’s stock exceeds the exercise price of the option as of January 1, 2019.
|
|
|
Awards
|
|
Weighted-
Average Grant Date Fair Value |
|||
Outstanding—January 2, 2018
|
|
328,359
|
|
|
$
|
4.52
|
|
Granted
|
|
824,251
|
|
|
8.51
|
|
|
Vested
|
|
(197,384
|
)
|
|
6.84
|
|
|
Forfeited
|
|
(47,144
|
)
|
|
0.01
|
|
|
Non-vested at January 1, 2019
|
|
908,082
|
|
|
$
|
0.01
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Net loss attributable to common stockholders
|
|
$
|
(8,441
|
)
|
|
$
|
(45,449
|
)
|
|
$
|
(71,677
|
)
|
Shares:
|
|
|
|
|
|
|
||||||
Basic weighted average shares outstanding
|
|
42,329,556
|
|
|
37,759,497
|
|
|
27,808,708
|
|
|||
Effect of dilutive securities
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Diluted weighted average number of shares outstanding
|
|
42,329,556
|
|
|
37,759,497
|
|
|
27,808,708
|
|
|||
Loss per share:
|
|
|
|
|
|
|
||||||
Basic loss earnings per share
|
|
$
|
(0.20
|
)
|
|
$
|
(1.20
|
)
|
|
$
|
(2.58
|
)
|
Diluted loss earnings per share
|
|
$
|
(0.20
|
)
|
|
$
|
(1.20
|
)
|
|
$
|
(2.58
|
)
|
2018
|
$
|
42,652
|
|
2019
|
39,626
|
|
|
2020
|
35,609
|
|
|
2021
|
30,611
|
|
|
2022
|
24,440
|
|
|
Thereafter
|
54,414
|
|
|
|
$
|
227,352
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Interest paid (net of amounts capitalized)
|
|
$
|
3,800
|
|
|
$
|
3,482
|
|
|
$
|
2,394
|
|
Income taxes paid (refunded)
|
|
42
|
|
|
(158
|
)
|
|
(427
|
)
|
|||
Changes in purchases of property and equipment accrued in accounts payable, net
|
|
(1,339
|
)
|
|
(842
|
)
|
|
(1,431
|
)
|
|||
Conversion of Series A convertible preferred stock to common stock
|
|
—
|
|
|
18,500
|
|
|
—
|
|
|
Fiscal 2018
|
||||||||||||||
|
January 1, 2019
|
|
October 2, 2018
|
|
July 3, 2018
|
|
April 3, 2018
|
||||||||
Revenue
|
$
|
113,193
|
|
|
$
|
116,727
|
|
|
$
|
117,395
|
|
|
$
|
110,526
|
|
Income (loss) from operations (1)(2)(3)
|
$
|
950
|
|
|
$
|
2,132
|
|
|
$
|
(4,162
|
)
|
|
$
|
(2,678
|
)
|
Net income (loss)
|
$
|
19
|
|
|
$
|
1,050
|
|
|
$
|
(5,935
|
)
|
|
$
|
(3,575
|
)
|
Basic income (loss) per share
|
$
|
—
|
|
|
$
|
0.02
|
|
|
$
|
(0.14
|
)
|
|
$
|
(0.09
|
)
|
Diluted income (loss) per share
|
$
|
—
|
|
|
$
|
0.02
|
|
|
$
|
(0.14
|
)
|
|
$
|
(0.09
|
)
|
|
|
||||||||||||||
|
Fiscal 2017
|
||||||||||||||
|
January 2, 2018
|
|
October 3, 2017
|
|
July 4, 2017
|
|
April 4, 2017
|
||||||||
Revenue
|
$
|
112,774
|
|
|
$
|
114,211
|
|
|
$
|
112,792
|
|
|
$
|
116,715
|
|
Income (loss) from operations (4)(5)
|
$
|
87
|
|
|
$
|
(7,483
|
)
|
|
$
|
(808
|
)
|
|
$
|
(25,646
|
)
|
Net loss
|
$
|
(487
|
)
|
|
$
|
(8,335
|
)
|
|
$
|
(1,815
|
)
|
|
$
|
(26,845
|
)
|
Net loss attributable to common stockholders (6)
|
$
|
(487
|
)
|
|
$
|
(8,335
|
)
|
|
$
|
(8,816
|
)
|
|
$
|
(27,810
|
)
|
Basic loss per share
|
$
|
(0.01
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
(0.22
|
)
|
|
$
|
(0.99
|
)
|
Diluted loss per share
|
$
|
(0.01
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
(0.22
|
)
|
|
$
|
(0.99
|
)
|
(1)
|
The second quarter of 2018 includes a $3.4 million charge for the final assessment related to the Data Breach Liabilities and a $0.3 million charge for the settlement of a Delaware gift card litigation.
|
(2)
|
Includes closure costs related to the seven restaurants that closed in the fourth quarter of 2018, three restaurants closed in the third quarter of 2018, seven restaurants that closed in the second quarter of 2018 and two restaurants that closed in the first quarter of 2018, most of which were approaching the expiration of their leases, as well as ongoing costs from restaurants closed in previous years. The closure costs recognized were $0.6 million in the fourth quarter of 2018, $1.5 million in the third quarter of 2018, $1.5 million in the second quarter of 2018 and $0.6 million in the first quarter of 2018. See Note 6, Restaurant Impairments, Closure Costs and Asset Disposals, for additional disclosure on closures.
|
(3)
|
The first quarter of 2018 includes an impairment charge of $0.4 million related to the impairment of one restaurant. The Company did not impair any restaurants in the second, third and fourth quarters of 2018.
|
(4)
|
The first quarter of 2017 includes $19.9 million of closure costs primarily related to the 55 restaurants closed during the first quarter of 2017. See Note 6, Restaurant Impairments, Closure Costs and Asset Disposals, for additional disclosure on closures.
|
(5)
|
Includes the impact of impairing three restaurants in the fourth quarter of 2017, 18 restaurants in the third quarter of 2017, nine restaurants in the second quarter of 2017 and four restaurants in the first quarter of 2017. The impairment costs recognized were $1.1 million in the fourth quarter of 2017, $9.1 million in the third quarter of 2017, $4.0 million in the second quarter of 2017 and $1.9 million in the first quarter of 2017. See Note 6, Restaurant Impairments, Closure Costs and Asset Disposals, for additional disclosure on impairments.
|
(6)
|
Represents net loss after accretion of the preferred stock issued to L Catterton to its full redemption value. See Note 8, Stockholders’ Equity for additional information.
|
/s/ Ernst & Young LLP
|
|
|
/s/ Ernst & Young LLP
|
|
|
ITEM 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
ITEM 14.
|
Principal Accounting Fees and Services
|
ITEM 15.
|
Exhibits, Financial Statement Schedules
|
1.
|
Our Consolidated Financial Statements and Notes thereto are included in Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K.
|
2.
|
All financial schedules have been omitted either because they are not applicable or because the required information is provided in our Consolidated Financial Statements and Notes thereto, included in Item 8 of this Annual Report on Form 10-K.
|
3.
|
The Index to Exhibits is incorporated herein by reference and is filed as part of this 10-K.
|
|
|
|
|
Description of Exhibit Incorporated Herein by Reference
|
|
|
||||||
Exhibit Number
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Filing Date
|
|
Exhibit Number
|
|
Filed Herewith
|
3.1
|
|
|
S-1
|
|
333-192402
|
|
November 19, 2013
|
|
3.1
|
|
|
|
3.2
|
|
|
8-K
|
|
001-35987
|
|
August 24, 2015
|
|
3.1
|
|
|
|
4.1
|
|
|
S-1/A
|
|
333-188783
|
|
June 17, 2013
|
|
4.1
|
|
|
|
4.2
|
|
|
8-K
|
|
001-35987
|
|
February 9, 2017
|
|
4.1
|
|
|
|
4.3
|
|
|
8-K
|
|
001-35987
|
|
February 9, 2017
|
|
4.2
|
|
|
|
10.1
|
|
|
S-1/A
|
|
333-188783
|
|
June 17, 2013
|
|
10.1
|
|
|
|
10.2
|
|
|
S-1/A
|
|
333-188783
|
|
June 17, 2013
|
|
10.2
|
|
|
|
10.3
|
|
|
S-1/A
|
|
333-188783
|
|
June 17, 2013
|
|
10.3
|
|
|
|
10.4
|
|
|
10-Q
|
|
001-35987
|
|
November 6, 2014
|
|
10.1
|
|
|
|
10.5
|
|
|
10-Q
|
|
001-35987
|
|
May 11, 2018
|
|
10.1
|
|
|
|
10.6
|
|
|
10-Q
|
|
001-35987
|
|
May 11, 2018
|
|
10.2
|
|
|
|
10.7
|
|
|
10-Q
|
|
001-35987
|
|
May 11, 2018
|
|
10.3
|
|
|
|
10.8
|
|
|
S-1/A
|
|
333-188783
|
|
June 17, 2013
|
|
10.15
|
|
|
|
10.9
|
|
|
10-K
|
|
001-35987
|
|
February 24, 2015
|
|
10.9
|
|
|
|
10.10
|
|
|
10-K
|
|
001-35987
|
|
February 24, 2015
|
|
10.10
|
|
|
|
10.11
|
|
|
10-Q
|
|
001-35987
|
|
November 9, 2017
|
|
10.7
|
|
|
|
10.12
|
|
|
10-Q
|
|
001-35987
|
|
November 9, 2017
|
|
10.8
|
|
|
10.13
|
|
|
10-Q
|
|
001-35987
|
|
November 9, 2017
|
|
10.9
|
|
|
|
10.14
|
|
|
10-Q
|
|
001-35987
|
|
July 19, 2018
|
|
10.1
|
|
|
|
10.15
|
|
|
S-1/A
|
|
333-188783
|
|
June 17, 2013
|
|
10.22
|
|
|
|
10.16
|
|
|
S-1
|
|
333-192402
|
|
November 19, 2013
|
|
10.18
|
|
|
|
10.17*
|
|
|
10-K
|
|
001-35987
|
|
March 1, 2016
|
|
10.20
|
|
|
|
10.18*
|
|
|
8-K
|
|
001-35987
|
|
December 6, 2017
|
|
10.1
|
|
|
|
10.19*
|
|
|
8-K
|
|
001-35987
|
|
September 25, 2017
|
|
10.1
|
|
|
|
10.20*
|
|
|
10-Q
|
|
001-35987
|
|
August 11, 2017
|
|
10.2
|
|
|
|
10.21*
|
|
|
10-Q
|
|
001-35987
|
|
October 23, 2018
|
|
10.1
|
|
|
|
10.22
|
|
|
8-K
|
|
001-35987
|
|
February 9, 2017
|
|
10.3
|
|
|
|
10.23
|
|
|
8-K
|
|
001-35987
|
|
March 14, 2017
|
|
10.2
|
|
|
|
10.24
|
|
|
8-K
|
|
001-35987
|
|
March 14, 2017
|
|
10.1
|
|
|
|
10.25*
|
|
|
10-Q
|
|
001-35987
|
|
August 11, 2017
|
|
10.3
|
|
|
|
10.26*
|
|
|
10-Q
|
|
001-35987
|
|
November 9, 2017
|
|
10.1
|
|
|
|
10.27*
|
|
|
10-Q
|
|
001-35987
|
|
November 9, 2017
|
|
10.2
|
|
|
|
10.28*
|
|
|
10-Q
|
|
001-35987
|
|
November 9, 2017
|
|
10.3
|
|
|
10.29*
|
|
|
10-Q
|
|
001-35987
|
|
November 9, 2017
|
|
10.4
|
|
|
|
10.30*
|
|
|
10-Q
|
|
001-35987
|
|
November 9, 2017
|
|
10.5
|
|
|
|
10.31*
|
|
|
10-Q
|
|
001-35987
|
|
November 9, 2017
|
|
10.6
|
|
|
|
10.32*
|
|
|
|
|
|
|
|
|
|
|
X
|
|
10.33*
|
|
|
|
|
|
|
|
|
|
|
X
|
|
10.34*
|
|
|
|
|
|
|
|
|
|
|
X
|
|
21.1
|
|
|
|
|
|
|
|
|
|
|
X
|
|
23.1
|
|
|
|
|
|
|
|
|
|
|
X
|
|
24.1
|
|
|
|
|
|
|
|
|
|
|
X
|
|
31.1
|
|
|
|
|
|
|
|
|
|
|
X
|
|
31.2
|
|
|
|
|
|
|
|
|
|
|
X
|
|
32.1
|
|
|
|
|
|
|
|
|
|
|
X
|
|
101.INS
|
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
|
|
|
|
|
|
|
|
|
|
X
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
|
|
|
|
|
X
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
ITEM 16.
|
Form 10-K Summary.
|
|
NOODLES & COMPANY
|
|
|
|
By: /s/ DAVE BOENNIGHAUSEN
|
|
Dave Boennighausen
|
|
Chief Executive Officer
|
Signature
|
Title
|
Date
|
/s/ DAVE BOENNIGHAUSEN
|
|
|
Dave Boennighausen
|
Director, Chief Executive Officer
(principal executive officer)
|
March 15, 2019
|
/s/ KEN KUICK
|
|
|
Ken Kuick
|
Chief Financial Officer
(principal financial officer)
|
March 15, 2019
|
/s/ KATHY LOCKHART
|
|
|
Kathy Lockhart
|
Vice President and Controller
(principal accounting officer)
|
March 15, 2019
|
/s/ PAUL MURPHY
|
|
|
Paul Murphy
|
Chairman
|
March 15, 2019
|
/s/ ROBERT HARTNETT
|
|
|
Robert Hartnett
|
Director
|
March 15, 2019
|
/s/ SCOTT DAHNKE
|
|
|
Scott Dahnke
|
Director
|
March 15, 2019
|
/s/ MARY EGAN
|
|
|
Mary Egan
|
Director
|
March 15, 2019
|
/s/ JEFFREY JONES
|
|
|
Jeffrey Jones
|
Director
|
March 15, 2019
|
/s/ THOMAS LYNCH
|
|
|
Thomas Lynch
|
Director
|
March 15, 2019
|
/s/ DREW MADSEN
|
|
|
Drew Madsen
|
Director
|
March 15, 2019
|
/s/ ANDREW TAUB
|
|
|
Andrew Taub
|
Director
|
March 15, 2019
|
|
|
|
|
|
NOODLES & COMPANY
|
|
|
|
a Delaware corporation
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ DAVE BOENNIGHAUSEN
|
|
|
|
Dave Boennighausen
|
|
|
|
|
|
|
EMPLOYEE:
|
|
|
|
|
|
|
|
/s/ MELISSA M. HEIDMAN
|
|
|
|
|
Melissa M. Heidman
|
NOODLES & COMPANY
|
|
EMPLOYEE:
|
||
a Delaware corporation
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
Date:
|
|
|
Date:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOODLES & COMPANY
|
|
|
|
a Delaware corporation
|
|
|
|
|
|
|
|
By:
|
/s/ DAVE BOENNIGHAUSEN
|
|
|
|
Dave Boennighausen
|
|
|
|
|
|
|
EMPLOYEE:
|
|
|
|
|
|
|
|
/s/ KEN KUICK
|
|
|
|
|
Ken Kuick
|
NOODLES & COMPANY
|
|
EMPLOYEE:
|
||
a Delaware corporation
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
Date:
|
|
|
Date:
|
|
|
|
|
|
|
|
|
|
|
|
Subsidiaries of the Registrant
|
Jurisdiction of Incorporation
|
Noodles & Company China Holdings, LTD
|
Cayman Islands
|
Noodles & Company International Holdings, LTD
|
Cayman Islands
|
TNSC, Inc.
|
Colorado, United States
|
The Noodle Shop, Co. - Colorado, Inc.
|
Colorado, United States
|
The Noodle Shop, Co. - Delaware, Inc.
|
Delaware, United States
|
The Noodle Shop, Co. - Illinois, Inc.
|
Illinois, United States
|
The Noodle Shop, Co. - Kansas, LLC
|
Kansas, United States
|
The Noodle Shop, Co. - Howard County, Inc.
|
Maryland, United States
|
The Noodle Shop, Co. - Washington County, LLC
|
Maryland, United States
|
The Noodle Shop, Co. - Harford County, LLC
|
Maryland, United States
|
The Noodle Shop, Co. - Carroll County, LLC
|
Maryland, United States
|
The Noodle Shop, Co. - Virginia, Inc.
|
Virginia, United States
|
The Noodle Shop, Co. - Wisconsin, Inc.
|
Wisconsin, United States
|
(1)
|
Registration Statement (Form S-8 No. 333-189877) pertaining to the Noodles & Company Employee Stock Purchase Plan,
|
(2)
|
Registration Statement (Form S-8 No. 333-189878) pertaining to the Noodles & Company Amended and Restated 2010 Stock Incentive Plan, and
|
(3)
|
Registration Statements (Form S-3 No. 333-217760 and No. 333-225238) pertaining to the Noodles & Company Class A Common Stock.
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
/s/ DAVE BOENNIGHAUSEN
|
|
|
Dave Boennighausen
|
|
|
Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
/s/ KEN KUICK
|
|
|
Ken Kuick
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
|
By:
|
|
/s/ DAVE BOENNIGHAUSEN
|
|
Name:
|
|
Dave Boennighausen
|
|
Title:
|
|
Chief Executive Officer
|
|
By:
|
|
/s/ KEN KUICK
|
|
Name:
|
|
Ken Kuick
|
|
Title:
|
|
Chief Financial Officer
|