ý
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QUARTERLY 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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90-0712224
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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14800 Landmark Boulevard, Suite 500
Dallas, Texas
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75254
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(Address of principal executive office)
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(Zip Code)
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Large accelerated filer
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ý
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Accelerated filer
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¨
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Non-accelerated filer
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¨
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Smaller reporting company
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¨
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(Do not check if smaller reporting company)
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Page
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PART I FINANCIAL INFORMATION
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Item 1
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Item 2
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Item 3
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Item 4
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Item 1
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Item 1A
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Item 2
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Item 3
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Item 4
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Item 5
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Item 6
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October 2, 2016
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January 3, 2016
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||||
ASSETS
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||||
Current assets:
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||||
Cash
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$
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4,862
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$
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5,281
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Trade receivables
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10,259
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9,217
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Inventories
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2,875
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2,910
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Prepaid rent
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3,539
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3,163
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Income tax receivable
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2,153
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7,448
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Prepaid expenses and other current assets
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2,842
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3,219
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Total current assets
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26,530
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31,238
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Property and equipment, net
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271,055
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248,992
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Goodwill
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123,484
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123,484
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Deferred income taxes
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15,258
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8,497
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Deferred financing costs, net
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687
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918
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Other assets
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2,473
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2,516
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Total assets
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$
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439,487
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$
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415,645
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LIABILITIES AND STOCKHOLDERS' EQUITY
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||||
Current liabilities:
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||||
Current portion of long-term debt
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$
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87
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$
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69
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Accounts payable
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23,608
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12,405
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Accrued payroll, related taxes and benefits
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12,165
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15,614
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Accrued real estate taxes
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7,584
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6,121
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Other liabilities
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12,249
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12,096
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Total current liabilities
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55,693
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46,305
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Long-term debt, net of current portion
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67,446
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72,612
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Lease financing obligations
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1,664
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1,663
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Deferred income—sale-leaseback of real estate
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28,062
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30,086
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Other liabilities
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25,735
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20,997
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Total liabilities
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178,600
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171,663
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Commitments and contingencies
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Stockholders' equity:
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Common stock, par value $.01; authorized 100,000,000 shares, issued 26,896,611 and 26,829,220 shares, respectively, and outstanding 26,746,012 and 26,571,602 shares, respectively.
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267
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266
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Additional paid-in capital
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162,348
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159,724
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Retained earnings
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98,272
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83,992
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Total stockholders' equity
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260,887
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243,982
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Total liabilities and stockholders' equity
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$
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439,487
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$
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415,645
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Three Months Ended
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Nine Months Ended
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||||||||||||
Revenues:
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October 2, 2016
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September 27, 2015
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October 2, 2016
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September 27, 2015
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Restaurant sales
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$
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181,592
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$
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171,469
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$
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538,366
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$
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505,795
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Franchise royalty revenues and fees
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664
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636
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2,099
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2,085
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Total revenues
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182,256
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172,105
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540,465
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507,880
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Costs and expenses:
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Cost of sales
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54,726
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55,409
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163,383
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160,755
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Restaurant wages and related expenses (including stock-based compensation expense of $35, $40, $111, and $147, respectively)
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47,503
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44,183
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139,536
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127,156
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Restaurant rent expense
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9,488
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8,396
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27,522
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24,451
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Other restaurant operating expenses
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25,715
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22,511
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72,366
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63,732
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Advertising expense
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7,506
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4,831
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21,507
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15,529
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General and administrative (including stock-based compensation expense of $330, $1,127, $2,523, and $3,056, respectively)
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14,520
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14,259
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42,621
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41,647
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Depreciation and amortization
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9,513
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7,596
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26,474
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21,844
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Pre-opening costs
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1,509
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1,689
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4,707
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3,851
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Impairment and other lease charges
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18,513
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387
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18,607
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481
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Other income
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—
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(165
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)
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(238
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)
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(679
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)
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Total operating expenses
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188,993
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159,096
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516,485
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458,767
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Income (loss) from operations
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(6,737
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)
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13,009
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23,980
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49,113
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Interest expense
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542
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493
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1,635
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1,345
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Income (loss) before income taxes
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(7,279
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)
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12,516
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22,345
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47,768
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Provision for (benefit from) income taxes
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(2,748
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)
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4,571
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8,065
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18,073
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Net income (loss)
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$
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(4,531
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)
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$
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7,945
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$
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14,280
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$
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29,695
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Basic net income (loss) per share
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$
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(0.17
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)
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$
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0.30
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$
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0.53
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$
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1.11
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Diluted net income (loss) per share
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$
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(0.17
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)
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$
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0.30
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$
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0.53
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$
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1.11
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Basic weighted average common shares outstanding
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26,716,219
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26,557,940
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26,658,739
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26,494,599
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Diluted weighted average common shares outstanding
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26,716,219
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26,565,575
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26,665,091
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26,501,951
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Number of
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|
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Additional
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Total
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|||||||||
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Common
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Common
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Paid-In
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Retained
|
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Stockholders'
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|||||||||
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Stock Shares
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Stock
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Capital
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Earnings
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Equity
|
|||||||||
Balance at December 28, 2014
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26,358,448
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$
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264
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$
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153,867
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$
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45,456
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$
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199,587
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Stock-based compensation
|
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—
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—
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3,203
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—
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|
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3,203
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Vesting of restricted shares and related tax benefit
|
|
210,983
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2
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1,525
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|
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—
|
|
|
1,527
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|
||||
Net income
|
|
—
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|
|
—
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|
|
—
|
|
|
29,695
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|
|
29,695
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|
||||
Balance at September 27, 2015
|
|
26,569,431
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|
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$
|
266
|
|
|
$
|
158,595
|
|
|
$
|
75,151
|
|
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$
|
234,012
|
|
|
|
|
|
|
|
|
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|||||||||
Balance at January 3, 2016
|
|
26,571,602
|
|
|
$
|
266
|
|
|
$
|
159,724
|
|
|
$
|
83,992
|
|
|
$
|
243,982
|
|
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
2,634
|
|
|
—
|
|
|
2,634
|
|
||||
Vesting of restricted shares and related tax deficiency
|
|
174,410
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|
|
1
|
|
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(10
|
)
|
|
—
|
|
|
(9
|
)
|
||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,280
|
|
|
14,280
|
|
||||
Balance at October 2, 2016
|
|
26,746,012
|
|
|
$
|
267
|
|
|
$
|
162,348
|
|
|
$
|
98,272
|
|
|
$
|
260,887
|
|
|
Nine Months Ended
|
||||||
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October 2, 2016
|
|
September 27, 2015
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
14,280
|
|
|
$
|
29,695
|
|
Adjustments to reconcile net income to net cash provided from operating activities:
|
|
|
|
||||
Loss (gain) on disposals of property and equipment
|
178
|
|
|
(236
|
)
|
||
Stock-based compensation
|
2,634
|
|
|
3,203
|
|
||
Impairment and other lease charges
|
18,607
|
|
|
481
|
|
||
Depreciation and amortization
|
26,474
|
|
|
21,844
|
|
||
Amortization of deferred financing costs
|
232
|
|
|
232
|
|
||
Amortization of deferred gains from sale-leaseback transactions
|
(2,687
|
)
|
|
(2,713
|
)
|
||
Deferred income taxes
|
(6,761
|
)
|
|
2,226
|
|
||
Changes in other operating assets and liabilities
|
13,400
|
|
|
4,236
|
|
||
Net cash provided from operating activities
|
66,357
|
|
|
58,968
|
|
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Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures:
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|
|
|
||||
New restaurant development
|
(52,828
|
)
|
|
(55,057
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)
|
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Restaurant remodeling
|
(956
|
)
|
|
(2,723
|
)
|
||
Other restaurant capital expenditures
|
(4,625
|
)
|
|
(5,197
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)
|
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Corporate and restaurant information systems
|
(4,634
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)
|
|
(3,242
|
)
|
||
Total capital expenditures
|
(63,043
|
)
|
|
(66,219
|
)
|
||
Properties purchased for sale-leaseback
|
(2,663
|
)
|
|
—
|
|
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Proceeds from sale-leaseback transactions
|
3,642
|
|
|
—
|
|
||
Proceeds from disposals of other properties
|
226
|
|
|
149
|
|
||
Net cash used in investing activities
|
(61,838
|
)
|
|
(66,070
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Excess tax benefit from vesting of restricted shares
|
211
|
|
|
1,527
|
|
||
Borrowings on revolving credit facility
|
14,400
|
|
|
23,500
|
|
||
Repayments on revolving credit facility
|
(19,500
|
)
|
|
(22,000
|
)
|
||
Principal payments on capital leases
|
(49
|
)
|
|
(40
|
)
|
||
Net cash (used in) provided by financing activities
|
(4,938
|
)
|
|
2,987
|
|
||
Net decrease in cash
|
(419
|
)
|
|
(4,115
|
)
|
||
Cash, beginning of period
|
5,281
|
|
|
5,087
|
|
||
Cash, end of period
|
$
|
4,862
|
|
|
$
|
972
|
|
Supplemental disclosures:
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|
|
|
||||
Interest paid on long-term debt
|
$
|
1,393
|
|
|
$
|
1,263
|
|
Interest paid on lease financing obligations
|
$
|
106
|
|
|
$
|
105
|
|
Accruals for capital expenditures
|
$
|
9,591
|
|
|
$
|
5,325
|
|
Income tax payments, net
|
$
|
9,540
|
|
|
$
|
13,101
|
|
•
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Current Assets and Liabilities. The carrying values reported on the balance sheet of cash, accounts receivable and accounts payable approximate fair value because of the short maturity of those financial instruments.
|
•
|
Revolving Credit Borrowings. The fair value of outstanding revolving credit borrowings under the Company's senior credit facility, which is considered Level 2, is based on current LIBOR rates. At October 2, 2016 and January 3, 2016, the fair value and carrying value of the Company's senior credit facility were approximately $65.9 million and $71.0 million, respectively.
|
|
October 2, 2016
|
|
January 3, 2016
|
||||
Accrued workers' compensation and general liability claims
|
$
|
6,717
|
|
|
$
|
5,540
|
|
Sales and property taxes
|
2,531
|
|
|
3,031
|
|
||
Accrued occupancy costs
|
934
|
|
|
980
|
|
||
Other
|
2,067
|
|
|
2,545
|
|
||
|
$
|
12,249
|
|
|
$
|
12,096
|
|
|
October 2, 2016
|
|
January 3, 2016
|
||||
Accrued occupancy costs
|
$
|
17,602
|
|
|
$
|
15,349
|
|
Deferred compensation
|
1,797
|
|
|
1,665
|
|
||
Accrued workers' compensation and general liability claims
|
1,910
|
|
|
697
|
|
||
Other
|
4,426
|
|
|
3,286
|
|
||
|
$
|
25,735
|
|
|
$
|
20,997
|
|
|
Nine Months Ended October 2, 2016
|
|
Year Ended January 3, 2016
|
||||
Balance, beginning of period
|
$
|
1,832
|
|
|
$
|
1,251
|
|
Provisions for restaurant closures
|
—
|
|
|
554
|
|
||
Additional lease charges, net of (recoveries)
|
—
|
|
|
258
|
|
||
Payments, net
|
(411
|
)
|
|
(358
|
)
|
||
Other adjustments
|
122
|
|
|
127
|
|
||
Balance, end of period
|
$
|
1,543
|
|
|
$
|
1,832
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
October 2, 2016
|
|
September 27, 2015
|
|
October 2, 2016
|
|
September 27, 2015
|
||||||||
Pollo Tropical
|
$
|
18,390
|
|
|
$
|
387
|
|
|
$
|
18,390
|
|
|
$
|
387
|
|
Taco Cabana
|
123
|
|
|
—
|
|
|
217
|
|
|
94
|
|
||||
|
$
|
18,513
|
|
|
$
|
387
|
|
|
$
|
18,607
|
|
|
$
|
481
|
|
|
Non-Vested Shares
|
|
Restricted Stock Units
|
||||||||||
|
|
|
Weighted
|
|
|
|
Weighted
|
||||||
|
|
|
Average
|
|
|
|
Average
|
||||||
|
|
|
Grant Date
|
|
|
|
Grant Date
|
||||||
|
Shares
|
|
Price
|
|
Units
|
|
Price
|
||||||
Outstanding at January 3, 2016
|
257,618
|
|
|
$
|
30.69
|
|
|
42,840
|
|
|
$
|
56.46
|
|
Granted
|
97,859
|
|
|
34.98
|
|
|
39,453
|
|
|
35.25
|
|
||
Vested/Released
|
(173,888
|
)
|
|
24.07
|
|
|
(522
|
)
|
|
51.23
|
|
||
Forfeited
|
(30,990
|
)
|
|
40.77
|
|
|
(24,751
|
)
|
|
45.73
|
|
||
Outstanding at October 2, 2016
|
150,599
|
|
|
$
|
38.16
|
|
|
57,020
|
|
|
$
|
46.48
|
|
Three Months Ended
|
|
Pollo Tropical
|
|
Taco Cabana
|
|
Other
|
|
Consolidated
|
||||||||
October 2, 2016:
|
|
|
|
|
|
|
|
|
||||||||
Restaurant sales
|
|
$
|
103,353
|
|
|
$
|
78,239
|
|
|
$
|
—
|
|
|
$
|
181,592
|
|
Franchise revenue
|
|
474
|
|
|
190
|
|
|
—
|
|
|
664
|
|
||||
Cost of sales
|
|
32,565
|
|
|
22,161
|
|
|
—
|
|
|
54,726
|
|
||||
Restaurant wages and related expenses (1)
|
|
24,383
|
|
|
23,120
|
|
|
—
|
|
|
47,503
|
|
||||
Restaurant rent expense
|
|
5,059
|
|
|
4,429
|
|
|
—
|
|
|
9,488
|
|
||||
Other restaurant operating expenses
|
|
14,361
|
|
|
11,354
|
|
|
—
|
|
|
25,715
|
|
||||
Advertising expense
|
|
5,026
|
|
|
2,480
|
|
|
—
|
|
|
7,506
|
|
||||
General and administrative expense (2)
|
|
9,091
|
|
|
5,355
|
|
|
74
|
|
|
14,520
|
|
||||
Depreciation and amortization
|
|
6,337
|
|
|
3,176
|
|
|
—
|
|
|
9,513
|
|
||||
Pre-opening costs
|
|
1,456
|
|
|
53
|
|
|
—
|
|
|
1,509
|
|
||||
Impairment and other lease charges
|
|
18,390
|
|
|
123
|
|
|
—
|
|
|
18,513
|
|
||||
Interest expense
|
|
229
|
|
|
313
|
|
|
—
|
|
|
542
|
|
||||
Income (loss) before taxes
|
|
(13,070
|
)
|
|
5,865
|
|
|
(74
|
)
|
|
(7,279
|
)
|
||||
Capital expenditures
|
|
18,146
|
|
|
2,791
|
|
|
(132
|
)
|
|
20,805
|
|
||||
September 27, 2015:
|
|
|
|
|
|
|
|
|
||||||||
Restaurant sales
|
|
$
|
91,440
|
|
|
$
|
80,029
|
|
|
$
|
—
|
|
|
$
|
171,469
|
|
Franchise revenue
|
|
468
|
|
|
168
|
|
|
—
|
|
|
636
|
|
||||
Cost of sales
|
|
31,054
|
|
|
24,355
|
|
|
—
|
|
|
55,409
|
|
||||
Restaurant wages and related expenses (1)
|
|
20,984
|
|
|
23,199
|
|
|
—
|
|
|
44,183
|
|
||||
Restaurant rent expense
|
|
4,158
|
|
|
4,238
|
|
|
—
|
|
|
8,396
|
|
||||
Other restaurant operating expenses
|
|
11,741
|
|
|
10,770
|
|
|
—
|
|
|
22,511
|
|
||||
Advertising expense
|
|
2,448
|
|
|
2,383
|
|
|
—
|
|
|
4,831
|
|
||||
General and administrative expense (2)
|
|
8,419
|
|
|
5,840
|
|
|
—
|
|
|
14,259
|
|
||||
Depreciation and amortization
|
|
4,504
|
|
|
3,092
|
|
|
—
|
|
|
7,596
|
|
||||
Pre-opening costs
|
|
1,597
|
|
|
92
|
|
|
—
|
|
|
1,689
|
|
||||
Impairment and other lease charges
|
|
387
|
|
|
—
|
|
|
—
|
|
|
387
|
|
||||
Interest expense
|
|
204
|
|
|
289
|
|
|
—
|
|
|
493
|
|
||||
Income before taxes
|
|
6,567
|
|
|
5,949
|
|
|
—
|
|
|
12,516
|
|
||||
Capital expenditures
|
|
22,960
|
|
|
3,847
|
|
|
(488
|
)
|
|
26,319
|
|
Nine Months Ended
|
|
Pollo Tropical
|
|
Taco Cabana
|
|
Other
|
|
Consolidated
|
||||||||
October 2, 2016:
|
|
|
|
|
|
|
|
|
||||||||
Restaurant sales
|
|
$
|
304,138
|
|
|
$
|
234,228
|
|
|
$
|
—
|
|
|
$
|
538,366
|
|
Franchise revenue
|
|
1,559
|
|
|
540
|
|
|
—
|
|
|
2,099
|
|
||||
Cost of sales
|
|
96,435
|
|
|
66,948
|
|
|
—
|
|
|
163,383
|
|
||||
Restaurant wages and related expenses (1)
|
|
71,259
|
|
|
68,277
|
|
|
—
|
|
|
139,536
|
|
||||
Restaurant rent expense
|
|
14,528
|
|
|
12,994
|
|
|
—
|
|
|
27,522
|
|
||||
Other restaurant operating expenses
|
|
40,654
|
|
|
31,712
|
|
|
—
|
|
|
72,366
|
|
||||
Advertising expense
|
|
12,473
|
|
|
9,034
|
|
|
—
|
|
|
21,507
|
|
||||
General and administrative expense (2)
|
|
25,619
|
|
|
16,180
|
|
|
822
|
|
|
42,621
|
|
||||
Depreciation and amortization
|
|
17,043
|
|
|
9,431
|
|
|
—
|
|
|
26,474
|
|
||||
Pre-opening costs
|
|
4,365
|
|
|
342
|
|
|
—
|
|
|
4,707
|
|
||||
Impairment and other lease charges
|
|
18,390
|
|
|
217
|
|
|
—
|
|
|
18,607
|
|
||||
Interest expense
|
|
708
|
|
|
927
|
|
|
—
|
|
|
1,635
|
|
||||
Income (loss) before taxes
|
|
4,235
|
|
|
18,932
|
|
|
(822
|
)
|
|
22,345
|
|
||||
Capital expenditures
|
|
52,713
|
|
|
8,058
|
|
|
2,272
|
|
|
63,043
|
|
||||
September 27, 2015:
|
|
|
|
|
|
|
|
|
||||||||
Restaurant sales
|
|
$
|
267,898
|
|
|
$
|
237,897
|
|
|
$
|
—
|
|
|
$
|
505,795
|
|
Franchise revenue
|
|
1,626
|
|
|
459
|
|
|
—
|
|
|
2,085
|
|
||||
Cost of sales
|
|
89,687
|
|
|
71,068
|
|
|
—
|
|
|
160,755
|
|
||||
Restaurant wages and related expenses (1)
|
|
58,989
|
|
|
68,167
|
|
|
—
|
|
|
127,156
|
|
||||
Restaurant rent expense
|
|
11,627
|
|
|
12,824
|
|
|
—
|
|
|
24,451
|
|
||||
Other restaurant operating expenses
|
|
32,723
|
|
|
31,009
|
|
|
—
|
|
|
63,732
|
|
||||
Advertising expense
|
|
6,710
|
|
|
8,819
|
|
|
—
|
|
|
15,529
|
|
||||
General and administrative expense (2)
|
|
23,867
|
|
|
17,780
|
|
|
—
|
|
|
41,647
|
|
||||
Depreciation and amortization
|
|
12,583
|
|
|
9,261
|
|
|
—
|
|
|
21,844
|
|
||||
Pre-opening costs
|
|
3,611
|
|
|
240
|
|
|
—
|
|
|
3,851
|
|
||||
Impairment and other lease charges
|
|
387
|
|
|
94
|
|
|
—
|
|
|
481
|
|
||||
Interest expense
|
|
565
|
|
|
780
|
|
|
—
|
|
|
1,345
|
|
||||
Income before taxes
|
|
29,065
|
|
|
18,703
|
|
|
—
|
|
|
47,768
|
|
||||
Capital expenditures
|
|
55,104
|
|
|
9,505
|
|
|
1,610
|
|
|
66,219
|
|
||||
Identifiable Assets:
|
|
|
|
|
|
|
|
|
||||||||
October 2, 2016:
|
|
260,296
|
|
|
162,729
|
|
|
16,462
|
|
|
439,487
|
|
||||
January 3, 2016
|
|
237,065
|
|
|
165,549
|
|
|
13,031
|
|
|
415,645
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
October 2, 2016
|
|
September 27, 2015
|
|
October 2, 2016
|
|
September 27, 2015
|
||||||||
Basic and diluted net income per share:
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
|
$
|
(4,531
|
)
|
|
$
|
7,945
|
|
|
$
|
14,280
|
|
|
$
|
29,695
|
|
Less: income allocated to participating securities
|
|
—
|
|
|
(81
|
)
|
|
(138
|
)
|
|
(359
|
)
|
||||
Net income (loss) available to common stockholders
|
|
$
|
(4,531
|
)
|
|
$
|
7,864
|
|
|
$
|
14,142
|
|
|
$
|
29,336
|
|
Weighted average common shares, basic
|
|
26,716,219
|
|
|
26,557,940
|
|
|
26,658,739
|
|
|
26,494,599
|
|
||||
Restricted stock units
|
|
—
|
|
|
7,635
|
|
|
6,352
|
|
|
7,352
|
|
||||
Weighted average common shares, diluted
|
|
26,716,219
|
|
|
26,565,575
|
|
|
26,665,091
|
|
|
26,501,951
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Basic net income (loss) per common share
|
|
$
|
(0.17
|
)
|
|
$
|
0.30
|
|
|
$
|
0.53
|
|
|
$
|
1.11
|
|
Diluted net income (loss) per common share
|
|
$
|
(0.17
|
)
|
|
$
|
0.30
|
|
|
$
|
0.53
|
|
|
$
|
1.11
|
|
•
|
Net income (loss) decreased $12.5 million to $(4.5) million in the third quarter of 2016, or $(0.17) per diluted share, compared to net income of $7.9 million, or $0.30 per diluted share in the third quarter of 2015, primarily due to impairment charges related to sixteen Pollo Tropical locations, new restaurant performance, lower comparable restaurant sales and higher operating expenses.
|
•
|
Total revenues increased 5.9% in the third quarter of 2016 to $182.3 million compared to $172.1 million in the third quarter of 2015, driven primarily by an increase in the number of company-owned restaurants, partially offset by a decrease in comparable restaurant sales. Comparable restaurant sales decreased 4.1% for our Taco Cabana restaurants resulting primarily from a decrease in comparable guest traffic of 3.5% and a decrease in average check of 0.6%. Comparable restaurant sales decreased 1.0% for our Pollo Tropical restaurants resulting primarily from a decrease in comparable guest traffic of 2.5% partially offset by an increase in average check of 1.5%.
|
•
|
During the third quarter of 2016, we opened nine company-owned Pollo Tropical restaurants. During the third quarter of 2015, we opened 14 company-owned Pollo Tropical restaurants and one Taco Cabana restaurant and permanently closed one company-owned Pollo Tropical restaurant and one company-owned Taco Cabana restaurant.
|
•
|
Adjusted EBITDA decreased $0.3 million in the third quarter of 2016 to $21.7 million compared to $22.0 million in the third quarter of 2015. Revenue growth in the third quarter of 2016 was offset by lower profitability as a result of new restaurant performance, lower comparable restaurant sales, higher operating expenses and the write-off of site costs related to locations that we decided not to develop. Adjusted EBITDA is a non-GAAP financial measure of performance. For a discussion of our use of Adjusted EBITDA and a reconciliation from net income to Adjusted EBITDA, see "Management's Use of Non-GAAP Financial Measures".
|
|
Pollo Tropical
|
|
Taco Cabana
|
||||||||||||||
|
Owned
|
|
Franchised
|
|
Total
|
|
Owned
|
|
Franchised
|
|
Total
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
January 3, 2016
|
155
|
|
|
35
|
|
|
190
|
|
|
162
|
|
|
6
|
|
|
168
|
|
New
|
6
|
|
|
1
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Closed
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
April 3, 2016
|
161
|
|
|
36
|
|
|
197
|
|
|
162
|
|
|
6
|
|
|
168
|
|
New
|
11
|
|
|
2
|
|
|
13
|
|
|
2
|
|
|
1
|
|
|
3
|
|
Closed
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
July 3, 2016
|
172
|
|
|
37
|
|
|
209
|
|
|
164
|
|
|
7
|
|
|
171
|
|
New
|
9
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Closed
|
—
|
|
|
(3
|
)
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
October 2, 2016
|
181
|
|
|
34
|
|
|
215
|
|
|
164
|
|
|
7
|
|
|
171
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
December 28, 2014
|
124
|
|
|
37
|
|
|
161
|
|
|
167
|
|
|
7
|
|
|
174
|
|
New
|
6
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Closed
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
March 29, 2015
|
130
|
|
|
37
|
|
|
167
|
|
|
164
|
|
|
7
|
|
|
171
|
|
New
|
6
|
|
|
—
|
|
|
6
|
|
|
1
|
|
|
—
|
|
|
1
|
|
Closed
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|
(1
|
)
|
|
(3
|
)
|
June 28, 2015
|
136
|
|
|
35
|
|
|
171
|
|
|
163
|
|
|
6
|
|
|
169
|
|
New
|
14
|
|
|
—
|
|
|
14
|
|
|
1
|
|
|
—
|
|
|
1
|
|
Closed
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
September 27, 2015
|
149
|
|
|
35
|
|
|
184
|
|
|
163
|
|
|
6
|
|
|
169
|
|
|
Three Months Ended
|
||||||||||||||||
|
October 2, 2016
|
|
September 27, 2015
|
|
October 2, 2016
|
|
September 27, 2015
|
|
October 2, 2016
|
|
September 27, 2015
|
||||||
|
Pollo Tropical
|
|
Taco Cabana
|
|
Consolidated
|
||||||||||||
Restaurant sales:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Pollo Tropical
|
|
|
|
|
|
|
|
|
56.9
|
%
|
|
53.3
|
%
|
||||
Taco Cabana
|
|
|
|
|
|
|
|
|
43.1
|
%
|
|
46.7
|
%
|
||||
Consolidated restaurant sales
|
|
|
|
|
|
|
|
|
100.0
|
%
|
|
100.0
|
%
|
||||
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cost of sales
|
31.5
|
%
|
|
34.0
|
%
|
|
28.3
|
%
|
|
30.4
|
%
|
|
30.1
|
%
|
|
32.3
|
%
|
Restaurant wages and related expenses
|
23.6
|
%
|
|
22.9
|
%
|
|
29.6
|
%
|
|
29.0
|
%
|
|
26.2
|
%
|
|
25.8
|
%
|
Restaurant rent expense
|
4.9
|
%
|
|
4.5
|
%
|
|
5.7
|
%
|
|
5.3
|
%
|
|
5.2
|
%
|
|
4.9
|
%
|
Other restaurant operating expenses
|
13.9
|
%
|
|
12.8
|
%
|
|
14.5
|
%
|
|
13.5
|
%
|
|
14.2
|
%
|
|
13.1
|
%
|
Advertising expense
|
4.9
|
%
|
|
2.7
|
%
|
|
3.2
|
%
|
|
3.0
|
%
|
|
4.1
|
%
|
|
2.8
|
%
|
Pre-opening costs
|
1.4
|
%
|
|
1.7
|
%
|
|
0.1
|
%
|
|
0.1
|
%
|
|
0.8
|
%
|
|
1.0
|
%
|
Pollo Tropical:
|
|
||
Decrease in comparable restaurant sales
|
$
|
(0.8
|
)
|
Incremental sales related to new restaurants, net of closed restaurants
|
12.7
|
|
|
Total increase
|
$
|
11.9
|
|
|
|
||
Taco Cabana:
|
|
||
Decrease in comparable restaurant sales
|
$
|
(3.2
|
)
|
Incremental sales related to new restaurants, net of closed restaurants
|
1.4
|
|
|
Total decrease
|
$
|
(1.8
|
)
|
Taco Cabana:
|
|
|
Cost of sales:
|
|
|
Lower commodity costs
|
(2.1
|
)%
|
Menu price increases
|
(0.4
|
)%
|
Lower operating inefficiencies
|
(0.2
|
)%
|
Higher promotions and discounts
|
0.5
|
%
|
Sales mix
|
0.4
|
%
|
Other
|
(0.3
|
)%
|
Net decrease in cost of sales as a percentage of restaurant sales
|
(2.1
|
)%
|
|
|
|
Restaurant wages and related expenses:
|
|
|
Impact of lower sales volumes and higher labor costs for comparable restaurants
|
1.5
|
%
|
Impact of closing lower sales volume restaurants, net of new restaurants
|
(0.1
|
)%
|
Lower workers compensation costs
|
(0.4
|
)%
|
Lower incentive bonus costs
|
(0.3
|
)%
|
Other
|
(0.1
|
)%
|
Net increase in restaurant wages and related costs as a percentage of restaurant sales
|
0.6
|
%
|
|
|
|
Other operating expenses:
|
|
|
Higher repairs and maintenance costs
|
0.2
|
%
|
Higher insurance costs
|
0.4
|
%
|
Other
|
0.4
|
%
|
Net increase in other restaurant operating expenses as a percentage of restaurant sales
|
1.0
|
%
|
|
|
|
Advertising expense:
|
|
|
Increase in advertising
|
0.2
|
%
|
Net increase in advertising expense as a percentage of restaurant sales
|
0.2
|
%
|
|
|
|
Pre-opening costs:
|
|
|
Net change in pre-opening costs as a percentage of restaurant sales
|
—
|
%
|
|
Nine Months Ended
|
||||||||||||||||
|
October 2, 2016
|
|
September 27, 2015
|
|
October 2, 2016
|
|
September 27, 2015
|
|
October 2, 2016
|
|
September 27, 2015
|
||||||
|
Pollo Tropical
|
|
Taco Cabana
|
|
Consolidated
|
||||||||||||
Restaurant sales:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Pollo Tropical
|
|
|
|
|
|
|
|
|
56.5
|
%
|
|
53.0
|
%
|
||||
Taco Cabana
|
|
|
|
|
|
|
|
|
43.5
|
%
|
|
47.0
|
%
|
||||
Consolidated restaurant sales
|
|
|
|
|
|
|
|
|
100.0
|
%
|
|
100.0
|
%
|
||||
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cost of sales
|
31.7
|
%
|
|
33.5
|
%
|
|
28.6
|
%
|
|
29.9
|
%
|
|
30.3
|
%
|
|
31.8
|
%
|
Restaurant wages and related expenses
|
23.4
|
%
|
|
22.0
|
%
|
|
29.1
|
%
|
|
28.7
|
%
|
|
25.9
|
%
|
|
25.1
|
%
|
Restaurant rent expense
|
4.8
|
%
|
|
4.3
|
%
|
|
5.5
|
%
|
|
5.4
|
%
|
|
5.1
|
%
|
|
4.8
|
%
|
Other restaurant operating expenses
|
13.4
|
%
|
|
12.2
|
%
|
|
13.5
|
%
|
|
13.0
|
%
|
|
13.4
|
%
|
|
12.6
|
%
|
Advertising expense
|
4.1
|
%
|
|
2.5
|
%
|
|
3.9
|
%
|
|
3.7
|
%
|
|
4.0
|
%
|
|
3.1
|
%
|
Pre-opening costs
|
1.4
|
%
|
|
1.3
|
%
|
|
0.1
|
%
|
|
0.1
|
%
|
|
0.9
|
%
|
|
0.8
|
%
|
Pollo Tropical:
|
|
||
Decrease in comparable restaurant sales
|
$
|
(2.0
|
)
|
Incremental sales related to new restaurants, net of closed restaurants
|
38.2
|
|
|
Total increase
|
$
|
36.2
|
|
|
|
||
Taco Cabana:
|
|
||
Decrease in comparable restaurant sales
|
$
|
(5.0
|
)
|
Incremental sales related to new restaurants, net of closed restaurants
|
1.3
|
|
|
Total decrease
|
$
|
(3.7
|
)
|
Pollo Tropical:
|
|
|
Cost of sales:
|
|
|
Lower commodity costs
|
(1.1
|
)%
|
Sales mix
|
(1.0
|
)%
|
Menu price increases
|
(0.4
|
)%
|
Operating inefficiencies
|
0.6
|
%
|
Other
|
0.1
|
%
|
Net decrease in cost of sales as a percentage of restaurant sales
|
(1.8
|
)%
|
|
|
|
Restaurant wages and related expenses:
|
|
|
Higher labor costs and impact of lower sales volumes for comparable restaurants
|
0.5
|
%
|
Higher labor costs and impact of lower sales volumes for new restaurants(1)
|
0.9
|
%
|
Higher workers compensation costs
|
0.2
|
%
|
Lower incentive bonus costs
|
(0.2
|
)%
|
Net increase in restaurant wages and related costs as a percentage of restaurant sales
|
1.4
|
%
|
|
|
|
Other operating expenses(2):
|
|
|
Higher repairs and maintenance costs
|
0.5
|
%
|
Higher real estate taxes generally related to new restaurants
|
0.4
|
%
|
Other
|
0.3
|
%
|
Net increase in other restaurant operating expenses as a percentage of restaurant sales
|
1.2
|
%
|
|
|
|
Advertising expense:
|
|
|
Increase in advertising
|
1.6
|
%
|
Net increase in advertising expense as a percentage of restaurant sales
|
1.6
|
%
|
|
|
|
Pre-opening costs:
|
|
|
Timing of restaurant openings
|
0.1
|
%
|
Net increase in pre-opening costs as a percentage of restaurant sales
|
0.1
|
%
|
Taco Cabana:
|
|
|
Cost of sales:
|
|
|
Lower commodity costs
|
(1.1
|
)%
|
Menu price increases
|
(0.6
|
)%
|
Menu board changes
|
0.3
|
%
|
Operating inefficiencies
|
0.2
|
%
|
Other
|
(0.1
|
)%
|
Net decrease in cost of sales as a percentage of restaurant sales
|
(1.3
|
)%
|
|
|
|
Restaurant wages and related expenses:
|
|
|
Higher labor costs and impact of lower sales volumes for comparable restaurants
|
1.1
|
%
|
Impact of closing lower sales volume restaurants, net of new restaurants
|
(0.2
|
)%
|
Lower medical benefit costs
|
(0.3
|
)%
|
Other
|
(0.2
|
)%
|
Net increase in restaurant wages and related costs as a percentage of restaurant sales
|
0.4
|
%
|
|
|
|
Other operating expenses:
|
|
|
Higher repairs and maintenance costs
|
0.3
|
%
|
Higher insurance costs
|
0.2
|
%
|
Lower utilities
|
(0.2
|
)%
|
Other
|
0.2
|
%
|
Net increase in other restaurant operating expenses as a percentage of restaurant sales
|
0.5
|
%
|
|
|
|
Advertising expense:
|
|
|
Increase in advertising
|
0.2
|
%
|
Net increase in advertising expense as a percentage of restaurant sales
|
0.2
|
%
|
|
|
|
Pre-opening costs:
|
|
|
Net change in pre-opening costs as a percentage of restaurant sales
|
—
|
%
|
•
|
restaurant operations are primarily conducted on a cash basis;
|
•
|
rapid turnover results in a limited investment in inventories; and
|
•
|
cash from sales is usually received before related liabilities for food, supplies and payroll become due.
|
|
Pollo
Tropical
|
|
Taco
Cabana
|
|
Other
|
|
Consolidated
|
||||||||
Nine Months Ended October 2, 2016:
|
|
|
|
|
|
|
|
||||||||
New restaurant development
|
$
|
48,857
|
|
|
$
|
3,971
|
|
|
$
|
—
|
|
|
$
|
52,828
|
|
Restaurant remodeling
|
956
|
|
|
—
|
|
|
—
|
|
|
956
|
|
||||
Other restaurant capital expenditures(1)
|
1,508
|
|
|
3,117
|
|
|
—
|
|
|
4,625
|
|
||||
Corporate and restaurant information systems
|
1,392
|
|
|
970
|
|
|
2,272
|
|
|
4,634
|
|
||||
Total capital expenditures
|
$
|
52,713
|
|
|
$
|
8,058
|
|
|
$
|
2,272
|
|
|
$
|
63,043
|
|
Number of new restaurant openings
|
26
|
|
|
2
|
|
|
|
|
28
|
|
|||||
Nine Months Ended September 27, 2015:
|
|
|
|
|
|
|
|
||||||||
New restaurant development
|
$
|
51,175
|
|
|
$
|
3,882
|
|
|
$
|
—
|
|
|
$
|
55,057
|
|
Restaurant remodeling
|
826
|
|
|
1,897
|
|
|
—
|
|
|
2,723
|
|
||||
Other restaurant capital expenditures(1)
|
2,078
|
|
|
3,119
|
|
|
—
|
|
|
5,197
|
|
||||
Corporate and restaurant information systems
|
1,025
|
|
|
607
|
|
|
1,610
|
|
|
3,242
|
|
||||
Total capital expenditures
|
$
|
55,104
|
|
|
$
|
9,505
|
|
|
$
|
1,610
|
|
|
$
|
66,219
|
|
Number of new restaurant openings
|
26
|
|
|
2
|
|
|
|
|
28
|
|
•
|
such financial information does not reflect our capital expenditures, future requirements for capital expenditures or contractual commitments to purchase capital equipment;
|
•
|
such financial information does not reflect interest expense or the cash requirements necessary to service payments on our debt;
|
•
|
although depreciation and amortization are non-cash charges, the assets that we currently depreciate and amortize will likely have to be replaced in the future, and such financial information does not reflect the cash required to fund such replacements; and
|
•
|
such financial information does not reflect the effect of earnings or charges resulting from matters that our management does not consider to be indicative of our ongoing operations. However, some of these charges (such as impairment and other lease charges, other income and expense and stock-based compensation expense) have recurred and may recur.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(Dollars in thousands)
|
October 2, 2016
|
|
September 27, 2015
|
|
October 2, 2016
|
|
September 27, 2015
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
$
|
(4,531
|
)
|
|
$
|
7,945
|
|
|
$
|
14,280
|
|
|
$
|
29,695
|
|
|
|
|
|
|
|
|
|
||||||||
Add:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
9,513
|
|
|
7,596
|
|
|
26,474
|
|
|
21,844
|
|
||||
Impairment and other lease charges
|
18,513
|
|
|
387
|
|
|
18,607
|
|
|
481
|
|
||||
Interest expense
|
542
|
|
|
493
|
|
|
1,635
|
|
|
1,345
|
|
||||
Provision for (benefit from) income taxes
|
(2,748
|
)
|
|
4,571
|
|
|
8,065
|
|
|
18,073
|
|
||||
Stock-based compensation expense
|
365
|
|
|
1,167
|
|
|
2,634
|
|
|
3,203
|
|
||||
Other income
|
—
|
|
|
(165
|
)
|
|
(238
|
)
|
|
(679
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA:
|
|
|
|
|
|
|
|
||||||||
Pollo Tropical
|
$
|
12,087
|
|
|
$
|
12,120
|
|
|
$
|
41,828
|
|
|
$
|
43,993
|
|
Taco Cabana
|
9,641
|
|
|
9,874
|
|
|
30,451
|
|
|
29,969
|
|
||||
Fiesta
|
(74
|
)
|
|
—
|
|
|
(822
|
)
|
|
—
|
|
||||
Consolidated
|
$
|
21,654
|
|
|
$
|
21,994
|
|
|
$
|
71,457
|
|
|
$
|
73,962
|
|
•
|
Increases in food and other commodity costs;
|
•
|
Risks associated with the expansion of our business, including increasing real estate and construction costs;
|
•
|
Risks associated with food borne illness or other food safety issues, including negative publicity through traditional
|
•
|
Our ability to manage our growth and successfully implement our business strategy;
|
•
|
Labor and employment benefit costs, including the impact of increases in federal and state minimum wages, increases in exempt status salary levels and healthcare costs imposed by the Affordable Care Act;
|
•
|
Cyber security breaches;
|
•
|
General economic conditions, particularly in the retail sector;
|
•
|
Competitive conditions;
|
•
|
Weather conditions;
|
•
|
Significant disruptions in service or supply by any of our suppliers or distributors;
|
•
|
Increases in employee injury and general liability claims;
|
•
|
Changes in consumer perception of dietary health and food safety;
|
•
|
Regulatory factors;
|
•
|
Fuel prices;
|
•
|
The outcome of pending or future legal claims or proceedings;
|
•
|
Environmental conditions and regulations;
|
•
|
Our borrowing costs;
|
•
|
The availability and terms of necessary or desirable financing or refinancing and other related risks and uncertainties;
|
•
|
The risk of an act of terrorism or escalation of any insurrection or armed conflict involving the United States or any other national or international calamity; and
|
•
|
Factors that affect the restaurant industry generally, including product recalls, liability if our products cause injury, ingredient disclosure and labeling laws and regulations.
|
|
|
|
Exhibit
No.
|
|
|
|
|
|
10.1
|
|
Agreement dated as of November 4, 2016 between Fiesta Restaurant Group, Inc. and Danny K. Meisenheimer.+
|
|
|
|
10.2
|
|
Agreement dated as of November 4, 2016 between Fiesta Restaurant Group, Inc. and Lynn Schweinfurth.+
|
|
|
|
10.3
|
|
Agreement dated as of November 4, 2016 between Fiesta Restaurant Group, Inc. and Joseph A. Zirkman.+
|
|
|
|
10.4
|
|
Agreement dated as of September 27, 2016 between Fiesta Restaurant Group, Inc. and Timothy P. Taft.+
|
|
|
|
31.1
|
|
Chief Executive Officer’s Certificate Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Fiesta Restaurant Group, Inc.
|
|
|
|
31.2
|
|
Chief Financial Officer’s Certificate Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Fiesta Restaurant Group, Inc.
|
|
|
|
32.1
|
|
Chief Executive Officer’s Certificate Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Fiesta Restaurant Group, Inc.
|
|
|
|
32.2
|
|
Chief Financial Officer’s Certificate Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Fiesta Restaurant Group, Inc.
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
+ Compensatory plan or arrangement
|
|
FIESTA RESTAURANT GROUP, INC.
|
|
|
Date: November 7, 2016
|
/S/ DANNY K. MEISENHEIMER
|
|
(Signature)
|
|
Danny K. Meisenheimer
Interim Chief Executive Officer
|
|
|
Date: November 7, 2016
|
/S/ LYNN S. SCHWEINFURTH
|
|
(Signature)
|
|
Lynn S. Schweinfurth
Senior Vice President, Chief Financial Officer and Treasurer
|
|
|
Date: November 7, 2016
|
/S/ CHERI L. KINDER
|
|
(Signature)
|
|
Cheri L. Kinder
Vice President, Corporate Controller
|
|
|
|
FIESTA RESTAURANT GROUP, INC.
|
||
|
|
|
By:
|
/S/ JOSEPH ZIRKMAN
|
|
|
Name: Joseph Zirkman
Senior Vice President
|
|
|
|
|
/S/ DANNY K. MEISENHEIMER
|
|
|
Danny K. Meisenheimer
|
|
EXECUTIVE
|
|
|
|
Danny K. Meisenheimer
|
|
|
|
|
FIESTA RESTAURANT GROUP, INC.
|
||
|
|
|
By:
|
/S/ DANNY K. MEISENHEIMER
|
|
|
Name: Danny Meisenheimer
Interim Chief Executive Officer
|
|
|
|
|
/S/ LYNN S. SCHWEINFURTH
|
|
|
Lynn Schweinfurth
|
|
EXECUTIVE
|
|
|
|
Lynn Schweinfurth
|
FIESTA RESTAURANT GROUP, INC.
|
||
By:
|
/S/ DANNY K. MEISENHEIMER
|
|
|
Name: Danny Meisenheimer
Interim Chief Executive Officer
|
|
|
||
/S/ JOSEPH ZIRKMAN
|
|
|
Joseph A. Zirkman
|
|
EXECUTIVE
|
|
|
|
Joseph Zirkman
|
|
If to the Company:
|
|
|
|
|
14800 Landmark Blvd.
Suite 500
Dallas, Texas 75254
Attn: General Counsel
|
with copy sent to the attention of the Chairman of the Board of Directors at the same address
|
||
|
|
|
If to the Executive:
|
|
|
|
|
|
|
|
|
FIESTA RESTAURANT GROUP, INC.
|
||
|
|
|
By:
|
/S/ JOSEPH ZIRKMAN
|
|
|
Name: Joseph Zirkman
Sr. Vice President
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/S/ TIMOTHY P. TAFT
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Timothy P. Taft
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Vest date
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share due to vest
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percentage to vest
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shares to vest
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forfeited shares
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|||
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3/2/2017
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3,369
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10/12th's
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2,808
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561
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2/14/2017
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14,835
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11/12th's
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13,599
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1,236
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2/19/2017
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4,163
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11/12th's
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3,817
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346
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2/27/2017
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1,827
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11/12th's
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1,675
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152
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24,194
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21,898
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2,296
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Date: November 7, 2016
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/s/ DANNY K. MEISENHEIMER
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Danny K. Meisenheimer
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Interim Chief Executive Officer
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Date: November 7, 2016
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/s/ LYNN SCHWEINFURTH
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Lynn Schweinfurth
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Senior Vice President, Chief Financial Officer and Treasurer
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/s/ DANNY K. MEISENHEIMER
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Danny K. Meisenheimer
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Interim Chief Executive Officer
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/s/ LYNN SCHWEINFURTH
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Lynn Schweinfurth
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Senior Vice President, Chief Financial Officer and Treasurer
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