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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¨ (Do not check if smaller reporting company)
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Smaller reporting company
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¨
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Emerging growth company
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¨
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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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July 2, 2017
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January 1, 2017
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ASSETS
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Current assets:
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||||
Cash
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$
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4,426
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|
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$
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4,196
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Trade receivables
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9,075
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8,771
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Inventories
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2,367
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2,865
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Prepaid rent
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3,345
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3,575
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Income tax receivable
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584
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3,304
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Prepaid expenses and other current assets
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9,443
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4,231
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Total current assets
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29,240
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26,942
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Property and equipment, net
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239,414
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270,920
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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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29,023
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14,377
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Other assets
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5,082
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5,842
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Total assets
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$
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426,243
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$
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441,565
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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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94
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$
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89
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Accounts payable
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18,135
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16,165
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Accrued payroll, related taxes and benefits
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11,786
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12,275
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Accrued real estate taxes
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5,164
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6,924
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Other liabilities
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20,779
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11,316
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Total current liabilities
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55,958
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46,769
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Long-term debt, net of current portion
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62,375
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71,423
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Lease financing obligations
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1,664
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1,664
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Deferred income—sale-leaseback of real estate
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25,362
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27,165
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Other liabilities
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32,082
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30,369
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Total liabilities
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177,441
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177,390
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Commitments and contingencies
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Stockholders' equity:
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Common stock, par value $.01; authorized 100,000,000 shares, issued 27,089,482 and 26,884,992 shares, respectively, and outstanding 26,835,137 and 26,755,640 shares, respectively.
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268
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267
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Additional paid-in capital
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165,097
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163,204
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Retained earnings
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83,437
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100,704
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Total stockholders' equity
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248,802
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264,175
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Total liabilities and stockholders' equity
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$
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426,243
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$
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441,565
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Three Months Ended
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Six Months Ended
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||||||||||||
Revenues:
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July 2, 2017
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July 3, 2016
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July 2, 2017
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July 3, 2016
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||||||||
Restaurant sales
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$
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172,005
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$
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180,835
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$
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346,982
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$
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356,774
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Franchise royalty revenues and fees
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619
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697
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1,249
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1,435
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||||
Total revenues
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172,624
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181,532
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348,231
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358,209
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Costs and expenses:
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Cost of sales
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50,728
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54,607
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101,676
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108,657
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Restaurant wages and related expenses (including stock-based compensation expense of ($74), $40, $35 and $76, respectively)
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46,269
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46,981
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94,401
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92,033
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Restaurant rent expense
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8,915
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9,113
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18,777
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18,034
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Other restaurant operating expenses
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24,636
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24,263
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48,704
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46,651
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Advertising expense
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4,292
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7,006
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11,831
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14,001
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General and administrative (including stock-based compensation expense of $1,248, $1,218, $1,785 and $2,193, respectively)
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19,140
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14,253
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35,148
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28,101
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Depreciation and amortization
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8,596
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8,625
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17,782
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16,961
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Pre-opening costs
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910
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2,016
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1,334
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3,198
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Impairment and other lease charges
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10,762
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82
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43,176
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94
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Other expense (income), net
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654
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10
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798
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(238
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)
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Total operating expenses
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174,902
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166,956
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373,627
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327,492
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Income (loss) from operations
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(2,278
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)
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14,576
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(25,396
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)
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30,717
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Interest expense
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654
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535
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1,238
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1,093
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Income (loss) before income taxes
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(2,932
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)
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14,041
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(26,634
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)
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29,624
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Provision for (benefit from) income taxes
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(772
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)
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5,125
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(9,414
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)
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10,813
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Net income (loss)
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$
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(2,160
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)
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$
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8,916
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$
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(17,220
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)
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$
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18,811
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Basic net income (loss) per share
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$
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(0.08
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)
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$
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0.33
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$
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(0.64
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)
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$
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0.70
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Diluted net income (loss) per share
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$
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(0.08
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)
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$
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0.33
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$
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(0.64
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)
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$
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0.70
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Basic weighted average common shares outstanding
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26,815,015
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26,654,280
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26,794,560
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26,629,999
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Diluted weighted average common shares outstanding
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26,815,015
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26,660,269
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26,794,560
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26,636,145
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Number of
Common Stock Shares |
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Common
Stock |
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Additional
Paid-In Capital |
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Retained
Earnings |
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Total
Stockholders' Equity |
|||||||||
Balance at January 3, 2016
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26,571,602
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$
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266
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$
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159,724
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$
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83,992
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$
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243,982
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Stock-based compensation
|
—
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—
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2,269
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—
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2,269
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|
||||
Vesting of restricted shares
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115,566
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1
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(1
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)
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—
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—
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||||
Tax deficiency from stock-based compensation
|
|
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|
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(81
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)
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|
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(81
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)
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|||||||
Net income
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—
|
|
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—
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|
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—
|
|
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18,811
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|
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18,811
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|
||||
Balance at July 3, 2016
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26,687,168
|
|
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$
|
267
|
|
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$
|
161,911
|
|
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$
|
102,803
|
|
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$
|
264,981
|
|
|
|
|
|
|
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|||||||||
Balance at January 1, 2017
|
26,755,640
|
|
|
$
|
267
|
|
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$
|
163,204
|
|
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$
|
100,704
|
|
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$
|
264,175
|
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Stock-based compensation
|
—
|
|
|
—
|
|
|
1,820
|
|
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—
|
|
|
1,820
|
|
||||
Vesting of restricted shares
|
79,497
|
|
|
1
|
|
|
|
|
—
|
|
|
1
|
|
|||||
Cumulative effect of adopting a new accounting standard (Note 1)
|
|
|
|
|
73
|
|
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(47
|
)
|
|
26
|
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(17,220
|
)
|
|
(17,220
|
)
|
||||
Balance at July 2, 2017
|
26,835,137
|
|
|
$
|
268
|
|
|
$
|
165,097
|
|
|
$
|
83,437
|
|
|
$
|
248,802
|
|
|
Six Months Ended
|
||||||
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July 2, 2017
|
|
July 3, 2016
|
||||
|
|
|
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income (loss)
|
$
|
(17,220
|
)
|
|
$
|
18,811
|
|
Adjustments to reconcile net income to net cash provided from operating activities:
|
|
|
|
||||
Loss on disposals of property and equipment
|
931
|
|
|
25
|
|
||
Stock-based compensation
|
1,820
|
|
|
2,269
|
|
||
Impairment and other lease charges
|
43,176
|
|
|
94
|
|
||
Depreciation and amortization
|
17,782
|
|
|
16,961
|
|
||
Amortization of deferred financing costs
|
154
|
|
|
154
|
|
||
Amortization of deferred gains from sale-leaseback transactions
|
(1,803
|
)
|
|
(1,791
|
)
|
||
Deferred income taxes
|
(14,646
|
)
|
|
—
|
|
||
Changes in other operating assets and liabilities
|
5,232
|
|
|
7,046
|
|
||
Net cash provided from operating activities
|
35,426
|
|
|
43,569
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures:
|
|
|
|
||||
New restaurant development
|
(18,796
|
)
|
|
(35,760
|
)
|
||
Restaurant remodeling
|
(961
|
)
|
|
(486
|
)
|
||
Other restaurant capital expenditures
|
(3,587
|
)
|
|
(1,995
|
)
|
||
Corporate and restaurant information systems
|
(2,809
|
)
|
|
(3,997
|
)
|
||
Total capital expenditures
|
(26,153
|
)
|
|
(42,238
|
)
|
||
Properties purchased for sale-leaseback
|
—
|
|
|
(2,663
|
)
|
||
Proceeds from disposals of other properties
|
—
|
|
|
226
|
|
||
Proceeds from sale-leaseback transactions
|
—
|
|
|
3,642
|
|
||
Net cash used in investing activities
|
(26,153
|
)
|
|
(41,033
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Excess tax benefit from vesting of restricted shares
|
—
|
|
|
120
|
|
||
Borrowings on revolving credit facility
|
5,000
|
|
|
9,400
|
|
||
Repayments on revolving credit facility
|
(14,000
|
)
|
|
(12,500
|
)
|
||
Principal payments on capital leases
|
(43
|
)
|
|
(28
|
)
|
||
Net cash used in financing activities
|
(9,043
|
)
|
|
(3,008
|
)
|
||
Net increase (decrease) in cash
|
230
|
|
|
(472
|
)
|
||
Cash, beginning of period
|
4,196
|
|
|
5,281
|
|
||
Cash, end of period
|
$
|
4,426
|
|
|
$
|
4,809
|
|
Supplemental disclosures:
|
|
|
|
||||
Interest paid on long-term debt
|
$
|
1,149
|
|
|
$
|
921
|
|
Interest paid on lease financing obligations
|
$
|
71
|
|
|
$
|
71
|
|
Accruals for capital expenditures
|
$
|
5,872
|
|
|
$
|
6,093
|
|
Income tax payments, net
|
$
|
2,486
|
|
|
$
|
5,275
|
|
•
|
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. The fair value and carrying value of the Company's senior credit facility were approximately $60.9 million at July 2, 2017 and $69.9 million at January 1, 2017.
|
|
July 2, 2017
|
|
January 1, 2017
|
||||
Prepaid contract expenses
|
$
|
2,984
|
|
|
$
|
2,089
|
|
Assets held for sale(1)
|
2,705
|
|
|
—
|
|
||
Other
|
3,754
|
|
|
2,142
|
|
||
|
$
|
9,443
|
|
|
$
|
4,231
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 2, 2017
|
|
July 3, 2016
|
|
July 2, 2017
|
|
July 3, 2016
|
||||||||
Pollo Tropical
|
$
|
10,536
|
|
|
$
|
—
|
|
|
$
|
42,607
|
|
|
$
|
—
|
|
Taco Cabana
|
226
|
|
|
82
|
|
|
569
|
|
|
94
|
|
||||
|
$
|
10,762
|
|
|
$
|
82
|
|
|
$
|
43,176
|
|
|
$
|
94
|
|
|
July 2, 2017
|
|
January 1, 2017
|
||||
Accrued workers' compensation and general liability claims
|
$
|
6,539
|
|
|
$
|
4,838
|
|
Sales and property taxes
|
2,062
|
|
|
1,844
|
|
||
Accrued occupancy costs
|
6,891
|
|
|
2,161
|
|
||
Other
|
5,287
|
|
|
2,473
|
|
||
|
$
|
20,779
|
|
|
$
|
11,316
|
|
|
July 2, 2017
|
|
January 1, 2017
|
||||
Accrued occupancy costs
|
$
|
22,676
|
|
|
$
|
20,172
|
|
Deferred compensation
|
1,121
|
|
|
2,027
|
|
||
Accrued workers’ compensation and general liability claims
|
4,029
|
|
|
4,030
|
|
||
Other
|
4,256
|
|
|
4,140
|
|
||
|
$
|
32,082
|
|
|
$
|
30,369
|
|
|
Six Months Ended July 2, 2017
|
|
Year Ended January 1, 2017
|
||||
Balance, beginning of period
|
$
|
4,912
|
|
|
$
|
1,832
|
|
Provisions for restaurant closures
|
7,423
|
|
|
3,093
|
|
||
Additional lease charges, net of (recoveries)
|
(698
|
)
|
|
(237
|
)
|
||
Payments, net
|
(1,928
|
)
|
|
(806
|
)
|
||
Other adjustments
|
4,371
|
|
|
1,030
|
|
||
Balance, end of period
|
$
|
14,080
|
|
|
$
|
4,912
|
|
•
|
The Company granted its Chief Executive Officer 72,290 restricted stock units, which vest and become non-forfeitable in four tranches over a four year vesting period subject to continued service and attainment of specified share prices of the Company's Common Stock during 20 consecutive trading days at any point during each year. Each tranche vests by the end of a one year period if the specified target stock price condition for that year is met. If the specified target stock price condition for any tranche is not met for the year, the cumulative unearned units will be rolled over to subsequent tranches on a pro rata basis. The number of shares into which these restricted stock units convert ranges from no shares, if the service and market performance conditions are not met, to 72,290 shares, if the service and market performance conditions are met in the fourth year. The weighted average fair value at grant date for these restricted stock units was $12.90.
|
•
|
The Company granted certain executives 19,881 restricted stock units, which vest and become non-forfeitable in March 2020 subject to market performance conditions. The weighted average fair value at grant date for these restricted stock units was $6.20.
|
|
Non-Vested Shares
|
|
Restricted Stock Units
|
||||||||||
|
Shares
|
|
Weighted
Average Grant Date Price |
|
Units
|
|
Weighted
Average Grant Date Price |
||||||
Outstanding at January 1, 2017
|
129,352
|
|
|
$
|
37.94
|
|
|
51,445
|
|
|
$
|
46.59
|
|
Granted
|
221,118
|
|
|
20.84
|
|
|
103,916
|
|
|
12.51
|
|
||
Vested/Released
|
(78,325
|
)
|
|
30.54
|
|
|
(1,172
|
)
|
|
51.54
|
|
||
Forfeited
|
(17,800
|
)
|
|
32.85
|
|
|
(5,556
|
)
|
|
37.43
|
|
||
Outstanding at July 2, 2017
|
254,345
|
|
|
$
|
25.71
|
|
|
148,633
|
|
|
$
|
23.06
|
|
Three Months Ended
|
|
Pollo Tropical
|
|
Taco Cabana
|
|
Other
|
|
Consolidated
|
||||||||
July 2, 2017:
|
|
|
|
|
|
|
|
|
||||||||
Restaurant sales
|
|
$
|
94,374
|
|
|
$
|
77,631
|
|
|
$
|
—
|
|
|
$
|
172,005
|
|
Franchise revenue
|
|
427
|
|
|
192
|
|
|
—
|
|
|
619
|
|
||||
Cost of sales
|
|
28,956
|
|
|
21,772
|
|
|
—
|
|
|
50,728
|
|
||||
Restaurant wages and related expenses
|
|
21,691
|
|
|
24,578
|
|
|
—
|
|
|
46,269
|
|
||||
Restaurant rent expense
|
|
4,472
|
|
|
4,443
|
|
|
—
|
|
|
8,915
|
|
||||
Other restaurant operating expenses
|
|
12,930
|
|
|
11,706
|
|
|
—
|
|
|
24,636
|
|
||||
Advertising expense
|
|
2,011
|
|
|
2,281
|
|
|
—
|
|
|
4,292
|
|
||||
General and administrative expense
|
|
10,782
|
|
|
8,358
|
|
|
—
|
|
|
19,140
|
|
||||
Adjusted EBITDA
|
|
17,139
|
|
|
6,982
|
|
|
—
|
|
|
24,121
|
|
||||
Depreciation and amortization
|
|
5,435
|
|
|
3,161
|
|
|
—
|
|
|
8,596
|
|
||||
Capital expenditures
|
|
8,243
|
|
|
5,320
|
|
|
916
|
|
|
14,479
|
|
||||
July 3, 2016:
|
|
|
|
|
|
|
|
|
||||||||
Restaurant sales
|
|
$
|
101,879
|
|
|
$
|
78,956
|
|
|
$
|
—
|
|
|
$
|
180,835
|
|
Franchise revenue
|
|
508
|
|
|
189
|
|
|
—
|
|
|
697
|
|
||||
Cost of sales
|
|
32,266
|
|
|
22,341
|
|
|
—
|
|
|
54,607
|
|
||||
Restaurant wages and related expenses
|
|
23,980
|
|
|
23,001
|
|
|
—
|
|
|
46,981
|
|
||||
Restaurant rent expense
|
|
4,825
|
|
|
4,288
|
|
|
—
|
|
|
9,113
|
|
||||
Other restaurant operating expenses
|
|
13,701
|
|
|
10,562
|
|
|
—
|
|
|
24,263
|
|
||||
Advertising expense
|
|
3,685
|
|
|
3,321
|
|
|
—
|
|
|
7,006
|
|
||||
General and administrative expense
|
|
8,843
|
|
|
5,363
|
|
|
47
|
|
|
14,253
|
|
||||
Adjusted EBITDA
|
|
14,588
|
|
|
10,528
|
|
|
—
|
|
|
25,116
|
|
||||
Depreciation and amortization
|
|
5,428
|
|
|
3,197
|
|
|
—
|
|
|
8,625
|
|
||||
Capital expenditures
|
|
20,468
|
|
|
3,633
|
|
|
1,346
|
|
|
25,447
|
|
Six Months Ended
|
|
Pollo Tropical
|
|
Taco Cabana
|
|
Other
|
|
Consolidated
|
||||||||
July 2, 2017:
|
|
|
|
|
|
|
|
|
||||||||
Restaurant sales
|
|
$
|
193,684
|
|
|
$
|
153,298
|
|
|
$
|
—
|
|
|
$
|
346,982
|
|
Franchise revenue
|
|
876
|
|
|
373
|
|
|
—
|
|
|
1,249
|
|
||||
Cost of sales
|
|
58,903
|
|
|
42,773
|
|
|
—
|
|
|
101,676
|
|
||||
Restaurant wages and related expenses
|
|
45,737
|
|
|
48,664
|
|
|
—
|
|
|
94,401
|
|
||||
Restaurant rent expense
|
|
9,847
|
|
|
8,930
|
|
|
—
|
|
|
18,777
|
|
||||
Other restaurant operating expenses
|
|
26,319
|
|
|
22,385
|
|
|
—
|
|
|
48,704
|
|
||||
Advertising expense
|
|
6,336
|
|
|
5,495
|
|
|
—
|
|
|
11,831
|
|
||||
General and administrative expense
|
|
19,676
|
|
|
15,472
|
|
|
—
|
|
|
35,148
|
|
||||
Adjusted EBITDA
|
|
31,861
|
|
|
13,476
|
|
|
—
|
|
|
45,337
|
|
||||
Depreciation and amortization
|
|
11,518
|
|
|
6,264
|
|
|
—
|
|
|
17,782
|
|
||||
Capital expenditures
|
|
16,906
|
|
|
8,016
|
|
|
1,231
|
|
|
26,153
|
|
||||
July 3, 2016:
|
|
|
|
|
|
|
|
|
||||||||
Restaurant sales
|
|
$
|
200,785
|
|
|
$
|
155,989
|
|
|
$
|
—
|
|
|
$
|
356,774
|
|
Franchise revenue
|
|
1,085
|
|
|
350
|
|
|
—
|
|
|
1,435
|
|
||||
Cost of sales
|
|
63,870
|
|
|
44,787
|
|
|
—
|
|
|
108,657
|
|
||||
Restaurant wages and related expenses
|
|
46,876
|
|
|
45,157
|
|
|
—
|
|
|
92,033
|
|
||||
Restaurant rent expense
|
|
9,469
|
|
|
8,565
|
|
|
—
|
|
|
18,034
|
|
||||
Other restaurant operating expenses
|
|
26,293
|
|
|
20,358
|
|
|
—
|
|
|
46,651
|
|
||||
Advertising expense
|
|
7,447
|
|
|
6,554
|
|
|
—
|
|
|
14,001
|
|
||||
General and administrative expense
|
|
16,528
|
|
|
10,825
|
|
|
748
|
|
|
28,101
|
|
||||
Adjusted EBITDA
|
|
30,050
|
|
|
20,768
|
|
|
—
|
|
|
50,818
|
|
||||
Depreciation and amortization
|
|
10,706
|
|
|
6,255
|
|
|
—
|
|
|
16,961
|
|
||||
Capital expenditures
|
|
34,567
|
|
|
5,267
|
|
|
2,404
|
|
|
42,238
|
|
||||
Identifiable Assets:
|
|
|
|
|
|
|
|
|
||||||||
July 2, 2017
|
|
$
|
247,312
|
|
|
$
|
164,384
|
|
|
$
|
14,547
|
|
|
$
|
426,243
|
|
January 1, 2017
|
|
263,868
|
|
|
165,195
|
|
|
12,502
|
|
|
441,565
|
|
Three Months Ended
|
|
Pollo Tropical
|
|
Taco Cabana
|
|
Other
|
|
Consolidated
|
||||||||
July 2, 2017:
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
|
|
|
|
|
|
|
$
|
(2,160
|
)
|
||||||
Provision for (benefit from) income taxes
|
|
|
|
|
|
|
|
(772
|
)
|
|||||||
Income (loss) before taxes
|
|
$
|
(3,502
|
)
|
|
$
|
570
|
|
|
$
|
—
|
|
|
$
|
(2,932
|
)
|
Add:
|
|
|
|
|
|
|
|
|
||||||||
Non-general and administrative expense adjustments:
|
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
|
5,435
|
|
|
3,161
|
|
|
—
|
|
|
8,596
|
|
||||
Impairment and other lease charges
|
|
10,536
|
|
|
226
|
|
|
—
|
|
|
10,762
|
|
||||
Interest expense
|
|
295
|
|
|
359
|
|
|
—
|
|
|
654
|
|
||||
Other expense (income), net
|
|
744
|
|
|
(90
|
)
|
|
—
|
|
|
654
|
|
||||
Stock-based compensation credit in restaurant wages
|
|
(45
|
)
|
|
(29
|
)
|
|
—
|
|
|
(74
|
)
|
||||
Unused pre-production costs in advertising expense
|
|
—
|
|
|
88
|
|
|
—
|
|
|
88
|
|
||||
Total Non-general and administrative expense adjustments
|
|
16,965
|
|
|
3,715
|
|
|
—
|
|
|
20,680
|
|
||||
General and administrative expense adjustments:
|
|
|
|
|
|
|
|
|
||||||||
Stock-based compensation expense
|
|
640
|
|
|
608
|
|
|
—
|
|
|
1,248
|
|
||||
Terminated capital project
|
|
7
|
|
|
6
|
|
|
—
|
|
|
13
|
|
||||
Board and shareholder matter costs
|
|
1,767
|
|
|
1,332
|
|
|
—
|
|
|
3,099
|
|
||||
Write-off of site development costs
|
|
109
|
|
|
35
|
|
|
—
|
|
|
144
|
|
||||
Plan restructuring costs and retention bonuses
|
|
1,153
|
|
|
716
|
|
|
—
|
|
|
1,869
|
|
||||
Total General and administrative expense adjustments
|
|
3,676
|
|
|
2,697
|
|
|
—
|
|
|
6,373
|
|
||||
Adjusted EBITDA:
|
|
$
|
17,139
|
|
|
$
|
6,982
|
|
|
$
|
—
|
|
|
$
|
24,121
|
|
|
|
|
|
|
|
|
|
|
||||||||
July 3, 2016:
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
|
|
|
|
|
|
|
$
|
8,916
|
|
||||||
Provision for (benefit from) income taxes
|
|
|
|
|
|
|
|
5,125
|
|
|||||||
Income (loss) before taxes
|
|
$
|
7,636
|
|
|
$
|
6,452
|
|
|
$
|
(47
|
)
|
|
$
|
14,041
|
|
Add:
|
|
|
|
|
|
|
|
|
||||||||
Non-general and administrative expense adjustments:
|
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
|
5,428
|
|
|
3,197
|
|
|
—
|
|
|
8,625
|
|
||||
Impairment and other lease charges
|
|
—
|
|
|
82
|
|
|
—
|
|
|
82
|
|
||||
Interest expense
|
|
228
|
|
|
307
|
|
|
—
|
|
|
535
|
|
||||
Other expense (income), net
|
|
—
|
|
|
10
|
|
|
—
|
|
|
10
|
|
||||
Stock-based compensation expense in restaurant wages
|
|
21
|
|
|
19
|
|
|
—
|
|
|
40
|
|
||||
Total Non-general and administrative expense adjustments
|
|
5,677
|
|
|
3,615
|
|
|
—
|
|
|
9,292
|
|
||||
General and administrative expense adjustments:
|
|
|
|
|
|
|
|
|
||||||||
Stock-based compensation expense
|
|
680
|
|
|
538
|
|
|
—
|
|
|
1,218
|
|
||||
Board and shareholder matter costs
|
|
—
|
|
|
—
|
|
|
47
|
|
|
47
|
|
||||
Write-off of site development costs
|
|
190
|
|
|
14
|
|
|
—
|
|
|
204
|
|
||||
Office restructuring and relocation costs
|
|
346
|
|
|
—
|
|
|
—
|
|
|
346
|
|
||||
Legal settlements and related costs
|
|
59
|
|
|
(91
|
)
|
|
—
|
|
|
(32
|
)
|
||||
Total General and administrative expense adjustments
|
|
1,275
|
|
|
461
|
|
|
47
|
|
|
1,783
|
|
||||
Adjusted EBITDA:
|
|
$
|
14,588
|
|
|
$
|
10,528
|
|
|
$
|
—
|
|
|
$
|
25,116
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
Pollo Tropical
|
|
Taco Cabana
|
|
Other
|
|
Consolidated
|
||||||||
July 2, 2017:
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
|
|
|
|
|
|
|
$
|
(17,220
|
)
|
||||||
Provision for (benefit from) income taxes
|
|
|
|
|
|
|
|
(9,414
|
)
|
|||||||
Income (loss) before taxes
|
|
$
|
(28,598
|
)
|
|
$
|
1,964
|
|
|
$
|
—
|
|
|
$
|
(26,634
|
)
|
Add:
|
|
|
|
|
|
|
|
|
||||||||
Non-general and administrative expense adjustments:
|
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
|
11,518
|
|
|
6,264
|
|
|
—
|
|
|
17,782
|
|
||||
Impairment and other lease charges
|
|
42,607
|
|
|
569
|
|
|
—
|
|
|
43,176
|
|
||||
Interest expense
|
|
544
|
|
|
694
|
|
|
—
|
|
|
1,238
|
|
||||
Other expense (income), net
|
|
888
|
|
|
(90
|
)
|
|
—
|
|
|
798
|
|
||||
Stock-based compensation expense in restaurant wages
|
|
—
|
|
|
35
|
|
|
—
|
|
|
35
|
|
||||
Unused pre-production costs in advertising expense
|
|
322
|
|
|
88
|
|
|
—
|
|
|
410
|
|
||||
Total Non-general and administrative expense adjustments
|
|
55,879
|
|
|
7,560
|
|
|
—
|
|
|
63,439
|
|
||||
General and administrative expense adjustments:
|
|
|
|
|
|
|
|
|
||||||||
Stock-based compensation expense
|
|
955
|
|
|
830
|
|
|
—
|
|
|
1,785
|
|
||||
Terminated capital project
|
|
484
|
|
|
365
|
|
|
—
|
|
|
849
|
|
||||
Board and shareholder matter costs
|
|
2,225
|
|
|
1,678
|
|
|
—
|
|
|
3,903
|
|
||||
Write-off of site development costs
|
|
162
|
|
|
292
|
|
|
—
|
|
|
454
|
|
||||
Plan restructuring costs and retention bonuses
|
|
1,227
|
|
|
787
|
|
|
—
|
|
|
2,014
|
|
||||
Legal settlements and related costs
|
|
(473
|
)
|
|
—
|
|
|
—
|
|
|
(473
|
)
|
||||
Total General and administrative expense adjustments
|
|
4,580
|
|
|
3,952
|
|
|
—
|
|
|
8,532
|
|
||||
Adjusted EBITDA:
|
|
$
|
31,861
|
|
|
$
|
13,476
|
|
|
$
|
—
|
|
|
$
|
45,337
|
|
|
|
|
|
|
|
|
|
|
||||||||
July 3, 2016:
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
|
|
|
|
|
|
|
$
|
18,811
|
|
||||||
Provision for (benefit from) income taxes
|
|
|
|
|
|
|
|
10,813
|
|
|||||||
Income (loss) before taxes
|
|
$
|
17,305
|
|
|
$
|
13,067
|
|
|
$
|
(748
|
)
|
|
$
|
29,624
|
|
Add:
|
|
|
|
|
|
|
|
|
||||||||
Non-general and administrative expense adjustments:
|
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
|
10,706
|
|
|
6,255
|
|
|
—
|
|
|
16,961
|
|
||||
Impairment and other lease charges
|
|
—
|
|
|
94
|
|
|
—
|
|
|
94
|
|
||||
Interest expense
|
|
479
|
|
|
614
|
|
|
—
|
|
|
1,093
|
|
||||
Other expense (income), net
|
|
(12
|
)
|
|
(226
|
)
|
|
—
|
|
|
(238
|
)
|
||||
Stock-based compensation expense in restaurant wages
|
|
38
|
|
|
38
|
|
|
—
|
|
|
76
|
|
||||
Total Non-general and administrative expense adjustments
|
|
11,211
|
|
|
6,775
|
|
|
—
|
|
|
17,986
|
|
||||
General and administrative expense adjustments:
|
|
|
|
|
|
|
|
|
||||||||
Stock-based compensation expense
|
|
1,225
|
|
|
968
|
|
|
—
|
|
|
2,193
|
|
||||
Board and shareholder matter costs
|
|
—
|
|
|
—
|
|
|
748
|
|
|
748
|
|
||||
Write-off of site development costs
|
|
247
|
|
|
49
|
|
|
—
|
|
|
296
|
|
||||
Office restructuring and relocation costs
|
|
346
|
|
|
—
|
|
|
—
|
|
|
346
|
|
||||
Legal settlements and related costs
|
|
(284
|
)
|
|
(91
|
)
|
|
—
|
|
|
(375
|
)
|
||||
Total General and administrative expense adjustments
|
|
1,534
|
|
|
926
|
|
|
748
|
|
|
3,208
|
|
||||
Adjusted EBITDA:
|
|
$
|
30,050
|
|
|
$
|
20,768
|
|
|
$
|
—
|
|
|
$
|
50,818
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 2, 2017
|
|
July 3, 2016
|
|
July 2, 2017
|
|
July 3, 2016
|
||||||||
Basic and diluted net income (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
$
|
(2,160
|
)
|
|
$
|
8,916
|
|
|
$
|
(17,220
|
)
|
|
$
|
18,811
|
|
Less: income allocated to participating securities
|
—
|
|
|
(89
|
)
|
|
—
|
|
|
(183
|
)
|
||||
Net income (loss) available to common shareholders
|
$
|
(2,160
|
)
|
|
$
|
8,827
|
|
|
$
|
(17,220
|
)
|
|
$
|
18,628
|
|
Weighted average common shares, basic
|
26,815,015
|
|
|
26,654,280
|
|
|
26,794,560
|
|
|
26,629,999
|
|
||||
Restricted stock units
|
—
|
|
|
5,989
|
|
|
—
|
|
|
6,146
|
|
||||
Weighted average common shares, diluted
|
26,815,015
|
|
|
26,660,269
|
|
|
26,794,560
|
|
|
26,636,145
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Basic net income (loss) per share
|
$
|
(0.08
|
)
|
|
$
|
0.33
|
|
|
$
|
(0.64
|
)
|
|
$
|
0.70
|
|
Diluted net income (loss) per share
|
$
|
(0.08
|
)
|
|
$
|
0.33
|
|
|
$
|
(0.64
|
)
|
|
$
|
0.70
|
|
•
|
The leadership team has met with the founders of Pollo Tropical and Taco Cabana to identify the principles that made each brand iconic; we continue to work with Chef Connie who created the original Taco Cabana recipes.
|
•
|
With the assistance of a culinary and food sourcing expert, we have reviewed all ingredients and recipes and have begun rolling out improvements to menu offerings through the use of high quality, natural ingredients. Almost 90% of each brand menu will be positively impacted by these improvements.
|
•
|
We are leveraging our scale and purchasing power to vertically integrate our chicken supply chain. We will ultimately control the feed and breed of chickens purchased which will further differentiate Pollo Tropical in the competitive landscape.
|
•
|
New labor models are being tested at both brands. The intention is to optimize the guest experience by ensuring that restaurants are adequately staffed and that managers are intensely focused on the guest experience. We believe these new labor models should increase speed of service and transaction flow and improve the quality and consistency of hospitality.
|
•
|
Brand and guest research has been conducted and is being utilized to refine our operating and marketing initiatives.
|
•
|
Pollo Tropical has retained a new advertising agency and new creative advertising campaigns are being developed at both brands based on refined positioning, marketing and digital strategies.
|
•
|
We have developed a priority list of deferred maintenance needs that will be addressed this year and in 2018. We are also enhancing signage and adding exterior lighting to improve visibility.
|
•
|
We continue to reinforce strict adherence to cleanliness and food safety standards including engaging an outside firm to conduct food and safety audits at every restaurant four times per year.
|
•
|
New incentive based compensation plans have been rolled out to the Operations teams.
|
•
|
Regional chefs are being added to the field structure to ensure adherence to high quality operating and food safety standards.
|
•
|
Social media and guest feedback systems and processes are being revamped.
|
•
|
Music selection and systems are improved.
|
•
|
We previously announced reductions in general and administrative expenses which will lower annualized costs by approximately $7.5 million. We continue to explore opportunities to operate more efficiently and to mitigate the investments being made to positively impact the guest experience.
|
•
|
A pricing elasticity analysis is underway to assist us in applying potential price increases in the fourth quarter to mitigate restaurant-level investments that coincide with the relaunch of both brands.
|
•
|
Nine Pollo Tropical restaurants and one Taco Cabana restaurant are being remodeled this year; three Pollo Tropical restaurants are nearing completion.
|
•
|
We closed 30 Company-owned Pollo Tropical locations in Texas, Tennessee and Georgia in April, as previously reported, and closed four Company-owned Taco Cabana locations in Texas in early July.
|
•
|
We have launched an improved preventative maintenance program to improve the longevity of our restaurant base.
|
•
|
Restaurant prototypes for both brands are being redesigned to optimize signature brand touch points and the guest experience, and deliver attractive investment returns.
|
•
|
We are making progress establishing new digital capabilities including rolling out video menu boards this year and developing delivery, catering, online ordering and loyalty platforms for implementation in 2018.
|
•
|
We are currently testing outsourcing a call center to answer guest inquiries and take catering orders.
|
•
|
We are reformulating the positioning strategy for Pollo Tropical outside of core markets beginning with our six locations in southern Texas and 13 locations in Atlanta, Georgia.
|
•
|
Net income (loss) decreased $11.1 million to $(2.2) million in the second quarter of 2017, or $(0.08) per diluted share, compared to net income of $8.9 million, or $0.33 per diluted share in the second quarter of 2016, due primarily to impairment and other lease charges, lower comparable restaurant sales and higher general and administrative costs, partially offset by lower advertising expenses due to reduced broadcast media spend while we implemented initiatives related to the Plan.
|
•
|
Total revenues decreased 4.9% in the second quarter of 2017 to $172.6 million compared to $181.5 million in the second quarter of 2016, driven primarily by a decrease in comparable restaurant sales. Comparable restaurant sales decreased 4.7% for our Taco Cabana restaurants resulting primarily from a decrease in comparable restaurant transactions of 4.5% and a decrease in average check of 0.2%. Comparable restaurant sales decreased 7.7% for our Pollo Tropical restaurants resulting primarily from a decrease in comparable restaurant transactions of 10.0% partially offset by an increase in average check of 2.3%.
|
•
|
During the second quarter of 2017, we opened three company-owned Pollo Tropical restaurants and two Taco Cabana restaurants. We closed 30 company-owned Pollo Tropical restaurants during the second quarter of 2017. During the second quarter of 2016, we opened eleven company-owned Pollo Tropical restaurants and two Taco Cabana restaurants.
|
•
|
Consolidated Adjusted EBITDA decreased $1.0 million in the second quarter of 2017 to $24.1 million compared to $25.1 million in the second quarter of 2016, driven primarily by lower comparable restaurant sales. Consolidated Adjusted EBITDA is a non-GAAP financial measure of performance. For a discussion of our use of Consolidated Adjusted EBITDA and a reconciliation from net income (loss) to Consolidated Adjusted EBITDA, see "Management's Use of Non-GAAP Financial Measures".
|
|
Pollo Tropical
|
|
Taco Cabana
|
||||||||||||||
|
Owned
|
|
Franchised
|
|
Total
|
|
Owned
|
|
Franchised
|
|
Total
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
January 1, 2017
|
177
|
|
|
35
|
|
|
212
|
|
|
166
|
|
|
7
|
|
|
173
|
|
New
|
3
|
|
|
2
|
|
|
5
|
|
|
1
|
|
|
—
|
|
|
1
|
|
Closed
|
—
|
|
|
(3
|
)
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
April 2, 2017
|
180
|
|
|
34
|
|
|
214
|
|
|
167
|
|
|
7
|
|
|
174
|
|
New
|
3
|
|
|
1
|
|
|
4
|
|
|
2
|
|
|
—
|
|
|
2
|
|
Closed
|
(30
|
)
|
|
(3
|
)
|
|
(33
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
July 2, 2017
|
153
|
|
|
32
|
|
|
185
|
|
|
169
|
|
|
7
|
|
|
176
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
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
|
|
|
Three Months Ended
|
||||||||||||||||
|
July 2, 2017
|
|
July 3, 2016
|
|
July 2, 2017
|
|
July 3, 2016
|
|
July 2, 2017
|
|
July 3, 2016
|
||||||
|
Pollo Tropical
|
|
Taco Cabana
|
|
Consolidated
|
||||||||||||
Restaurant sales:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Pollo Tropical
|
|
|
|
|
|
|
|
|
54.9
|
%
|
|
56.3
|
%
|
||||
Taco Cabana
|
|
|
|
|
|
|
|
|
45.1
|
%
|
|
43.7
|
%
|
||||
Consolidated restaurant sales
|
|
|
|
|
|
|
|
|
100.0
|
%
|
|
100.0
|
%
|
||||
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cost of sales
|
30.7
|
%
|
|
31.7
|
%
|
|
28.0
|
%
|
|
28.3
|
%
|
|
29.5
|
%
|
|
30.2
|
%
|
Restaurant wages and related expenses
|
23.0
|
%
|
|
23.5
|
%
|
|
31.7
|
%
|
|
29.1
|
%
|
|
26.9
|
%
|
|
26.0
|
%
|
Restaurant rent expense
|
4.7
|
%
|
|
4.7
|
%
|
|
5.7
|
%
|
|
5.4
|
%
|
|
5.2
|
%
|
|
5.0
|
%
|
Other restaurant operating expenses
|
13.7
|
%
|
|
13.4
|
%
|
|
15.1
|
%
|
|
13.4
|
%
|
|
14.3
|
%
|
|
13.4
|
%
|
Advertising expense
|
2.1
|
%
|
|
3.6
|
%
|
|
2.9
|
%
|
|
4.2
|
%
|
|
2.5
|
%
|
|
3.9
|
%
|
Pre-opening costs
|
0.5
|
%
|
|
1.8
|
%
|
|
0.6
|
%
|
|
0.3
|
%
|
|
0.5
|
%
|
|
1.1
|
%
|
Pollo Tropical:
|
|
||
Decrease in comparable restaurant sales
|
$
|
(6.8
|
)
|
Decrease in sales related to closed restaurants, net of new restaurants
|
(0.7
|
)
|
|
Total decrease
|
$
|
(7.5
|
)
|
|
|
||
Taco Cabana:
|
|
||
Decrease in comparable restaurant sales
|
$
|
(3.6
|
)
|
Incremental sales related to new restaurants, net of closed restaurants
|
2.3
|
|
|
Total decrease
|
$
|
(1.3
|
)
|
Taco Cabana:
|
|
|
Cost of sales:
|
|
|
Menu price increases
|
(0.6
|
)%
|
Lower commodity costs
|
(0.3
|
)%
|
Sales mix
|
0.8
|
%
|
Other
|
(0.2
|
)%
|
Net decrease in cost of sales as a percentage of restaurant sales
|
(0.3
|
)%
|
|
|
|
Restaurant wages and related expenses:
|
|
|
Higher labor costs(1) (2)
|
2.7
|
%
|
Higher medical benefit and payroll tax costs(1)
|
0.4
|
%
|
Lower incentive bonus costs
|
(0.4
|
)%
|
Other(1)
|
(0.1
|
)%
|
Net increase in restaurant wages and related costs as a percentage of restaurant sales
|
2.6
|
%
|
|
|
|
Other operating expenses:
|
|
|
Higher repairs and maintenance costs(1)
|
0.5
|
%
|
Higher operating supplies(1)
|
0.3
|
%
|
Higher insurance costs(1)
|
0.3
|
%
|
Higher real estate taxes(1)
|
0.2
|
%
|
Other(1)
|
0.4
|
%
|
Net increase in other restaurant operating expenses as a percentage of restaurant sales
|
1.7
|
%
|
|
|
|
Advertising expense:
|
|
|
Reduced advertising
|
(1.3
|
)%
|
Net decrease in advertising expense as a percentage of restaurant sales
|
(1.3
|
)%
|
|
|
|
Pre-opening costs:
|
|
|
Timing of restaurant openings
|
0.3
|
%
|
Net increase in pre-opening costs as a percentage of restaurant sales
|
0.3
|
%
|
|
Six Months Ended
|
||||||||||||||||
|
July 2, 2017
|
|
July 3, 2016
|
|
July 2, 2017
|
|
July 3, 2016
|
|
July 2, 2017
|
|
July 3, 2016
|
||||||
|
Pollo Tropical
|
|
Taco Cabana
|
|
Consolidated
|
||||||||||||
Restaurant sales:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Pollo Tropical
|
|
|
|
|
|
|
|
|
55.8
|
%
|
|
56.3
|
%
|
||||
Taco Cabana
|
|
|
|
|
|
|
|
|
44.2
|
%
|
|
43.7
|
%
|
||||
Consolidated restaurant sales
|
|
|
|
|
|
|
|
|
100.0
|
%
|
|
100.0
|
%
|
||||
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cost of sales
|
30.4
|
%
|
|
31.8
|
%
|
|
27.9
|
%
|
|
28.7
|
%
|
|
29.3
|
%
|
|
30.5
|
%
|
Restaurant wages and related expenses
|
23.6
|
%
|
|
23.3
|
%
|
|
31.7
|
%
|
|
28.9
|
%
|
|
27.2
|
%
|
|
25.8
|
%
|
Restaurant rent expense
|
5.1
|
%
|
|
4.7
|
%
|
|
5.8
|
%
|
|
5.5
|
%
|
|
5.4
|
%
|
|
5.1
|
%
|
Other restaurant operating expenses
|
13.6
|
%
|
|
13.1
|
%
|
|
14.6
|
%
|
|
13.1
|
%
|
|
14.0
|
%
|
|
13.1
|
%
|
Advertising expense
|
3.3
|
%
|
|
3.7
|
%
|
|
3.6
|
%
|
|
4.2
|
%
|
|
3.4
|
%
|
|
3.9
|
%
|
Pre-opening costs
|
0.4
|
%
|
|
1.4
|
%
|
|
0.4
|
%
|
|
0.2
|
%
|
|
0.4
|
%
|
|
0.9
|
%
|
Pollo Tropical:
|
|
|
Cost of sales:
|
|
|
Menu price increases
|
(0.7
|
)%
|
Lower commodity costs
|
(0.3
|
)%
|
Lower promotions and discounts
|
(0.2
|
)%
|
Improved operating efficiency
|
(0.2
|
)%
|
Net decrease in cost of sales as a percentage of restaurant sales
|
(1.4
|
)%
|
|
|
|
Restaurant wages and related expenses:
|
|
|
Higher labor costs(1)
|
0.3
|
%
|
Net increase in restaurant wages and related costs as a percentage of restaurant sales
|
0.3
|
%
|
|
|
|
Other operating expenses:
|
|
|
Higher utility costs(1)
|
0.3
|
%
|
Other(1)
|
0.2
|
%
|
Net increase in other restaurant operating expenses as a percentage of restaurant sales
|
0.5
|
%
|
|
|
|
Advertising expense:
|
|
|
Reduced advertising
|
(0.4
|
)%
|
Net decrease in advertising expense as a percentage of restaurant sales
|
(0.4
|
)%
|
|
|
|
Pre-opening costs:
|
|
|
Decrease in the number of restaurant openings
|
(1.0
|
)%
|
Net decrease in pre-opening costs as a percentage of restaurant sales
|
(1.0
|
)%
|
Taco Cabana:
|
|
|
Cost of sales:
|
|
|
Lower commodity costs
|
(0.9
|
)%
|
Menu price increases
|
(0.6
|
)%
|
Higher promotions and discounts
|
0.4
|
%
|
Sales mix
|
0.3
|
%
|
Net decrease in cost of sales as a percentage of restaurant sales
|
(0.8
|
)%
|
|
|
|
Restaurant wages and related expenses:
|
|
|
Higher labor costs(1) (2)
|
2.5
|
%
|
Higher medical benefit and payroll tax costs(1)
|
0.3
|
%
|
Net increase in restaurant wages and related costs as a percentage of restaurant sales
|
2.8
|
%
|
|
|
|
Other operating expenses:
|
|
|
Higher repairs and maintenance costs(1)
|
0.4
|
%
|
Higher real estate taxes(1)
|
0.3
|
%
|
Higher operating supplies(1)
|
0.2
|
%
|
Higher insurance costs(1)
|
0.2
|
%
|
Other(1)
|
0.4
|
%
|
Net increase in other restaurant operating expenses as a percentage of restaurant sales
|
1.5
|
%
|
|
|
|
Advertising expense:
|
|
|
Reduced advertising
|
(0.6
|
)%
|
Net decrease in advertising expense as a percentage of restaurant sales
|
(0.6
|
)%
|
|
|
|
Pre-opening costs:
|
|
|
Timing of restaurant openings
|
0.2
|
%
|
Net increase in pre-opening costs as a percentage of restaurant sales
|
0.2
|
%
|
•
|
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
|
||||||||
Six Months Ended July 2, 2017:
|
|
|
|
|
|
|
|
||||||||
New restaurant development
|
$
|
13,878
|
|
|
$
|
4,918
|
|
|
$
|
—
|
|
|
$
|
18,796
|
|
Restaurant remodeling
|
934
|
|
|
27
|
|
|
—
|
|
|
961
|
|
||||
Other restaurant capital expenditures(1)
|
1,546
|
|
|
2,041
|
|
|
—
|
|
|
3,587
|
|
||||
Corporate and restaurant information systems
|
548
|
|
|
1,030
|
|
|
1,231
|
|
|
2,809
|
|
||||
Total capital expenditures
|
$
|
16,906
|
|
|
$
|
8,016
|
|
|
$
|
1,231
|
|
|
$
|
26,153
|
|
Number of new restaurant openings
|
6
|
|
|
3
|
|
|
—
|
|
|
9
|
|
||||
Six Months Ended July 3, 2016:
|
|
|
|
|
|
|
|
||||||||
New restaurant development
|
$
|
32,572
|
|
|
$
|
3,188
|
|
|
$
|
—
|
|
|
$
|
35,760
|
|
Restaurant remodeling
|
486
|
|
|
—
|
|
|
—
|
|
|
486
|
|
||||
Other restaurant capital expenditures(1)
|
659
|
|
|
1,336
|
|
|
—
|
|
|
1,995
|
|
||||
Corporate and restaurant information systems
|
850
|
|
|
743
|
|
|
2,404
|
|
|
3,997
|
|
||||
Total capital expenditures
|
$
|
34,567
|
|
|
$
|
5,267
|
|
|
$
|
2,404
|
|
|
$
|
42,238
|
|
Number of new restaurant openings
|
17
|
|
|
2
|
|
|
—
|
|
|
19
|
|
•
|
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 and gains (such as impairment and other lease charges, other income and expense and stock-based compensation expense) have recurred and may recur.
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
July 2, 2017
|
|
July 3, 2016
|
|
July 2, 2017
|
|
July 3, 2016
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
|
$
|
(2,160
|
)
|
|
$
|
8,916
|
|
|
$
|
(17,220
|
)
|
|
$
|
18,811
|
|
Provision for (benefit from) income taxes
|
|
(772
|
)
|
|
5,125
|
|
|
(9,414
|
)
|
|
10,813
|
|
||||
Income (loss) before taxes
|
|
(2,932
|
)
|
|
14,041
|
|
|
(26,634
|
)
|
|
29,624
|
|
||||
Add:
|
|
|
|
|
|
|
|
|
||||||||
Non-general and administrative expense adjustments:
|
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
|
8,596
|
|
|
8,625
|
|
|
17,782
|
|
|
16,961
|
|
||||
Impairment and other lease charges
|
|
10,762
|
|
|
82
|
|
|
43,176
|
|
|
94
|
|
||||
Interest expense
|
|
654
|
|
|
535
|
|
|
1,238
|
|
|
1,093
|
|
||||
Other expense (income), net
|
|
654
|
|
|
10
|
|
|
798
|
|
|
(238
|
)
|
||||
Stock-based compensation credit in restaurant wages
|
|
(74
|
)
|
|
40
|
|
|
35
|
|
|
76
|
|
||||
Unused pre-production costs in advertising expense(1)
|
|
88
|
|
|
—
|
|
|
410
|
|
|
—
|
|
||||
Total Non-general and administrative expense adjustments
|
|
20,680
|
|
|
9,292
|
|
|
63,439
|
|
|
17,986
|
|
||||
General and administrative expense adjustments:
|
|
|
|
|
|
|
|
|
||||||||
Stock-based compensation expense
|
|
1,248
|
|
|
1,218
|
|
|
1,785
|
|
|
2,193
|
|
||||
Terminated capital project(2)
|
|
13
|
|
|
—
|
|
|
849
|
|
|
—
|
|
||||
Board and shareholder matter costs(3)
|
|
3,099
|
|
|
47
|
|
|
3,903
|
|
|
748
|
|
||||
Write-off of site development costs(4)
|
|
144
|
|
|
204
|
|
|
454
|
|
|
296
|
|
||||
Plan restructuring costs and retention bonuses(5)
|
|
1,869
|
|
|
—
|
|
|
2,014
|
|
|
—
|
|
||||
Office restructuring and relocation costs(6)
|
|
—
|
|
|
346
|
|
|
—
|
|
|
346
|
|
||||
Legal settlements and related costs(7)
|
|
—
|
|
|
(32
|
)
|
|
(473
|
)
|
|
(375
|
)
|
||||
Total General and administrative expense adjustments
|
|
6,373
|
|
|
1,783
|
|
|
8,532
|
|
|
3,208
|
|
||||
Consolidated Adjusted EBITDA:
|
|
$
|
24,121
|
|
|
$
|
25,116
|
|
|
$
|
45,337
|
|
|
$
|
50,818
|
|
Three Months Ended
|
|
Pollo Tropical
|
|
Taco Cabana
|
||||
July 2, 2017:
|
|
|
|
|
||||
Adjusted EBITDA:
|
|
$
|
17,139
|
|
|
$
|
6,982
|
|
Restaurant-Level Adjustments:
|
|
|
|
|
||||
Add: Pre-opening costs
|
|
451
|
|
|
459
|
|
||
Add: Other general and administrative expense(1)
|
|
7,106
|
|
|
5,661
|
|
||
Less: Franchise royalty revenue and fees
|
|
427
|
|
|
192
|
|
||
Restaurant-Level Adjusted EBITDA:
|
|
$
|
24,269
|
|
|
$
|
12,910
|
|
|
|
|
|
|
||||
July 3, 2016:
|
|
|
|
|
||||
Adjusted EBITDA:
|
|
$
|
14,588
|
|
|
$
|
10,528
|
|
Restaurant-Level Adjustments:
|
|
|
|
|
||||
Add: Pre-opening costs
|
|
1,795
|
|
|
221
|
|
||
Add: Other general and administrative expense(1)
|
|
7,568
|
|
|
4,902
|
|
||
Less: Franchise royalty revenue and fees
|
|
508
|
|
|
189
|
|
||
Restaurant-Level Adjusted EBITDA:
|
|
$
|
23,443
|
|
|
$
|
15,462
|
|
|
|
|
|
|
||||
Six Months Ended
|
|
Pollo Tropical
|
|
Taco Cabana
|
||||
July 2, 2017:
|
|
|
|
|
||||
Adjusted EBITDA:
|
|
$
|
31,861
|
|
|
$
|
13,476
|
|
Restaurant-Level Adjustments:
|
|
|
|
|
||||
Add: Pre-opening costs
|
|
783
|
|
|
551
|
|
||
Add: Other general and administrative expense(1)
|
|
15,096
|
|
|
11,520
|
|
||
Less: Franchise royalty revenue and fees
|
|
876
|
|
|
373
|
|
||
Restaurant-Level Adjusted EBITDA:
|
|
$
|
46,864
|
|
|
$
|
25,174
|
|
|
|
|
|
|
||||
July 3, 2016:
|
|
|
|
|
||||
Adjusted EBITDA:
|
|
$
|
30,050
|
|
|
$
|
20,768
|
|
Restaurant-Level Adjustments:
|
|
|
|
|
||||
Add: Pre-opening costs
|
|
2,909
|
|
|
289
|
|
||
Add: Other general and administrative expense(1)
|
|
14,995
|
|
|
9,898
|
|
||
Less: Franchise royalty revenue and fees
|
|
1,085
|
|
|
350
|
|
||
Restaurant-Level Adjusted EBITDA:
|
|
$
|
46,869
|
|
|
$
|
30,605
|
|
•
|
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.
|
|
|
|
|
|
3.1
|
|
Certificate of Amendment to Restated Certificate of Incorporation of Fiesta Restaurant Group, Inc.
|
|
|
|
3.2
|
|
Amendment to Amended and Restated Bylaws of Fiesta Restaurant Group, Inc.
|
|
|
|
10.1
|
|
Retention Bonus Agreement dated as of November 9, 2016 between Joseph Brink and Fiesta Restaurant Group, Inc.+
|
|
|
|
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: August 7, 2017
|
/S/ RICHARD C. STOCKINGER
|
|
(Signature)
|
|
Richard C. Stockinger
Chief Executive Officer
|
|
|
Date: August 7, 2017
|
/S/ LYNN S. SCHWEINFURTH
|
|
(Signature)
|
|
Lynn S. Schweinfurth
Senior Vice President, Chief Financial Officer and Treasurer
|
|
|
Date: August 7, 2017
|
/S/ CHERI L. KINDER
|
|
(Signature)
|
|
Cheri L. Kinder
Vice President, Corporate Controller
|
FIESTA RESTAURANT GROUP, INC.
|
||
By:
|
/s/ Danny Meisenheimer
|
|
|
Name: Danny Meisenheimer
Interim Chief Executive Officer
|
|
/s/ Joseph Brink
|
||
|
Joseph Brink
|
|
Date: August 7, 2017
|
/s/RICHARD C. STOCKINGER
|
|
Richard C. Stockinger
Chief Executive Officer
|
Date: August 7, 2017
|
/s/LYNN SCHWEINFURTH
|
|
Lynn Schweinfurth
Senior Vice President, Chief Financial Officer and Treasurer
|
/s/ RICHARD C. STOCKINGER
|
Richard C. Stockinger
|
Chief Executive Officer
|
/s/ LYNN SCHWEINFURTH
|
Lynn Schweinfurth
|
Senior Vice President, Chief Financial Officer and Treasurer
|