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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October 1, 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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4,244
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$
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4,196
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Trade receivables
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8,864
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8,771
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Inventories
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2,552
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2,865
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Prepaid rent
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3,335
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3,575
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Income tax receivable
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3,689
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3,304
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Prepaid expenses and other current assets
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8,534
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4,231
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Total current assets
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31,218
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26,942
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Property and equipment, net
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227,686
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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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31,263
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14,377
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Other assets
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4,146
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5,842
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Total assets
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$
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417,797
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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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96
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$
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89
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Accounts payable
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19,126
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16,165
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Accrued payroll, related taxes and benefits
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11,535
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12,275
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Accrued real estate taxes
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6,881
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6,924
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Other liabilities
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21,116
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11,316
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Total current liabilities
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58,754
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46,769
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Long-term debt, net of current portion
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62,350
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71,423
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Lease financing obligations
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—
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1,664
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Deferred income—sale-leaseback of real estate
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24,365
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27,165
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Other liabilities
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30,836
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30,369
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Total liabilities
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176,305
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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 $.01; authorized 100,000,000 shares, issued 27,087,447 and 26,884,992 shares, respectively, and outstanding 26,846,809 and 26,755,640 shares, respectively.
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268
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267
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Additional paid-in capital
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166,044
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163,204
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Retained earnings
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75,180
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100,704
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Total stockholders' equity
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241,492
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264,175
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Total liabilities and stockholders' equity
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$
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417,797
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$
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441,565
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Three Months Ended
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Nine Months Ended
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||||||||||||
Revenues:
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October 1, 2017
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October 2, 2016
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October 1, 2017
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October 2, 2016
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||||||||
Restaurant sales
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$
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158,100
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$
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181,592
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$
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505,082
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$
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538,366
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Franchise royalty revenues and fees
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591
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664
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1,840
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2,099
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Total revenues
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158,691
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182,256
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506,922
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540,465
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Costs and expenses:
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Cost of sales
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49,151
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54,726
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150,827
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163,383
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Restaurant wages and related expenses (including stock-based compensation expense of $9, $35, $44 and $111, respectively)
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44,649
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47,503
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139,050
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139,536
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Restaurant rent expense
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9,104
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9,488
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27,881
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27,522
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Other restaurant operating expenses
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24,856
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25,715
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73,560
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72,366
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Advertising expense
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5,885
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7,506
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17,716
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21,507
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General and administrative (including stock-based compensation expense of $938, $330, $2,723 and $2,523, respectively)
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12,065
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14,520
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47,213
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42,621
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Depreciation and amortization
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8,483
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9,513
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26,265
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26,474
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Pre-opening costs
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544
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1,509
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1,878
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4,707
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Impairment and other lease charges
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15,905
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18,513
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59,081
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18,607
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Other expense (income), net
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461
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—
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1,259
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(238
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)
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||||
Total operating expenses
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171,103
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188,993
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544,730
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516,485
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Income (loss) from operations
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(12,412
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)
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(6,737
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)
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(37,808
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)
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23,980
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Interest expense
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672
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542
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1,910
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1,635
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Income (loss) before income taxes
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(13,084
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)
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(7,279
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)
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(39,718
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)
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22,345
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Provision for (benefit from) income taxes
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(4,827
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)
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(2,748
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)
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(14,241
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)
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8,065
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Net income (loss)
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$
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(8,257
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)
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$
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(4,531
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)
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$
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(25,477
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)
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$
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14,280
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Basic net income (loss) per share
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$
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(0.31
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)
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$
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(0.17
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)
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$
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(0.95
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)
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$
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0.53
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Diluted net income (loss) per share
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$
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(0.31
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)
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$
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(0.17
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)
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$
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(0.95
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)
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$
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0.53
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Basic weighted average common shares outstanding
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26,845,568
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26,716,219
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26,811,610
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26,658,739
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Diluted weighted average common shares outstanding
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26,845,568
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26,716,219
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26,811,610
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26,665,091
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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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—
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2,634
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—
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2,634
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||||
Vesting of restricted shares
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174,410
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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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(9
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)
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(9
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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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—
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|
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14,280
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|
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14,280
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||||
Balance at October 2, 2016
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26,746,012
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$
|
267
|
|
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$
|
162,348
|
|
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$
|
98,272
|
|
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$
|
260,887
|
|
|
|
|
|
|
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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
|
—
|
|
|
—
|
|
|
2,767
|
|
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—
|
|
|
2,767
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|
||||
Vesting of restricted shares
|
91,169
|
|
|
1
|
|
|
|
|
—
|
|
|
1
|
|
|||||
Cumulative effect of adopting a new accounting standard (Note 1)
|
|
|
|
|
73
|
|
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(47
|
)
|
|
26
|
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(25,477
|
)
|
|
(25,477
|
)
|
||||
Balance at October 1, 2017
|
26,846,809
|
|
|
$
|
268
|
|
|
$
|
166,044
|
|
|
$
|
75,180
|
|
|
$
|
241,492
|
|
|
Nine Months Ended
|
||||||
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October 1, 2017
|
|
October 2, 2016
|
||||
|
|
|
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income (loss)
|
$
|
(25,477
|
)
|
|
$
|
14,280
|
|
Adjustments to reconcile net income to net cash provided from operating activities:
|
|
|
|
||||
Loss on disposals of property and equipment
|
1,020
|
|
|
178
|
|
||
Stock-based compensation
|
2,767
|
|
|
2,634
|
|
||
Impairment and other lease charges
|
59,081
|
|
|
18,607
|
|
||
Depreciation and amortization
|
26,265
|
|
|
26,474
|
|
||
Amortization of deferred financing costs
|
231
|
|
|
232
|
|
||
Amortization of deferred gains from sale-leaseback transactions
|
(2,703
|
)
|
|
(2,687
|
)
|
||
Deferred income taxes
|
(16,886
|
)
|
|
(6,761
|
)
|
||
Changes in other operating assets and liabilities
|
3,355
|
|
|
13,400
|
|
||
Net cash provided from operating activities
|
47,653
|
|
|
66,357
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures:
|
|
|
|
||||
New restaurant development
|
(23,994
|
)
|
|
(52,828
|
)
|
||
Restaurant remodeling
|
(2,280
|
)
|
|
(956
|
)
|
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Other restaurant capital expenditures
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(7,650
|
)
|
|
(4,625
|
)
|
||
Corporate and restaurant information systems
|
(4,615
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)
|
|
(4,634
|
)
|
||
Total capital expenditures
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(38,539
|
)
|
|
(63,043
|
)
|
||
Properties purchased for sale-leaseback
|
—
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|
|
(2,663
|
)
|
||
Proceeds from disposals of other properties
|
—
|
|
|
226
|
|
||
Proceeds from sale-leaseback transactions
|
—
|
|
|
3,642
|
|
||
Net cash used in investing activities
|
(38,539
|
)
|
|
(61,838
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Excess tax benefit from vesting of restricted shares
|
—
|
|
|
211
|
|
||
Borrowings on revolving credit facility
|
7,000
|
|
|
14,400
|
|
||
Repayments on revolving credit facility
|
(16,000
|
)
|
|
(19,500
|
)
|
||
Principal payments on capital leases
|
(66
|
)
|
|
(49
|
)
|
||
Net cash used in financing activities
|
(9,066
|
)
|
|
(4,938
|
)
|
||
Net increase (decrease) in cash
|
48
|
|
|
(419
|
)
|
||
Cash, beginning of period
|
4,196
|
|
|
5,281
|
|
||
Cash, end of period
|
$
|
4,244
|
|
|
$
|
4,862
|
|
Supplemental disclosures:
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|
|
|
||||
Interest paid on long-term debt
|
$
|
1,756
|
|
|
$
|
1,393
|
|
Interest paid on lease financing obligations
|
$
|
83
|
|
|
$
|
106
|
|
Accruals for capital expenditures
|
$
|
7,950
|
|
|
$
|
9,591
|
|
Income tax payments, net
|
$
|
3,003
|
|
|
$
|
9,540
|
|
Non-cash reduction of lease financing obligations
|
$
|
1,664
|
|
|
$
|
—
|
|
Non-cash reduction of assets under lease financing obligations
|
$
|
1,193
|
|
|
$
|
—
|
|
•
|
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 October 1, 2017 and $69.9 million at January 1, 2017.
|
|
October 1, 2017
|
|
January 1, 2017
|
||||
Prepaid contract expenses
|
$
|
3,455
|
|
|
$
|
2,089
|
|
Assets held for sale(1)
|
2,705
|
|
|
—
|
|
||
Other
|
2,374
|
|
|
2,142
|
|
||
|
$
|
8,534
|
|
|
$
|
4,231
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
October 1, 2017
|
|
October 2, 2016
|
|
October 1, 2017
|
|
October 2, 2016
|
||||||||
Pollo Tropical
|
$
|
13,729
|
|
|
$
|
18,390
|
|
|
$
|
56,336
|
|
|
$
|
18,390
|
|
Taco Cabana
|
2,176
|
|
|
123
|
|
|
2,745
|
|
|
217
|
|
||||
|
$
|
15,905
|
|
|
$
|
18,513
|
|
|
$
|
59,081
|
|
|
$
|
18,607
|
|
|
October 1, 2017
|
|
January 1, 2017
|
||||
Accrued workers' compensation and general liability claims
|
$
|
6,796
|
|
|
$
|
4,838
|
|
Sales and property taxes
|
2,134
|
|
|
1,844
|
|
||
Accrued occupancy costs
|
7,296
|
|
|
2,161
|
|
||
Other
|
4,890
|
|
|
2,473
|
|
||
|
$
|
21,116
|
|
|
$
|
11,316
|
|
|
October 1, 2017
|
|
January 1, 2017
|
||||
Accrued occupancy costs
|
$
|
21,551
|
|
|
$
|
20,172
|
|
Deferred compensation
|
992
|
|
|
2,027
|
|
||
Accrued workers’ compensation and general liability claims
|
4,028
|
|
|
4,030
|
|
||
Other
|
4,265
|
|
|
4,140
|
|
||
|
$
|
30,836
|
|
|
$
|
30,369
|
|
|
Nine Months Ended October 1, 2017
|
|
Year Ended January 1, 2017
|
||||
Balance, beginning of period
|
$
|
4,912
|
|
|
$
|
1,832
|
|
Provisions for restaurant closures
|
7,857
|
|
|
3,093
|
|
||
Additional lease charges, net of (recoveries)
|
(1,616
|
)
|
|
(237
|
)
|
||
Payments, net
|
(3,526
|
)
|
|
(806
|
)
|
||
Other adjustments(1)
|
5,507
|
|
|
1,030
|
|
||
Balance, end of period
|
$
|
13,134
|
|
|
$
|
4,912
|
|
•
|
The Company granted its Chief Executive Officer 72,290 restricted stock units, which vest 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 in three tranches over a three year vesting period subject to continued service and attainment of specified share price of the Company's Common Stock. 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 19,881 shares, if the service and market performance conditions are met in the third year.
|
|
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
|
|
|
13.10
|
|
||
Vested/Released
|
(89,739
|
)
|
|
29.99
|
|
|
(1,430
|
)
|
|
51.51
|
|
||
Forfeited
|
(20,093
|
)
|
|
32.16
|
|
|
(8,647
|
)
|
|
35.43
|
|
||
Outstanding at October 1, 2017
|
240,638
|
|
|
$
|
24.82
|
|
|
145,284
|
|
|
$
|
23.25
|
|
Three Months Ended
|
|
Pollo Tropical
|
|
Taco Cabana
|
|
Other
|
|
Consolidated
|
||||||||
October 1, 2017:
|
|
|
|
|
|
|
|
|
||||||||
Restaurant sales
|
|
$
|
87,888
|
|
|
$
|
70,212
|
|
|
$
|
—
|
|
|
$
|
158,100
|
|
Franchise revenue
|
|
396
|
|
|
195
|
|
|
—
|
|
|
591
|
|
||||
Cost of sales
|
|
28,527
|
|
|
20,624
|
|
|
—
|
|
|
49,151
|
|
||||
Restaurant wages and related expenses
|
|
21,208
|
|
|
23,441
|
|
|
—
|
|
|
44,649
|
|
||||
Restaurant rent expense
|
|
4,655
|
|
|
4,449
|
|
|
—
|
|
|
9,104
|
|
||||
Other restaurant operating expenses
|
|
13,034
|
|
|
11,822
|
|
|
—
|
|
|
24,856
|
|
||||
Advertising expense
|
|
4,980
|
|
|
905
|
|
|
—
|
|
|
5,885
|
|
||||
General and administrative expense
|
|
6,655
|
|
|
5,410
|
|
|
—
|
|
|
12,065
|
|
||||
Adjusted EBITDA
|
|
9,396
|
|
|
3,776
|
|
|
—
|
|
|
13,172
|
|
||||
Depreciation and amortization
|
|
5,187
|
|
|
3,296
|
|
|
—
|
|
|
8,483
|
|
||||
Capital expenditures
|
|
6,302
|
|
|
5,471
|
|
|
613
|
|
|
12,386
|
|
||||
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
|
|
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
|
|
9,091
|
|
|
5,355
|
|
|
74
|
|
|
14,520
|
|
||||
Adjusted EBITDA
|
|
13,782
|
|
|
9,762
|
|
|
—
|
|
|
23,544
|
|
||||
Depreciation and amortization
|
|
6,337
|
|
|
3,176
|
|
|
—
|
|
|
9,513
|
|
||||
Capital expenditures
|
|
18,146
|
|
|
2,791
|
|
|
(132
|
)
|
|
20,805
|
|
Nine Months Ended
|
|
Pollo Tropical
|
|
Taco Cabana
|
|
Other
|
|
Consolidated
|
||||||||
October 1, 2017:
|
|
|
|
|
|
|
|
|
||||||||
Restaurant sales
|
|
$
|
281,572
|
|
|
$
|
223,510
|
|
|
$
|
—
|
|
|
$
|
505,082
|
|
Franchise revenue
|
|
1,272
|
|
|
568
|
|
|
—
|
|
|
1,840
|
|
||||
Cost of sales
|
|
87,430
|
|
|
63,397
|
|
|
—
|
|
|
150,827
|
|
||||
Restaurant wages and related expenses
|
|
66,945
|
|
|
72,105
|
|
|
—
|
|
|
139,050
|
|
||||
Restaurant rent expense
|
|
14,502
|
|
|
13,379
|
|
|
—
|
|
|
27,881
|
|
||||
Other restaurant operating expenses
|
|
39,353
|
|
|
34,207
|
|
|
—
|
|
|
73,560
|
|
||||
Advertising expense
|
|
11,316
|
|
|
6,400
|
|
|
—
|
|
|
17,716
|
|
||||
General and administrative expense
|
|
26,331
|
|
|
20,882
|
|
|
—
|
|
|
47,213
|
|
||||
Adjusted EBITDA
|
|
41,257
|
|
|
17,252
|
|
|
—
|
|
|
58,509
|
|
||||
Depreciation and amortization
|
|
16,705
|
|
|
9,560
|
|
|
—
|
|
|
26,265
|
|
||||
Capital expenditures
|
|
23,208
|
|
|
13,487
|
|
|
1,844
|
|
|
38,539
|
|
||||
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
|
|
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
|
|
25,619
|
|
|
16,180
|
|
|
822
|
|
|
42,621
|
|
||||
Adjusted EBITDA
|
|
43,832
|
|
|
30,530
|
|
|
—
|
|
|
74,362
|
|
||||
Depreciation and amortization
|
|
17,043
|
|
|
9,431
|
|
|
—
|
|
|
26,474
|
|
||||
Capital expenditures
|
|
52,713
|
|
|
8,058
|
|
|
2,272
|
|
|
63,043
|
|
||||
Identifiable Assets:
|
|
|
|
|
|
|
|
|
||||||||
October 1, 2017
|
|
$
|
234,433
|
|
|
$
|
166,368
|
|
|
$
|
16,996
|
|
|
$
|
417,797
|
|
January 1, 2017
|
|
263,868
|
|
|
165,195
|
|
|
12,502
|
|
|
441,565
|
|
Three Months Ended
|
|
Pollo Tropical
|
|
Taco Cabana
|
|
Other
|
|
Consolidated
|
||||||||
October 1, 2017:
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
|
|
|
|
|
|
|
$
|
(8,257
|
)
|
||||||
Provision for (benefit from) income taxes
|
|
|
|
|
|
|
|
(4,827
|
)
|
|||||||
Income (loss) before taxes
|
|
$
|
(10,816
|
)
|
|
$
|
(2,268
|
)
|
|
$
|
—
|
|
|
$
|
(13,084
|
)
|
Add:
|
|
|
|
|
|
|
|
|
||||||||
Non-general and administrative expense adjustments:
|
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
|
5,187
|
|
|
3,296
|
|
|
—
|
|
|
8,483
|
|
||||
Impairment and other lease charges
|
|
13,729
|
|
|
2,176
|
|
|
—
|
|
|
15,905
|
|
||||
Interest expense
|
|
329
|
|
|
343
|
|
|
—
|
|
|
672
|
|
||||
Other expense (income), net
|
|
566
|
|
|
(105
|
)
|
|
—
|
|
|
461
|
|
||||
Stock-based compensation expense in restaurant wages
|
|
(4
|
)
|
|
13
|
|
|
—
|
|
|
9
|
|
||||
Total Non-general and administrative expense adjustments
|
|
19,807
|
|
|
5,723
|
|
|
—
|
|
|
25,530
|
|
||||
General and administrative expense adjustments:
|
|
|
|
|
|
|
|
|
||||||||
Stock-based compensation expense
|
|
587
|
|
|
351
|
|
|
—
|
|
|
938
|
|
||||
Board and shareholder matter costs
|
|
(89
|
)
|
|
(66
|
)
|
|
—
|
|
|
(155
|
)
|
||||
Write-off of site development costs
|
|
8
|
|
|
—
|
|
|
—
|
|
|
8
|
|
||||
Plan restructuring costs and retention bonuses
|
|
51
|
|
|
36
|
|
|
—
|
|
|
87
|
|
||||
Office restructuring and relocation costs
|
|
(152
|
)
|
|
—
|
|
|
—
|
|
|
(152
|
)
|
||||
Total General and administrative expense adjustments
|
|
405
|
|
|
321
|
|
|
—
|
|
|
726
|
|
||||
Adjusted EBITDA:
|
|
$
|
9,396
|
|
|
$
|
3,776
|
|
|
$
|
—
|
|
|
$
|
13,172
|
|
|
|
|
|
|
|
|
|
|
||||||||
October 2, 2016:
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
|
|
|
|
|
|
|
$
|
(4,531
|
)
|
||||||
Provision for (benefit from) income taxes
|
|
|
|
|
|
|
|
(2,748
|
)
|
|||||||
Income (loss) before taxes
|
|
$
|
(13,070
|
)
|
|
$
|
5,865
|
|
|
$
|
(74
|
)
|
|
$
|
(7,279
|
)
|
Add:
|
|
|
|
|
|
|
|
|
||||||||
Non-general and administrative expense adjustments:
|
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
|
6,337
|
|
|
3,176
|
|
|
—
|
|
|
9,513
|
|
||||
Impairment and other lease charges
|
|
18,390
|
|
|
123
|
|
|
—
|
|
|
18,513
|
|
||||
Interest expense
|
|
229
|
|
|
313
|
|
|
—
|
|
|
542
|
|
||||
Stock-based compensation expense in restaurant wages
|
|
18
|
|
|
17
|
|
|
—
|
|
|
35
|
|
||||
Total Non-general and administrative expense adjustments
|
|
24,974
|
|
|
3,629
|
|
|
—
|
|
|
28,603
|
|
||||
General and administrative expense adjustments:
|
|
|
|
|
|
|
|
|
||||||||
Stock-based compensation expense
|
|
183
|
|
|
147
|
|
|
—
|
|
|
330
|
|
||||
Board and shareholder matter costs
|
|
119
|
|
|
89
|
|
|
74
|
|
|
282
|
|
||||
Write-off of site development costs
|
|
549
|
|
|
32
|
|
|
—
|
|
|
581
|
|
||||
Office restructuring and relocation costs
|
|
193
|
|
|
—
|
|
|
—
|
|
|
193
|
|
||||
Legal settlements and related costs
|
|
834
|
|
|
—
|
|
|
—
|
|
|
834
|
|
||||
Total General and administrative expense adjustments
|
|
1,878
|
|
|
268
|
|
|
74
|
|
|
2,220
|
|
||||
Adjusted EBITDA:
|
|
$
|
13,782
|
|
|
$
|
9,762
|
|
|
$
|
—
|
|
|
$
|
23,544
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
Pollo Tropical
|
|
Taco Cabana
|
|
Other
|
|
Consolidated
|
||||||||
October 1, 2017:
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
|
|
|
|
|
|
|
$
|
(25,477
|
)
|
||||||
Provision for (benefit from) income taxes
|
|
|
|
|
|
|
|
(14,241
|
)
|
|||||||
Income (loss) before taxes
|
|
$
|
(39,414
|
)
|
|
$
|
(304
|
)
|
|
$
|
—
|
|
|
$
|
(39,718
|
)
|
Add:
|
|
|
|
|
|
|
|
|
||||||||
Non-general and administrative expense adjustments:
|
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
|
16,705
|
|
|
9,560
|
|
|
—
|
|
|
26,265
|
|
||||
Impairment and other lease charges
|
|
56,336
|
|
|
2,745
|
|
|
—
|
|
|
59,081
|
|
||||
Interest expense
|
|
873
|
|
|
1,037
|
|
|
—
|
|
|
1,910
|
|
||||
Other expense (income), net
|
|
1,454
|
|
|
(195
|
)
|
|
—
|
|
|
1,259
|
|
||||
Stock-based compensation expense in restaurant wages
|
|
(4
|
)
|
|
48
|
|
|
—
|
|
|
44
|
|
||||
Unused pre-production costs in advertising expense
|
|
322
|
|
|
88
|
|
|
—
|
|
|
410
|
|
||||
Total Non-general and administrative expense adjustments
|
|
75,686
|
|
|
13,283
|
|
|
—
|
|
|
88,969
|
|
||||
General and administrative expense adjustments:
|
|
|
|
|
|
|
|
|
||||||||
Stock-based compensation expense
|
|
1,542
|
|
|
1,181
|
|
|
—
|
|
|
2,723
|
|
||||
Terminated capital project
|
|
484
|
|
|
365
|
|
|
—
|
|
|
849
|
|
||||
Board and shareholder matter costs
|
|
2,136
|
|
|
1,612
|
|
|
—
|
|
|
3,748
|
|
||||
Write-off of site development costs
|
|
170
|
|
|
292
|
|
|
—
|
|
|
462
|
|
||||
Plan restructuring costs and retention bonuses
|
|
1,278
|
|
|
823
|
|
|
—
|
|
|
2,101
|
|
||||
Office restructuring and relocation costs
|
|
(152
|
)
|
|
—
|
|
|
—
|
|
|
(152
|
)
|
||||
Legal settlements and related costs
|
|
(473
|
)
|
|
—
|
|
|
—
|
|
|
(473
|
)
|
||||
Total General and administrative expense adjustments
|
|
4,985
|
|
|
4,273
|
|
|
—
|
|
|
9,258
|
|
||||
Adjusted EBITDA:
|
|
$
|
41,257
|
|
|
$
|
17,252
|
|
|
$
|
—
|
|
|
$
|
58,509
|
|
|
|
|
|
|
|
|
|
|
||||||||
October 2, 2016:
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
|
|
|
|
|
|
|
$
|
14,280
|
|
||||||
Provision for (benefit from) income taxes
|
|
|
|
|
|
|
|
8,065
|
|
|||||||
Income (loss) before taxes
|
|
$
|
4,235
|
|
|
$
|
18,932
|
|
|
$
|
(822
|
)
|
|
$
|
22,345
|
|
Add:
|
|
|
|
|
|
|
|
|
||||||||
Non-general and administrative expense adjustments:
|
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
|
17,043
|
|
|
9,431
|
|
|
—
|
|
|
26,474
|
|
||||
Impairment and other lease charges
|
|
18,390
|
|
|
217
|
|
|
—
|
|
|
18,607
|
|
||||
Interest expense
|
|
708
|
|
|
927
|
|
|
—
|
|
|
1,635
|
|
||||
Other expense (income), net
|
|
(12
|
)
|
|
(226
|
)
|
|
—
|
|
|
(238
|
)
|
||||
Stock-based compensation expense in restaurant wages
|
|
56
|
|
|
55
|
|
|
—
|
|
|
111
|
|
||||
Total Non-general and administrative expense adjustments
|
|
36,185
|
|
|
10,404
|
|
|
—
|
|
|
46,589
|
|
||||
General and administrative expense adjustments:
|
|
|
|
|
|
|
|
|
||||||||
Stock-based compensation expense
|
|
1,408
|
|
|
1,115
|
|
|
—
|
|
|
2,523
|
|
||||
Board and shareholder matter costs
|
|
119
|
|
|
89
|
|
|
822
|
|
|
1,030
|
|
||||
Write-off of site development costs
|
|
796
|
|
|
81
|
|
|
—
|
|
|
877
|
|
||||
Office restructuring and relocation costs
|
|
539
|
|
|
—
|
|
|
—
|
|
|
539
|
|
||||
Legal settlements and related costs
|
|
550
|
|
|
(91
|
)
|
|
—
|
|
|
459
|
|
||||
Total General and administrative expense adjustments
|
|
3,412
|
|
|
1,194
|
|
|
822
|
|
|
5,428
|
|
||||
Adjusted EBITDA:
|
|
$
|
43,832
|
|
|
$
|
30,530
|
|
|
$
|
—
|
|
|
$
|
74,362
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
October 1, 2017
|
|
October 2, 2016
|
|
October 1, 2017
|
|
October 2, 2016
|
||||||||
Basic and diluted net income (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
$
|
(8,257
|
)
|
|
$
|
(4,531
|
)
|
|
$
|
(25,477
|
)
|
|
$
|
14,280
|
|
Less: income allocated to participating securities
|
—
|
|
|
—
|
|
|
—
|
|
|
(138
|
)
|
||||
Net income (loss) available to common shareholders
|
$
|
(8,257
|
)
|
|
$
|
(4,531
|
)
|
|
$
|
(25,477
|
)
|
|
$
|
14,142
|
|
Weighted average common shares, basic
|
26,845,568
|
|
|
26,716,219
|
|
|
26,811,610
|
|
|
26,658,739
|
|
||||
Restricted stock units
|
—
|
|
|
—
|
|
|
—
|
|
|
6,352
|
|
||||
Weighted average common shares, diluted
|
26,845,568
|
|
|
26,716,219
|
|
|
26,811,610
|
|
|
26,665,091
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Basic net income (loss) per share
|
$
|
(0.31
|
)
|
|
$
|
(0.17
|
)
|
|
$
|
(0.95
|
)
|
|
$
|
0.53
|
|
Diluted net income (loss) per share
|
$
|
(0.31
|
)
|
|
$
|
(0.17
|
)
|
|
$
|
(0.95
|
)
|
|
$
|
0.53
|
|
•
|
We have implemented refined recipes that improve food quality with fresh and clean ingredients, positively impacting approximately 90% of each brand's menu.
|
•
|
We have uniquely vertically integrated our chicken supply chain for Pollo Tropical, allowing us to control the feed and breed of all chickens purchased with the objective of "no antibiotics ever" by 2018.
|
•
|
Multiple operational initiatives have been put in place to deliver high quality execution with consistency.
|
•
|
Pollo Tropical launched a new creative TV, radio, billboard and social media advertising campaign in late October 2017 which features freshly prepared menu offerings.
|
•
|
In October 2017, Pollo Tropical rolled out a new menu featuring new menu items which is demonstrating promising initial results including higher check averages. Research validates the new menu direction including new and future opportunities.
|
•
|
Taco Cabana recently launched a new advertising campaign that features for a limited time three new chicken fajita tacos with composed topping recipes.
|
•
|
New digital menu boards are in the process of being rolled out across both brands featuring enhanced displays with flexibility to rotate by daypart and feature promotions and videos.
|
•
|
New labor models have been implemented at both brands to improve speed of service, transaction flow, and the quality and consistency of hospitality.
|
•
|
We continue to upgrade our kitchens and restaurant presentation, including added signage and exterior lighting to improve visibility.
|
•
|
Regional chefs were added to the field structure to enhance food knowledge, provide culinary training and ensure adherence to high quality operating and food safety standards.
|
•
|
Based on research and financial modeling, we have introduced a tiered menu pricing strategy across both brands in October 2017.
|
•
|
Nine Pollo Tropical Company-owned restaurants have been remodeled this year and one Taco Cabana restaurant will be remodeled by the end of 2017.
|
•
|
We are in the process of developing a preventative maintenance program to improve the longevity of our restaurant base.
|
•
|
Restaurant prototypes for both brands are being redesigned to optimize the guest experience and deliver attractive investment returns at lower costs.
|
•
|
We launched an outsourced call center to answer guest inquiries and handle catering orders initially at Pollo Tropical, This is a significant source of future growth at both brands.
|
•
|
We are working with new partners to establish comprehensive digital capabilities that will include refining delivery, catering, mobile apps, online ordering and loyalty platforms for implementation in 2018.
|
•
|
We continue to refine the positioning of both brands in core markets and outside of core markets beginning with Pollo Tropical locations in North Florida and the Atlanta metropolitan area.
|
•
|
We have rationalized our restaurant portfolio at both brands with the closure of several unprofitable restaurants.
|
•
|
We are updating our franchise disclosure documents to support potential franchise growth in the future.
|
•
|
We plan to update our site selection and restaurant optimization models for future expansion outside of core markets.
|
•
|
Net loss increased $3.7 million to $(8.3) million in the third quarter of 2017, or $(0.31) per diluted share, compared to net loss of $(4.5) million, or $(0.17) per diluted share in the third quarter of 2016, due primarily to lower comparable restaurant sales and higher cost of sales as a percentage of sales, attributable in part to the impact of the Hurricanes, which caused temporary closures, modified hours of operations, loss of inventory and limited menu offerings, as well as ongoing costs incurred during the temporary closures and modified hours of operations. The increase in net loss is also due to higher repair and maintenance costs, partially offset by the impact of closing unprofitable restaurants and lower general and administrative expenses, advertising and impairment and other lease charges.
|
•
|
Total revenues decreased 12.9% in the third quarter of 2017 to $158.7 million compared to $182.3 million in the third quarter of 2016, driven primarily by a decrease in comparable restaurant sales partially attributable to the Hurricanes combined with the impact of permanent restaurant closures in the fourth quarter of 2016 and in 2017. Comparable restaurant sales decreased 12.6% for our Taco Cabana restaurants resulting primarily from a decrease in comparable restaurant transactions of 14.3% partially offset by an increase in average check of 1.7%. Comparable restaurant sales decreased 10.9% for our Pollo Tropical restaurants resulting primarily from a decrease in comparable restaurant transactions of 13.1% partially offset by an increase in average check of 2.2%.
|
•
|
During the third quarter of 2017, we opened two Company-owned Pollo Tropical restaurants and three Company-owned Taco Cabana restaurants. We closed six Company-owned Pollo Tropical restaurants and four Company-owned Taco Cabana restaurants during the third quarter of 2017. During the third quarter of 2016, we opened nine Company-owned Pollo Tropical restaurants.
|
•
|
Consolidated Adjusted EBITDA decreased $10.4 million in the third quarter of 2017 to $13.2 million compared to $23.5 million in the third quarter of 2016, driven primarily by lower comparable restaurant sales, higher cost of sales as a percentage of sales and higher repair and maintenance costs. 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
|
|
New
|
2
|
|
|
—
|
|
|
2
|
|
|
3
|
|
|
—
|
|
|
3
|
|
Closed
|
(6
|
)
|
|
—
|
|
|
(6
|
)
|
|
(4
|
)
|
|
—
|
|
|
(4
|
)
|
October 1, 2017
|
149
|
|
|
32
|
|
|
181
|
|
|
168
|
|
|
7
|
|
|
175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
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
|
|
|
Three Months Ended
|
||||||||||||||||
|
October 1, 2017
|
|
October 2, 2016
|
|
October 1, 2017
|
|
October 2, 2016
|
|
October 1, 2017
|
|
October 2, 2016
|
||||||
|
Pollo Tropical
|
|
Taco Cabana
|
|
Consolidated
|
||||||||||||
Restaurant sales:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Pollo Tropical
|
|
|
|
|
|
|
|
|
55.6
|
%
|
|
56.9
|
%
|
||||
Taco Cabana
|
|
|
|
|
|
|
|
|
44.4
|
%
|
|
43.1
|
%
|
||||
Consolidated restaurant sales
|
|
|
|
|
|
|
|
|
100.0
|
%
|
|
100.0
|
%
|
||||
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cost of sales
|
32.5
|
%
|
|
31.5
|
%
|
|
29.4
|
%
|
|
28.3
|
%
|
|
31.1
|
%
|
|
30.1
|
%
|
Restaurant wages and related expenses
|
24.1
|
%
|
|
23.6
|
%
|
|
33.4
|
%
|
|
29.6
|
%
|
|
28.2
|
%
|
|
26.2
|
%
|
Restaurant rent expense
|
5.3
|
%
|
|
4.9
|
%
|
|
6.3
|
%
|
|
5.7
|
%
|
|
5.8
|
%
|
|
5.2
|
%
|
Other restaurant operating expenses
|
14.8
|
%
|
|
13.9
|
%
|
|
16.8
|
%
|
|
14.5
|
%
|
|
15.7
|
%
|
|
14.2
|
%
|
Advertising expense
|
5.7
|
%
|
|
4.9
|
%
|
|
1.3
|
%
|
|
3.2
|
%
|
|
3.7
|
%
|
|
4.1
|
%
|
Pre-opening costs
|
0.3
|
%
|
|
1.4
|
%
|
|
0.4
|
%
|
|
0.1
|
%
|
|
0.3
|
%
|
|
0.8
|
%
|
Pollo Tropical:
|
|
||
Decrease in comparable restaurant sales
|
$
|
(9.6
|
)
|
Decrease in sales related to closed restaurants, net of new restaurants
|
(5.9
|
)
|
|
Total decrease
|
$
|
(15.5
|
)
|
|
|
||
Taco Cabana:
|
|
||
Decrease in comparable restaurant sales
|
$
|
(9.5
|
)
|
Incremental sales related to new restaurants, net of closed restaurants
|
1.5
|
|
|
Total decrease
|
$
|
(8.0
|
)
|
Taco Cabana:
|
|
|
Cost of sales:
|
|
|
Menu offering improvement costs related to the Plan
|
1.3
|
%
|
Sales mix
|
1.2
|
%
|
Hurricane inventory loss
|
0.3
|
%
|
Lower promotions and discounts
|
(1.4
|
)%
|
Menu price increases
|
(0.5
|
)%
|
Other
|
0.2
|
%
|
Net increase in cost of sales as a percentage of restaurant sales
|
1.1
|
%
|
|
|
|
Restaurant wages and related expenses:
|
|
|
Higher labor costs(1) (2)
|
3.7
|
%
|
Higher payroll tax costs(2)
|
0.2
|
%
|
Other
|
(0.1
|
)%
|
Net increase in restaurant wages and related costs as a percentage of restaurant sales
|
3.8
|
%
|
|
|
|
Other operating expenses:
|
|
|
Higher repair and maintenance(2) (3)
|
1.3
|
%
|
Higher utility costs(2)
|
0.4
|
%
|
Higher real estate taxes(2)
|
0.3
|
%
|
Higher sanitation costs(2)
|
0.2
|
%
|
Lower insurance costs(2)
|
(0.6
|
)%
|
Other(2)
|
0.7
|
%
|
Net increase in other restaurant operating expenses as a percentage of restaurant sales
|
2.3
|
%
|
|
|
|
Advertising expense:
|
|
|
Reduced advertising
|
(1.9
|
)%
|
Net decrease in advertising expense as a percentage of restaurant sales
|
(1.9
|
)%
|
|
|
|
Pre-opening costs:
|
|
|
Increase in restaurant openings
|
0.3
|
%
|
Net increase in pre-opening costs as a percentage of restaurant sales
|
0.3
|
%
|
|
Nine Months Ended
|
||||||||||||||||
|
October 1, 2017
|
|
October 2, 2016
|
|
October 1, 2017
|
|
October 2, 2016
|
|
October 1, 2017
|
|
October 2, 2016
|
||||||
|
Pollo Tropical
|
|
Taco Cabana
|
|
Consolidated
|
||||||||||||
Restaurant sales:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Pollo Tropical
|
|
|
|
|
|
|
|
|
55.7
|
%
|
|
56.5
|
%
|
||||
Taco Cabana
|
|
|
|
|
|
|
|
|
44.3
|
%
|
|
43.5
|
%
|
||||
Consolidated restaurant sales
|
|
|
|
|
|
|
|
|
100.0
|
%
|
|
100.0
|
%
|
||||
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cost of sales
|
31.1
|
%
|
|
31.7
|
%
|
|
28.4
|
%
|
|
28.6
|
%
|
|
29.9
|
%
|
|
30.3
|
%
|
Restaurant wages and related expenses
|
23.8
|
%
|
|
23.4
|
%
|
|
32.3
|
%
|
|
29.1
|
%
|
|
27.5
|
%
|
|
25.9
|
%
|
Restaurant rent expense
|
5.2
|
%
|
|
4.8
|
%
|
|
6.0
|
%
|
|
5.5
|
%
|
|
5.5
|
%
|
|
5.1
|
%
|
Other restaurant operating expenses
|
14.0
|
%
|
|
13.4
|
%
|
|
15.3
|
%
|
|
13.5
|
%
|
|
14.6
|
%
|
|
13.4
|
%
|
Advertising expense
|
4.0
|
%
|
|
4.1
|
%
|
|
2.9
|
%
|
|
3.9
|
%
|
|
3.5
|
%
|
|
4.0
|
%
|
Pre-opening costs
|
0.4
|
%
|
|
1.4
|
%
|
|
0.4
|
%
|
|
0.1
|
%
|
|
0.4
|
%
|
|
0.9
|
%
|
Pollo Tropical:
|
|
||
Decrease in comparable restaurant sales
|
$
|
(22.3
|
)
|
Decrease in sales related to closed restaurants, net of new restaurants
|
(0.3
|
)
|
|
Total decrease
|
$
|
(22.6
|
)
|
|
|
||
Taco Cabana:
|
|
||
Decrease in comparable restaurant sales
|
$
|
(16.5
|
)
|
Incremental sales related to new restaurants, net of closed restaurants
|
5.8
|
|
|
Total decrease
|
$
|
(10.7
|
)
|
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
|
)%
|
Hurricane inventory loss
|
0.2
|
%
|
Menu offering improvement costs related to the Plan
|
0.1
|
%
|
Sales mix
|
0.1
|
%
|
Other
|
0.4
|
%
|
Net decrease in cost of sales as a percentage of restaurant sales
|
(0.6
|
)%
|
|
|
|
Restaurant wages and related expenses:
|
|
|
Higher labor costs for comparable restaurants(1) (2)
|
0.8
|
%
|
Lower labor costs due to closure of restaurants
|
(0.5
|
)%
|
Other(2)
|
0.1
|
%
|
Net increase in restaurant wages and related costs as a percentage of restaurant sales
|
0.4
|
%
|
|
|
|
Other operating expenses:
|
|
|
Higher utility costs(2)
|
0.3
|
%
|
Higher repairs and maintenance costs(2) (3)
|
0.3
|
%
|
Higher sanitation costs(2)
|
0.2
|
%
|
Other
|
(0.2
|
)%
|
Net increase in other restaurant operating expenses as a percentage of restaurant sales
|
0.6
|
%
|
|
|
|
Advertising expense:
|
|
|
Reduced advertising
|
(0.1
|
)%
|
Net decrease in advertising expense as a percentage of restaurant sales
|
(0.1
|
)%
|
|
|
|
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
|
(0.7
|
)%
|
Menu price increases
|
(0.6
|
)%
|
Lower promotions and discounts
|
(0.2
|
)%
|
Menu offering improvement costs related to the Plan
|
0.5
|
%
|
Sales mix
|
0.4
|
%
|
Hurricane inventory loss
|
0.1
|
%
|
Other
|
0.3
|
%
|
Net decrease in cost of sales as a percentage of restaurant sales
|
(0.2
|
)%
|
|
|
|
Restaurant wages and related expenses:
|
|
|
Higher labor costs(1) (2)
|
2.8
|
%
|
Higher medical benefit and payroll tax costs(2)
|
0.3
|
%
|
Other(2)
|
0.1
|
%
|
Net increase in restaurant wages and related costs as a percentage of restaurant sales
|
3.2
|
%
|
|
|
|
Other operating expenses:
|
|
|
Higher repairs and maintenance costs(2) (3)
|
0.7
|
%
|
Higher real estate taxes(2)
|
0.3
|
%
|
Higher utility costs(2)
|
0.2
|
%
|
Higher operating supplies(2)
|
0.2
|
%
|
Other(2)
|
0.4
|
%
|
Net increase in other restaurant operating expenses as a percentage of restaurant sales
|
1.8
|
%
|
|
|
|
Advertising expense:
|
|
|
Reduced advertising
|
(1.0
|
)%
|
Net decrease in advertising expense as a percentage of restaurant sales
|
(1.0
|
)%
|
|
|
|
Pre-opening costs:
|
|
|
Increase in restaurant openings
|
0.3
|
%
|
Net increase in pre-opening costs as a percentage of restaurant sales
|
0.3
|
%
|
•
|
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 1, 2017:
|
|
|
|
|
|
|
|
||||||||
New restaurant development
|
$
|
15,863
|
|
|
$
|
8,131
|
|
|
$
|
—
|
|
|
$
|
23,994
|
|
Restaurant remodeling
|
2,243
|
|
|
37
|
|
|
—
|
|
|
2,280
|
|
||||
Other restaurant capital expenditures(1)
|
4,033
|
|
|
3,617
|
|
|
—
|
|
|
7,650
|
|
||||
Corporate and restaurant information systems
|
1,069
|
|
|
1,702
|
|
|
1,844
|
|
|
4,615
|
|
||||
Total capital expenditures
|
$
|
23,208
|
|
|
$
|
13,487
|
|
|
$
|
1,844
|
|
|
$
|
38,539
|
|
Number of new restaurant openings
|
8
|
|
|
6
|
|
|
—
|
|
|
14
|
|
||||
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
|
|
•
|
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
|
|
Nine Months Ended
|
||||||||||||
|
|
October 1, 2017
|
|
October 2, 2016
|
|
October 1, 2017
|
|
October 2, 2016
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
|
$
|
(8,257
|
)
|
|
$
|
(4,531
|
)
|
|
$
|
(25,477
|
)
|
|
$
|
14,280
|
|
Provision for (benefit from) income taxes
|
|
(4,827
|
)
|
|
(2,748
|
)
|
|
(14,241
|
)
|
|
8,065
|
|
||||
Income (loss) before taxes
|
|
(13,084
|
)
|
|
(7,279
|
)
|
|
(39,718
|
)
|
|
22,345
|
|
||||
Add:
|
|
|
|
|
|
|
|
|
||||||||
Non-general and administrative expense adjustments:
|
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
|
8,483
|
|
|
9,513
|
|
|
26,265
|
|
|
26,474
|
|
||||
Impairment and other lease charges
|
|
15,905
|
|
|
18,513
|
|
|
59,081
|
|
|
18,607
|
|
||||
Interest expense
|
|
672
|
|
|
542
|
|
|
1,910
|
|
|
1,635
|
|
||||
Other expense (income), net
|
|
461
|
|
|
—
|
|
|
1,259
|
|
|
(238
|
)
|
||||
Stock-based compensation expense in restaurant wages
|
|
9
|
|
|
35
|
|
|
44
|
|
|
111
|
|
||||
Unused pre-production costs in advertising expense(1)
|
|
—
|
|
|
—
|
|
|
410
|
|
|
—
|
|
||||
Total Non-general and administrative expense adjustments
|
|
25,530
|
|
|
28,603
|
|
|
88,969
|
|
|
46,589
|
|
||||
General and administrative expense adjustments:
|
|
|
|
|
|
|
|
|
||||||||
Stock-based compensation expense
|
|
938
|
|
|
330
|
|
|
2,723
|
|
|
2,523
|
|
||||
Terminated capital project(2)
|
|
—
|
|
|
—
|
|
|
849
|
|
|
—
|
|
||||
Board and shareholder matter costs(3)
|
|
(155
|
)
|
|
282
|
|
|
3,748
|
|
|
1,030
|
|
||||
Write-off of site development costs(4)
|
|
8
|
|
|
581
|
|
|
462
|
|
|
877
|
|
||||
Plan restructuring costs and retention bonuses(5)
|
|
87
|
|
|
—
|
|
|
2,101
|
|
|
—
|
|
||||
Office restructuring and relocation costs(6)
|
|
(152
|
)
|
|
193
|
|
|
(152
|
)
|
|
539
|
|
||||
Legal settlements and related costs(7)
|
|
—
|
|
|
834
|
|
|
(473
|
)
|
|
459
|
|
||||
Total General and administrative expense adjustments
|
|
726
|
|
|
2,220
|
|
|
9,258
|
|
|
5,428
|
|
||||
Consolidated Adjusted EBITDA:
|
|
$
|
13,172
|
|
|
$
|
23,544
|
|
|
$
|
58,509
|
|
|
$
|
74,362
|
|
Three Months Ended
|
|
Pollo Tropical
|
|
Taco Cabana
|
||||
October 1, 2017:
|
|
|
|
|
||||
Adjusted EBITDA:
|
|
$
|
9,396
|
|
|
$
|
3,776
|
|
Restaurant-Level Adjustments:
|
|
|
|
|
||||
Add: Pre-opening costs
|
|
230
|
|
|
314
|
|
||
Add: Other general and administrative expense(1)
|
|
6,250
|
|
|
5,089
|
|
||
Less: Franchise royalty revenue and fees
|
|
396
|
|
|
195
|
|
||
Restaurant-Level Adjusted EBITDA:
|
|
$
|
15,480
|
|
|
$
|
8,984
|
|
|
|
|
|
|
||||
October 2, 2016:
|
|
|
|
|
||||
Adjusted EBITDA:
|
|
$
|
13,782
|
|
|
$
|
9,762
|
|
Restaurant-Level Adjustments:
|
|
|
|
|
||||
Add: Pre-opening costs
|
|
1,456
|
|
|
53
|
|
||
Add: Other general and administrative expense(1)
|
|
7,213
|
|
|
5,087
|
|
||
Less: Franchise royalty revenue and fees
|
|
474
|
|
|
190
|
|
||
Restaurant-Level Adjusted EBITDA:
|
|
$
|
21,977
|
|
|
$
|
14,712
|
|
|
|
|
|
|
||||
Nine Months Ended
|
|
Pollo Tropical
|
|
Taco Cabana
|
||||
October 1, 2017:
|
|
|
|
|
||||
Adjusted EBITDA:
|
|
$
|
41,257
|
|
|
$
|
17,252
|
|
Restaurant-Level Adjustments:
|
|
|
|
|
||||
Add: Pre-opening costs
|
|
1,013
|
|
|
865
|
|
||
Add: Other general and administrative expense(1)
|
|
21,345
|
|
|
16,610
|
|
||
Less: Franchise royalty revenue and fees
|
|
1,272
|
|
|
568
|
|
||
Restaurant-Level Adjusted EBITDA:
|
|
$
|
62,343
|
|
|
$
|
34,159
|
|
|
|
|
|
|
||||
October 2, 2016:
|
|
|
|
|
||||
Adjusted EBITDA:
|
|
$
|
43,832
|
|
|
$
|
30,530
|
|
Restaurant-Level Adjustments:
|
|
|
|
|
||||
Add: Pre-opening costs
|
|
4,365
|
|
|
342
|
|
||
Add: Other general and administrative expense(1)
|
|
22,208
|
|
|
14,985
|
|
||
Less: Franchise royalty revenue and fees
|
|
1,559
|
|
|
540
|
|
||
Restaurant-Level Adjusted EBITDA:
|
|
$
|
68,846
|
|
|
$
|
45,317
|
|
•
|
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.
|
|
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
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 6, 2017
|
/S/ RICHARD C. STOCKINGER
|
|
(Signature)
|
|
Richard C. Stockinger
Chief Executive Officer
|
|
|
Date: November 6, 2017
|
/S/ LYNN S. SCHWEINFURTH
|
|
(Signature)
|
|
Lynn S. Schweinfurth
Senior Vice President, Chief Financial Officer and Treasurer
|
|
|
Date: November 6, 2017
|
/S/ CHERI L. KINDER
|
|
(Signature)
|
|
Cheri L. Kinder
Vice President, Corporate Controller
|
FIESTA RESTAURANT GROUP, INC.
|
||
By:
|
/s/ Richard C. Stockinger
|
|
|
Name: Richard C. Stockinger
Title: Chief Executive Officer and President
|
|
|
|
|
/s/ Charles Locke
|
||
|
Charles Locke
|
|
Date: November 6, 2017
|
/s/RICHARD C. STOCKINGER
|
|
Richard C. Stockinger
Chief Executive Officer
|
Date: November 6, 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
|