FIESTA RESTAURANT GROUP, INC., 10-Q filed on 5/7/2018
Quarterly Report
v3.8.0.1
Document and Entity Information - shares
3 Months Ended
Apr. 01, 2018
May 01, 2018
Document And Entity Information [Abstract]    
Entity Registrant Name FIESTA RESTAURANT GROUP, INC.  
Entity Central Index Key 0001534992  
Current Fiscal Year End Date --12-30  
Entity Filer Category Large Accelerated Filer  
Document Type 10-Q  
Document Period End Date Apr. 01, 2018  
Document Fiscal Year Focus 2018  
Document Fiscal Period Focus Q1  
Amendment Flag false  
Entity Common Stock, Shares Outstanding   27,252,222
v3.8.0.1
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Apr. 01, 2018
Dec. 31, 2017
Current assets:    
Cash $ 3,791 $ 3,599
Trade receivables 11,011 9,830
Inventories 2,688 2,880
Prepaid rent 0 3,300
Income tax receivable 11,023 11,334
Prepaid expenses and other current assets 8,601 10,105
Total current assets 37,114 41,048
Property and equipment, net 235,038 234,561
Goodwill 123,484 123,484
Deferred income taxes 15,884 17,232
Other assets 7,564 6,988
Total assets 419,084 423,313
Current liabilities:    
Current portion of long-term debt 104 98
Accounts payable 14,152 20,293
Accrued payroll, related taxes and benefits 11,904 11,776
Accrued real estate taxes 2,612 5,860
Other liabilities 19,619 21,817
Total current liabilities 48,391 59,844
Long-term debt, net of current portion 81,718 76,425
Deferred income—sale-leaseback of real estate 22,564 23,466
Other liabilities 30,114 32,062
Total liabilities 182,787 191,797
Commitments and contingencies
Stockholders' equity:    
Common stock, par value $.01; authorized 100,000,000 shares, issued 27,253,103 and 27,086,958 shares, respectively, and outstanding 26,905,630 and 26,847,458 shares, respectively. 269 268
Additional paid-in capital 167,711 166,823
Retained earnings 68,666 64,425
Treasury stock, at cost; 18,406 shares (349) 0
Total stockholders' equity 236,297 231,516
Total liabilities and stockholders' equity $ 419,084 $ 423,313
v3.8.0.1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares
Apr. 01, 2018
Dec. 31, 2017
Statement of Financial Position [Abstract]    
Common stock, par value (usd per share) $ 0.01 $ 0.01
Common stock, shares authorized 100,000,000 100,000,000
Common stock, shares issued 27,253,103 27,086,958
Common stock, shares outstanding 26,905,630 26,847,458
Treasury stock, shares 18,406  
v3.8.0.1
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
$ in Thousands
3 Months Ended
Apr. 01, 2018
Apr. 02, 2017
Revenues:    
Restaurant sales $ 168,833 $ 174,977
Franchise royalty revenues and fees 651 630
Total revenues 169,484 175,607
Costs and expenses:    
Cost of sales 53,565 50,948
Restaurant wages and related expenses (including stock-based compensation expense of $17 and $109, respectively) 46,483 48,132
Restaurant rent expense 8,892 9,862
Other restaurant operating expenses 23,450 24,068
Advertising expense 6,213 7,539
General and administrative (including stock-based compensation expense of $872 and $537, respectively) 14,919 15,698
Depreciation and amortization 8,999 9,186
Pre-opening costs 381 424
Impairment and other lease charges (662) 32,414
Other expense (income), net 366 454
Total operating expenses 162,606 198,725
Income (loss) from operations 6,878 (23,118)
Interest expense 1,069 584
Income (loss) before income taxes 5,809 (23,702)
Provision for (benefit from) income taxes 1,625 (8,642)
Net income (loss) $ 4,184 $ (15,060)
Basic net income (loss) per share (usd per share) $ 0.15 $ (0.56)
Diluted net income (loss) per share (usd per share) $ 0.15 $ (0.56)
Basic weighted average common shares outstanding 26,874,016 26,774,103
Diluted weighted average common shares outstanding 26,879,831 26,774,103
v3.8.0.1
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($)
$ in Thousands
3 Months Ended
Apr. 01, 2018
Apr. 02, 2017
Stock-based compensation $ 900 $ 600
Restaurant Wages And Related Expenses    
Stock-based compensation 17 109
General and Administrative Expense    
Stock-based compensation $ 872 $ 537
v3.8.0.1
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($)
$ in Thousands
Total
Common Stock
Additional Paid-In Capital
Retained Earnings
Treasury Stock
Beginning balance at Jan. 01, 2017 $ 264,175 $ 267 $ 163,204 $ 100,704  
Beginning shares at Jan. 01, 2017 26,755,640        
Increase (Decrease) in Stockholders' Equity          
Stock-based compensation $ 646   646    
Vesting of restricted shares (in shares) 31,565        
Vesting of restricted shares $ 1 1 0    
Cumulative effect of adopting a new accounting standard 26   73 (47)  
Net income (loss) $ (15,060)     (15,060)  
Ending shares at Apr. 02, 2017 26,787,205        
Ending balance at Apr. 02, 2017 $ 249,788 268 163,923 85,597  
Beginning balance at Dec. 31, 2017 $ 231,516 268 166,823 64,425  
Beginning shares at Dec. 31, 2017 26,847,458        
Increase (Decrease) in Stockholders' Equity          
Stock-based compensation $ 889   889    
Vesting of restricted shares (in shares) 76,578        
Vesting of restricted shares $ 0 1 (1)    
Cumulative effect of adopting a new accounting standard $ 57     57  
Treasury stock purchases (in shares) (18,406)        
Purchase of treasury stock $ (349)       $ (349)
Net income (loss) $ 4,184     4,184  
Ending shares at Apr. 01, 2018 26,905,630        
Ending balance at Apr. 01, 2018 $ 236,297 $ 269 $ 167,711 $ 68,666 $ (349)
v3.8.0.1
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands
3 Months Ended
Apr. 01, 2018
Apr. 02, 2017
Cash flows from operating activities:    
Net income (loss) $ 4,184 $ (15,060)
Adjustments to reconcile net income to net cash provided from operating activities:    
Loss on disposals of property and equipment 129 838
Stock-based compensation 889 646
Impairment and other lease charges (662) 32,414
Depreciation and amortization 8,999 9,186
Amortization of deferred financing costs 68 77
Amortization of deferred gains from sale-leaseback transactions (899) (901)
Deferred income taxes 1,348 (11,848)
Changes in other operating assets and liabilities (5,167) (3,140)
Net cash provided from operating activities 8,889 12,212
Capital expenditures:    
New restaurant development (4,765) (8,571)
Restaurant remodeling (333) (217)
Other restaurant capital expenditures (5,895) (1,689)
Corporate and restaurant information systems (4,175) (1,197)
Total capital expenditures (15,168) (11,674)
Proceeds from disposals of properties 1,813 0
Proceeds from insurance recoveries 180 0
Net cash used in investing activities (13,175) (11,674)
Cash flows from financing activities:    
Borrowings on revolving credit facility 15,000 5,000
Repayments on revolving credit facility (10,000) (2,000)
Principal payments on capital leases (23) (22)
Financing costs associated with issuance of debt (150) 0
Payments to purchase treasury stock (349) 0
Net cash provided from financing activities 4,478 2,978
Net increase in cash 192 3,516
Cash, beginning of period 3,599 4,196
Cash, end of period 3,791 7,712
Supplemental disclosures:    
Interest paid on long-term debt 516 522
Interest paid on lease financing obligations 0 36
Accruals for capital expenditures 3,428 6,754
Income tax payments (refunds), net (17) 86
Capital lease obligations incurred $ 322 $ 0
v3.8.0.1
Basis of Presentation
3 Months Ended
Apr. 01, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Presentation Basis of Presentation
Business Description. Fiesta Restaurant Group, Inc. ("Fiesta Restaurant Group" or "Fiesta") owns, operates and franchises two fast-casual restaurant brands through its wholly-owned subsidiaries Pollo Operations, Inc. and its subsidiaries, Pollo Franchise, Inc. (collectively “Pollo Tropical”) and Taco Cabana, Inc. and its subsidiaries (collectively “Taco Cabana”). Unless the context otherwise requires, Fiesta and its subsidiaries, Pollo Tropical and Taco Cabana, are collectively referred to as the “Company”. At April 1, 2018, the Company owned and operated 146 Pollo Tropical® restaurants and 166 Taco Cabana® restaurants. The Pollo Tropical restaurants included 137 located in Florida and 9 located in Georgia. All of the Taco Cabana restaurants are located in Texas. At April 1, 2018, the Company franchised a total of 31 Pollo Tropical restaurants and seven Taco Cabana restaurants. The franchised Pollo Tropical restaurants included 17 in Puerto Rico, four in Panama, two in Guyana, one in the Bahamas, one in Venezuela, and six on college campuses and at a hospital in Florida. The franchised Taco Cabana restaurants included five in New Mexico and two on college campuses in Texas.
Basis of Consolidation. The unaudited condensed consolidated financial statements presented herein reflect the consolidated financial position, results of operations and cash flows of Fiesta and its wholly-owned subsidiaries. All intercompany transactions have been eliminated in consolidation.
Fiscal Year. The Company uses a 52-53 week fiscal year ending on the Sunday closest to December 31. The fiscal year ended December 31, 2017 contained 52 weeks. The three months ended April 1, 2018 and April 2, 2017 each contained thirteen weeks. The fiscal year ending December 30, 2018 will contain 52 weeks.
Basis of Presentation. The accompanying unaudited condensed consolidated financial statements for the three months ended April 1, 2018 and April 2, 2017 have been prepared without an audit pursuant to the rules and regulations of the Securities and Exchange Commission and do not include certain information and footnotes required by U.S. Generally Accepted Accounting Principles ("GAAP") for complete financial statements. In the opinion of management, all normal and recurring adjustments considered necessary for a fair presentation of such financial statements have been included. The results of operations for the three months ended April 1, 2018 and April 2, 2017 are not necessarily indicative of the results to be expected for the full year.
These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2017 included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2017. The December 31, 2017 balance sheet data is derived from those audited financial statements.
Reclassification. Write-offs of site development costs were reclassified from general and administrative expense to other expense (income), net in the condensed consolidated statement of operations to conform with the current year presentation.
Guidance Adopted in 2018. In May 2014, and in subsequent updates, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the guidance in former Topic 605, Revenue Recognition, and requires entities to recognize revenue when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The Company adopted this new accounting standard and all the related amendments as of January 1, 2018 using the modified retrospective method, and recognized a total cumulative effect adjustment to increase retained earnings by less than $0.1 million, which consisted of a $0.3 million increase related to gift card breakage and a $0.3 million decrease related to initial franchise and area development fees, as a result of adopting the standard. The new standard did not impact the Company’s recognition of revenue from Company-owned and operated restaurants or its recognition of sale-based royalties from restaurants operated by franchisees. The comparative period information has not been restated and continues to be reported under the accounting standard in effect for those periods. When compared to the previous accounting policies, the impact of adopting the new standard was immaterial to current and long-term other liabilities and retained earnings at January 1, 2018 and to net income for the three months ended April 1, 2018. The adoption of the new standard had no impact on our consolidated statements of cash flows.
Revenue Recognition. Revenue is recognized upon transfer of promised products or services to customers in an amount that reflects the consideration the Company received in exchange for those products or services. Revenues from the Company's owned and operated restaurants are recognized when payment is tendered at the time of sale. Franchise royalty revenues are based on a percent of gross sales and are recorded as income when earned. Initial franchise fees and area development fees associated with new franchise agreements are not distinct from the continuing rights and services offered by the Company during the term of the related franchise agreements and are recognized as income over the term of the related franchise agreements. A portion of the
initial franchise fee is allocated to training services and is recognized as revenue when the Company completes the training services. Prior to adopting Topic 606, the Company recognized initial franchise fees as revenue in the period that a franchised location opened for business. See Note 6 - Business Segment Information.
Gift cards. The Company sells gift cards to its customers in its restaurants and through select third parties. The Company recognizes revenue from gift cards upon redemption by the customer. For unredeemed gift cards that the Company expects to be entitled to breakage, the Company recognizes expected breakage as revenue in proportion to the pattern of redemption by the customers. The gift cards have no stated expiration dates. Revenues from unredeemed gift cards and gift card liabilities, which are recorded in other current liabilities, are not material to the Company's financial statements. Prior to adopting Topic 606, the Company did not recognize breakage on its gift cards.
Fair Value of Financial Instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. In determining fair value, the accounting standards establish a three level hierarchy for inputs used in measuring fair value as follows: Level 1 inputs are quoted prices in active markets for identical assets or liabilities; Level 2 inputs are observable for the asset or liability, either directly or indirectly, including quoted prices in active markets for similar assets or liabilities; and Level 3 inputs are unobservable and reflect our own assumptions. The following methods were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate the fair value:
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 of the Company's senior credit facility was approximately $79.7 million at April 1, 2018, and $75.0 million at December 31, 2017. The carrying value of the Company's senior credit facility was $80.0 million at April 1, 2018 and $75.0 million at December 31, 2017.
Long-Lived Assets. The Company assesses the recoverability of property and equipment and definite-lived intangible assets by determining whether the carrying value of these assets can be recovered over their respective remaining lives through undiscounted future operating cash flows. Impairment is reviewed when events or changes in circumstances indicate that the carrying amounts of these assets may not be fully recoverable. See Note 3 - Impairment of Long-Lived Assets.
Use of Estimates. The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements. Estimates also affect the reported amounts of expenses during the reporting periods. Significant items subject to such estimates and assumptions include: accrued occupancy costs, insurance liabilities, evaluation for impairment of goodwill and long-lived assets and lease accounting matters. Actual results could differ from those estimates.
v3.8.0.1
Prepaid Expenses and Other Current Assets
3 Months Ended
Apr. 01, 2018
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]  
Prepaid Expenses and Other Current Assets Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets, consist of the following:
 
April 1, 2018
 
December 31, 2017
Prepaid contract expenses
$
3,851

 
$
3,681

Assets held for sale(1)
1,005

 
2,705

Other
3,745

 
3,719

 
$
8,601

 
$
10,105


(1) One closed Pollo Tropical restaurant property owned by the Company that was classified as held for sale as of December 31, 2017 was sold in January 2018 for $1.8 million.
v3.8.0.1
Impairment of Long-Lived Assets and Other Lease Charges
3 Months Ended
Apr. 01, 2018
Property, Plant and Equipment [Abstract]  
Impairment of Long-Lived Assets and Other Lease Charges Impairment of Long-Lived Assets and Other Lease Charges
The Company reviews its long-lived assets, principally property and equipment, for impairment at the restaurant level. In addition to considering management’s plans, known regulatory or governmental actions and damage due to acts of God (hurricanes, tornadoes, etc.), the Company considers a triggering event to have occurred related to a specific restaurant if the restaurant’s cash flows for the last twelve months are less than a minimum threshold or if consistent levels of cash flows for the remaining lease
period are less than the carrying value of the restaurant’s assets. If an indicator of impairment exists for any of its assets, an estimate of undiscounted future cash flows over the life of the primary asset for each restaurant is compared to that long-lived asset’s carrying value. If the carrying value is greater than the undiscounted cash flow, the Company then determines the fair value of the asset and if an asset is determined to be impaired, the loss is measured by the excess of the carrying amount of the asset over its fair value. There is uncertainty in the projected undiscounted future cash flows used in the Company's impairment review analysis. If actual performance does not achieve the projections, the Company may recognize impairment charges in future periods, and such charges could be material. For closed restaurant locations, the Company reviews the future minimum lease payments and related ancillary costs from the date of the restaurant closure to the end of the remaining lease term and records a lease charge for the lease liabilities to be incurred, net of any estimated sublease recoveries. There is uncertainty in the estimates of future lease costs and sublease recoveries. Actual costs and sublease recoveries could vary significantly from the estimated amounts and result in additional lease charges or recoveries, and such amounts could be material.

A summary of impairment on long-lived assets and other lease charges (recoveries) recorded by segment is as follows:
 
Three Months Ended
 
April 1, 2018
 
April 2, 2017
Pollo Tropical
$
(541
)
 
$
32,071

Taco Cabana
(121
)
 
343

 
$
(662
)
 
$
32,414


Impairment and other lease charges for the three months ended April 1, 2018 primarily consist of a $(0.6) million and a $(0.1) million net benefit related to lease charge recoveries for Pollo Tropical and Taco Cabana, respectively, due primarily to a lease termination, a lease assignment, subleases and other adjustments to estimates of future lease costs.
In conjunction with the Strategic Renewal Plan to drive long-term shareholder value creation, the Company recognized impairment charges of $32.0 million in the first quarter of 2017 primarily related to 30 Pollo Tropical restaurants that were subsequently closed during the second quarter of 2017, seven of which were initially impaired in 2016. In the first quarter of 2017, the Company also recognized impairment charges of $0.3 million with respect to three underperforming Taco Cabana restaurants.
The Company determined the fair value of restaurant equipment, for those restaurants reviewed for impairment, based on current economic conditions, the Company’s history of using these assets in the operation of its business and the Company's expectation of how a market participant would value the assets. In addition, for those restaurants reviewed for impairment where the Company owns the land and building, the Company utilized third-party information such as a broker quoted value to determine the fair value of the property. These fair value asset measurements rely on significant unobservable inputs and are considered Level 3 in the fair value hierarchy. The Level 3 assets measured at fair value associated with impairment charges recorded during the three months ended April 2, 2017 totaled $15.2 million, which primarily consisted of leasehold improvements related to Pollo Tropical restaurants that will be rebranded as Taco Cabana restaurants and the estimated fair value of owned properties.
v3.8.0.1
Other Liabilities
3 Months Ended
Apr. 01, 2018
Other Liabilities Disclosure [Abstract]  
Other Liabilities Other Liabilities
Other liabilities, current, consist of the following:
 
April 1, 2018
 
December 31, 2017
Accrued workers' compensation and general liability claims
$
5,425

 
$
5,083

Sales and property taxes
1,617

 
2,279

Accrued occupancy costs
6,896

 
7,813

Other
5,681

 
6,642

 
$
19,619

 
$
21,817


Other liabilities, long-term, consist of the following:
 
April 1, 2018
 
December 31, 2017
Accrued occupancy costs
$
19,218

 
$
20,985

Deferred compensation
794

 
1,029

Accrued workers’ compensation and general liability claims
6,102

 
6,102

Other
4,000

 
3,946

 
$
30,114

 
$
32,062


Accrued occupancy costs include obligations pertaining to closed restaurant locations and accruals to expense operating lease rental payments on a straight-line basis over the lease term.
The following table presents the activity in the closed-restaurant reserve, of which $3.2 million and $5.3 million are included in long-term accrued occupancy costs at April 1, 2018 and December 31, 2017, respectively, with the remainder in current accrued occupancy costs.
 
Three Months Ended April 1, 2018
 
Year Ended December 31, 2017
Balance, beginning of period
$
12,994

 
$
4,912

Provisions for restaurant closures

 
8,767

Additional lease charges (recoveries), net
(720
)
 
(1,301
)
Payments, net
(2,456
)
 
(5,528
)
Other adjustments(1)
189

 
6,144

Balance, end of period
$
10,007

 
$
12,994


(1) For the year ended December 31, 2017, includes the transfer of accruals to expense operating lease payments on a straight-line basis.
v3.8.0.1
Stockholder's Equity
3 Months Ended
Apr. 01, 2018
Equity [Abstract]  
Stockholder's Equity Stockholders' Equity

Purchase of treasury stock

On February 26, 2018, the Company announced that its board of directors approved a share repurchase program for up to 1.5 million shares of the Company's common stock. Under the share repurchase program, shares may be repurchased from time to time in open market transactions at prevailing market prices, in privately negotiated transactions or by other means in accordance with federal securities laws, including Rule 10b-18 under the Securities Exchange Act of 1934, as amended. The share repurchase program has no time limit and may be modified, suspended, superseded or terminated at any time by the Company's board of directors. The Company repurchased 18,406 shares of its common stock under the program in open market transactions during the three months ended April 1, 2018 for $0.3 million. The repurchased shares are held as treasury stock at cost.

Stock-based Compensation

During the three months ended April 1, 2018, the Company granted certain employees a total of 153,769 non-vested restricted shares under the Fiesta Restaurant Group, Inc. 2012 Stock Incentive Plan (the "Fiesta Plan"). The shares granted generally vest and become non-forfeitable over a four year vesting period. The weighted average fair value at grant date for these non-vested shares issued during the three months ended April 1, 2018 was $18.70. In addition, the Company granted a non-employee food and beverage consultant 8,022 non-vested restricted shares under the Plan. These shares vest and become non-forfeitable over a three year vesting period.

During the three months ended April 2, 2017, the Company granted certain employees and a non-employee director a total of 187,342 non-vested restricted shares under the Fiesta Plan. The shares granted generally vest and become non-forfeitable over a four year vesting period, or for the grant to the non-employee director, over a five year vesting period. The weighted average fair value at grant date for these non-vested shares issued during the three months ended April 2, 2017 was $20.75.
During the three months ended April 1, 2018, the Company granted certain executives a total of 112,169 restricted stock units under the Fiesta Plan, which vest in three tranches over a three 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 112,169 shares, if the service and market performance conditions are met in the third year. The weighted average fair value at grant date for these restricted stock units was 6.96.
During the three months ended April 2, 2017, the Company granted certain employees a total of 11,745 restricted stock units under the Fiesta Plan. The restricted stock units granted during the three months ended April 2, 2017 vest and become non-forfeitable at the end of a four year vesting period. The weighted average fair value at grant date for these restricted stock units issued to employees during the three months ended April 2, 2017 was $20.75.
Stock-based compensation expense for the three months ended April 1, 2018 and April 2, 2017 was $0.9 million and $0.6 million, respectively. At April 1, 2018, the total unrecognized stock-based compensation expense related to non-vested restricted shares and restricted stock units was approximately $7.6 million. At April 1, 2018, the remaining weighted average vesting period for non-vested restricted shares was 3.1 years and restricted stock units was 1.8 years.
A summary of all employee (and non-employee director) non-vested restricted shares and restricted stock units activity for the three months ended April 1, 2018 is as follows:
 
Non-Vested Shares
 
Restricted Stock Units
 
Shares
 
Weighted
Average
Grant Date
Fair Value
 
Units
 
Weighted
Average
Grant Date
Fair Value
Outstanding at December 31, 2017
239,500

 
$
24.81

 
143,946

 
$
23.11

Granted
153,769

 
18.70

 
112,169

 
6.96

Vested/Released
(67,057
)
 
27.83

 
(9,722
)
 
45.19

Forfeited
(5,167
)
 
33.87

 
(10,641
)
 
59.45

Outstanding at April 1, 2018
321,045

 
$
20.75

 
235,752

 
$
12.88


The fair value of the restricted stock units subject to market performance conditions was estimated using the Monte Carlo simulation method. The fair value of the non-vested restricted shares and all other restricted stock units is based on the closing price on the date of grant.
v3.8.0.1
Business Segment Information
3 Months Ended
Apr. 01, 2018
Segment Reporting [Abstract]  
Business Segment Information Business Segment Information
The Company owns, operates and franchises two restaurant brands, Pollo Tropical® and Taco Cabana®, each of which is an operating segment. Pollo Tropical restaurants feature citrus marinated chicken and other freshly prepared tropical inspired menu items, while Taco Cabana restaurants specialize in Mexican inspired food.
Each segment's accounting policies are described in the summary of significant accounting policies in Note 1 to the Company's audited financial statements contained in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2017. The primary measure of segment profit or loss used by the chief operating decision maker to assess performance and allocate resources is Adjusted EBITDA, which is defined as earnings attributable to the applicable operating segments before interest expense, income taxes, depreciation and amortization, impairment and other lease charges, stock-compensation expense, other expense (income), net, and certain significant items for each segment that management believes are related to strategic changes and/or are not related to the ongoing operation of the Company's restaurants as set forth in the reconciliation table below.
The “Other” column includes corporate-related items not allocated to reportable segments and consists primarily of corporate-owned property and equipment, miscellaneous prepaid costs, capitalized costs associated with the issuance of indebtedness, corporate cash accounts and a current income tax receivable.
 
Three Months Ended
 
Pollo Tropical
 
Taco Cabana
 
Other
 
Consolidated
April 1, 2018:
 
 
 
 
 
 
 
 
Restaurant sales
 
$
94,478

 
$
74,355

 
$

 
$
168,833

Franchise revenue
 
464

 
187

 

 
651

Cost of sales
 
31,015

 
22,550

 

 
53,565

Restaurant wages and related expenses(1)
 
22,156

 
24,327

 

 
46,483

Restaurant rent expense
 
4,297

 
4,595

 

 
8,892

Other restaurant operating expenses
 
12,115

 
11,335

 

 
23,450

Advertising expense
 
3,316

 
2,897

 

 
6,213

General and administrative expense(2)
 
8,042

 
6,877

 

 
14,919

Adjusted EBITDA
 
14,447

 
2,511

 

 
16,958

Depreciation and amortization
 
5,316

 
3,683

 

 
8,999

Capital expenditures
 
8,173

 
6,911

 
84

 
15,168

April 2, 2017:
 
 
 
 
 
 
 
 
Restaurant sales
 
$
99,310

 
$
75,667

 
$

 
$
174,977

Franchise revenue
 
449

 
181

 

 
630

Cost of sales
 
29,947

 
21,001

 

 
50,948

Restaurant wages and related expenses(1)
 
24,046

 
24,086

 

 
48,132

Restaurant rent expense
 
5,375

 
4,487

 

 
9,862

Other restaurant operating expenses
 
13,389

 
10,679

 

 
24,068

Advertising expense
 
4,325

 
3,214

 

 
7,539

General and administrative expense(2)
 
8,841

 
6,857

 

 
15,698

Adjusted EBITDA
 
14,722

 
6,494

 

 
21,216

Depreciation and amortization
 
6,083

 
3,103

 

 
9,186

Capital expenditures
 
8,663

 
2,696

 
315

 
11,674

Identifiable Assets:
 
 
 
 
 
 
 
 
April 1, 2018
 
$
223,114

 
$
169,560

 
$
26,410

 
$
419,084

December 31, 2017
 
227,194

 
167,237

 
28,882

 
423,313


(1) Includes stock-based compensation expense of $17 and $109 for the three months ended April 1, 2018 and April 2, 2017, respectively.
(2) Includes stock-based compensation expense of $872 and $537 for the three months ended April 1, 2018 and April 2, 2017, respectively.
A reconciliation of consolidated net income (loss) to Adjusted EBITDA follows:
Three Months Ended
 
Pollo Tropical
 
Taco Cabana
 
Consolidated
April 1, 2018:
 
 
 
 
 
 
Net income
 
 
 
 
 
$
4,184

Provision for income taxes
 
 
 
 
 
1,625

Income (loss) before taxes
 
$
8,128

 
$
(2,319
)
 
$
5,809

Add
 
 
 
 
 
 
     Non-general and administrative expense adjustments
 
 
 
 
 
 
          Depreciation and amortization
 
5,316

 
3,683

 
8,999

          Impairment and other lease charges
 
(541
)
 
(121
)
 
(662
)
          Interest expense
 
528

 
541

 
1,069

          Other expense (income), net
 
346

 
20

 
366

          Stock-based compensation expense in restaurant wages
 
5

 
12

 
17

                Total Non-general and administrative expense adjustments
 
5,654

 
4,135

 
9,789

     General and administrative expense adjustments
 
 
 
 
 
 
          Stock-based compensation expense
 
467

 
405

 
872

          Plan restructuring costs and retention bonuses
 
198

 
290

 
488

               Total General and administrative expense adjustments
 
665

 
695

 
1,360

Adjusted EBITDA
 
$
14,447

 
$
2,511

 
$
16,958

 
 
 
 
 
 
 
April 2, 2017:
 
 
 
 
 
 
Net loss
 
 
 
 
 
$
(15,060
)
Benefit from income taxes
 
 
 
 
 
(8,642
)
Income (loss) before taxes
 
$
(25,096
)
 
$
1,394

 
$
(23,702
)
Add
 
 
 
 
 
 
     Non-general and administrative expense adjustments
 
 
 
 
 
 
          Depreciation and amortization
 
6,083

 
3,103

 
9,186

          Impairment and other lease charges
 
32,071

 
343

 
32,414

          Interest expense
 
249

 
335

 
584

          Other expense (income), net
 
197

 
257

 
454

          Stock-based compensation expense in restaurant wages
 
45

 
64

 
109

          Unused pre-production costs in advertising expense
 
322

 

 
322

                Total Non-general and administrative expense adjustments
 
38,967

 
4,102

 
43,069

     General and administrative expense adjustments
 
 
 
 
 
 
          Stock-based compensation expense
 
315

 
222

 
537

          Terminated capital project
 
477

 
359

 
836

          Board and shareholder matter costs
 
458

 
346

 
804

          Plan restructuring costs and retention bonuses
 
74

 
71

 
145

          Legal settlements and related costs
 
(473
)
 

 
(473
)
               Total General and administrative expense adjustments
 
851

 
998

 
1,849

Adjusted EBITDA
 
$
14,722

 
$
6,494

 
$
21,216

v3.8.0.1
Net Income (Loss) per Share
3 Months Ended
Apr. 01, 2018
Earnings Per Share [Abstract]  
Net Income (Loss) per Share Net Income (Loss) per Share
The Company computes basic net income (loss) per share by dividing net income (loss) applicable to common shares by the weighted average number of common shares outstanding during each period. Our non-vested restricted shares contain a non-forfeitable right to receive dividends on a one-to-one per share ratio to common shares and are thus considered participating securities. The impact of the participating securities is included in the computation of basic net income per share pursuant to the two-class method. The two-class method of computing earnings per share is an earnings allocation formula that determines earnings attributable to common shares and participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. Net income per common share is computed by dividing undistributed earnings allocated to common stockholders by the weighted average number of common shares outstanding for the period. In applying the two-class method, undistributed earnings are allocated to both common shares and non-vested restricted shares based on the weighted average shares outstanding during the period.
Diluted earnings per share reflects the potential dilution that could occur if our restricted stock units were to be converted into common shares. Restricted stock units with performance conditions are only included in the diluted earnings per share calculation to the extent that performance conditions have been met at the measurement date. We compute diluted earnings per share by adjusting the basic weighted average number of common shares by the dilutive effect of the restricted stock units, determined using the treasury stock method.
Weighted average outstanding restricted stock units totaling 1,061 shares were not included in the computation of diluted earnings per share for the three months ended April 1, 2018 because including them would have been antidilutive. For the three months ended April 2, 2017, all restricted stock units outstanding were excluded from the computation of diluted earnings per share because including them would have been antidilutive as a result of the net loss in this period.
The computation of basic and diluted net income (loss) per share is as follows:
 
Three Months Ended
 
April 1, 2018
 
April 2, 2017
Basic and diluted net income (loss) per share:
 
 
 
Net income (loss)
$
4,184

 
$
(15,060
)
Less: income allocated to participating securities
40

 

Net income (loss) available to common shareholders
$
4,144

 
$
(15,060
)
Weighted average common shares, basic
26,874,016

 
26,774,103

Restricted stock units
5,815

 

Weighted average common shares, diluted
26,879,831

 
26,774,103

 
 
 
 
Basic net income (loss) per share
$
0.15

 
$
(0.56
)
Diluted net income (loss) per share
$
0.15

 
$
(0.56
)
v3.8.0.1
Commitments and Contingencies
3 Months Ended
Apr. 01, 2018
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Commitments and Contingencies

Lease Assignments. Taco Cabana has assigned three leases to various parties on properties where it no longer operates restaurants with lease terms expiring on various dates through 2029. The assignees are responsible for making the payments required by the leases. The Company is a guarantor under one of the leases, and it remains secondarily liable as a surety with respect to two of the leases. Pollo Tropical assigned one lease to a third party on a property where it no longer operates with a lease term expiring in 2033. The assignee is responsible for making the payments required by the lease. The Company is a guarantor under the lease.

The maximum potential liability for future rental payments that the Company could be required to make under these leases at April 1, 2018 was $3.9 million. The Company could also be obligated to pay property taxes and other lease related costs. The obligations under these leases will generally continue to decrease over time as the operating leases expire. The Company does not believe it is probable that it will be ultimately responsible for the obligations under these leases.

Legal Matters. On November 24, 2015, Pollo Tropical received a legal demand letter alleging that assistant managers were misclassified as exempt from overtime wages under the Fair Labor Standards Act. On September 30, 2016, prior to any suit being
filed, Pollo Tropical reached a settlement with seven named individuals and a proposed collective action class that will allow current and former assistant managers to receive notice and opt-in to the settlement. Pollo Tropical denies any liability or unlawful conduct. The settlement was approved by a Florida state judge on December 27, 2017 which resulted in dismissal with prejudice for the named individuals and all individuals that opt-in to the settlement. The deadline to respond to a notice and opt-in to the settlement was May 1, 2018. After that date, the class administrator will calculate the total amount due by Pollo Tropical. The Company has reserved $0.8 million to cover the estimated costs related to the settlement and does not expect the total settlement costs to exceed this amount.

The Company is also a party to various other litigation matters incidental to the conduct of business. The Company does not believe that the outcome of any of these matters will have a material effect on its consolidated financial statements.

Contingency Related to Insurance Recoveries. During the third quarter of 2017, Pollo Tropical and Taco Cabana restaurants were negatively affected by Hurricanes Harvey and Irma (the "Hurricanes"). In 2017, the Company recorded expected insurance proceeds of $0.7 million and $0.4 million for Pollo Tropical and Taco Cabana, respectively, for lost inventory, idle time wages paid to hourly employees and property damages due to the Hurricanes. The Company expects to record additional insurance proceeds in the periods when additional information is available or, for business interruption coverage for lost profit, at the time of final settlement or when proceeds are received.
v3.8.0.1
Income Taxes
3 Months Ended
Apr. 01, 2018
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Tax Law Changes. On December 22, 2017, the Tax Cuts and Jobs Act (the "Act"), which includes a provision that reduces the federal corporate income tax rate from 35.0% to 21.0% effective January 1, 2018, was signed into law. In accordance with generally accepted accounting principles, the enactment of this new tax legislation required the Company to revalue its net deferred income tax assets at the new corporate statutory rate of 21.0% as of the enactment date, which resulted in a one-time adjustment to its deferred income taxes of $9.0 million with a corresponding increase to the provision for income taxes as a discrete item during the fourth quarter of 2017.
On December 22, 2017, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 118 (SAB 118), which provides guidance on accounting for the impact of the Act, that, in effect, allows entities to use a methodology similar to the measurement period in a business combination. Pursuant to the disclosure provisions of SAB 118, the Company continues to evaluate the impact of the Act on various matters. The actual impact of the Act on the Company may differ from the provisional amounts recognized based on its reasonable estimates due to, among other things, changes in assumptions made in the Company's interpretation of the Act, guidance related to application of the Act that may be issued in the future, and actions that the Company may take as a result of the expected impact of the Act. The Company will adjust the amounts recognized related to the Act if more information becomes available. The Company did not make any measurement period adjustments related to the Act in the first quarter of 2018 and expects to complete its analysis with the filing of its 2017 income tax returns in 2018.
v3.8.0.1
Recent Accounting Pronouncements
3 Months Ended
Apr. 01, 2018
Accounting Policies [Abstract]  
Recent Accounting Pronouncements Recent Accounting Pronouncements
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which requires lessee recognition of lease assets and lease liabilities on the balance sheet and disclosure of key information about leasing arrangements. For the Company, the new standard is effective for interim and annual periods beginning after December 15, 2018, and early adoption is permitted. A modified retrospective approach is required with an option to use certain practical expedients. The new guidance is required to be applied at the beginning of the earliest comparative period presented. The Company is currently evaluating the impact on its financial statements. Although the impact is not currently estimable, the Company expects to recognize lease assets and lease liabilities for most of the leases it currently accounts for as operating leases. In addition, the Company will be required to record an initial adjustment to retained earnings associated with previously deferred gains on sale-leaseback transactions, and for any future sale-leaseback transactions, the gain, adjusted for any off-market terms, will be recorded immediately. Currently the Company amortizes sale-leaseback gains over the lease term. The Company is continuing its assessment and may identify other impacts.
In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment, which eliminates the requirement to calculate the implied fair value of goodwill if the fair value of a reporting unit is less than the carrying amount of the reporting unit. Instead, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss will be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. The guidance will be effective for interim and annual periods beginning after December 15, 2019. Early adoption is permitted for any goodwill impairment tests after January 1, 2017. This standard may have an impact on the Company's financial statements if goodwill impairment is recognized in future periods.
v3.8.0.1
Basis of Presentation (Policies)
3 Months Ended
Apr. 01, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Consolidation Basis of Consolidation. The unaudited condensed consolidated financial statements presented herein reflect the consolidated financial position, results of operations and cash flows of Fiesta and its wholly-owned subsidiaries. All intercompany transactions have been eliminated in consolidation.
Fiscal Year Fiscal Year. The Company uses a 52-53 week fiscal year ending on the Sunday closest to December 31. The fiscal year ended December 31, 2017 contained 52 weeks. The three months ended April 1, 2018 and April 2, 2017 each contained thirteen weeks. The fiscal year ending December 30, 2018 will contain 52 weeks.
Basis of Presentation Basis of Presentation. The accompanying unaudited condensed consolidated financial statements for the three months ended April 1, 2018 and April 2, 2017 have been prepared without an audit pursuant to the rules and regulations of the Securities and Exchange Commission and do not include certain information and footnotes required by U.S. Generally Accepted Accounting Principles ("GAAP") for complete financial statements. In the opinion of management, all normal and recurring adjustments considered necessary for a fair presentation of such financial statements have been included. The results of operations for the three months ended April 1, 2018 and April 2, 2017 are not necessarily indicative of the results to be expected for the full year.These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2017 included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2017. The December 31, 2017 balance sheet data is derived from those audited financial statements.
Reclassification Reclassification. Write-offs of site development costs were reclassified from general and administrative expense to other expense (income), net in the condensed consolidated statement of operations to conform with the current year presentation.
Revenue Recognition Revenue Recognition. Revenue is recognized upon transfer of promised products or services to customers in an amount that reflects the consideration the Company received in exchange for those products or services. Revenues from the Company's owned and operated restaurants are recognized when payment is tendered at the time of sale. Franchise royalty revenues are based on a percent of gross sales and are recorded as income when earned. Initial franchise fees and area development fees associated with new franchise agreements are not distinct from the continuing rights and services offered by the Company during the term of the related franchise agreements and are recognized as income over the term of the related franchise agreements. A portion of the
initial franchise fee is allocated to training services and is recognized as revenue when the Company completes the training services. Prior to adopting Topic 606, the Company recognized initial franchise fees as revenue in the period that a franchised location opened for business. See Note 6 - Business Segment Information.
Gift cards. The Company sells gift cards to its customers in its restaurants and through select third parties. The Company recognizes revenue from gift cards upon redemption by the customer. For unredeemed gift cards that the Company expects to be entitled to breakage, the Company recognizes expected breakage as revenue in proportion to the pattern of redemption by the customers. The gift cards have no stated expiration dates. Revenues from unredeemed gift cards and gift card liabilities, which are recorded in other current liabilities, are not material to the Company's financial statements. Prior to adopting Topic 606, the Company did not recognize breakage on its gift cards.
Fair Value of Financial Instruments Fair Value of Financial Instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. In determining fair value, the accounting standards establish a three level hierarchy for inputs used in measuring fair value as follows: Level 1 inputs are quoted prices in active markets for identical assets or liabilities; Level 2 inputs are observable for the asset or liability, either directly or indirectly, including quoted prices in active markets for similar assets or liabilities; and Level 3 inputs are unobservable and reflect our own assumptions. The following methods were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate the fair value:
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.
Long-Lived Assets Long-Lived Assets. The Company assesses the recoverability of property and equipment and definite-lived intangible assets by determining whether the carrying value of these assets can be recovered over their respective remaining lives through undiscounted future operating cash flows. Impairment is reviewed when events or changes in circumstances indicate that the carrying amounts of these assets may not be fully recoverable. See Note 3 - Impairment of Long-Lived Assets.
Use of Estimates Use of Estimates. The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements. Estimates also affect the reported amounts of expenses during the reporting periods. Significant items subject to such estimates and assumptions include: accrued occupancy costs, insurance liabilities, evaluation for impairment of goodwill and long-lived assets and lease accounting matters. Actual results could differ from those estimates.
Impairment of Long-Lived Assets The Company reviews its long-lived assets, principally property and equipment, for impairment at the restaurant level. In addition to considering management’s plans, known regulatory or governmental actions and damage due to acts of God (hurricanes, tornadoes, etc.), the Company considers a triggering event to have occurred related to a specific restaurant if the restaurant’s cash flows for the last twelve months are less than a minimum threshold or if consistent levels of cash flows for the remaining lease period are less than the carrying value of the restaurant’s assets. If an indicator of impairment exists for any of its assets, an estimate of undiscounted future cash flows over the life of the primary asset for each restaurant is compared to that long-lived asset’s carrying value. If the carrying value is greater than the undiscounted cash flow, the Company then determines the fair value of the asset and if an asset is determined to be impaired, the loss is measured by the excess of the carrying amount of the asset over its fair value. There is uncertainty in the projected undiscounted future cash flows used in the Company's impairment review analysis. If actual performance does not achieve the projections, the Company may recognize impairment charges in future periods, and such charges could be material. For closed restaurant locations, the Company reviews the future minimum lease payments and related ancillary costs from the date of the restaurant closure to the end of the remaining lease term and records a lease charge for the lease liabilities to be incurred, net of any estimated sublease recoveries. There is uncertainty in the estimates of future lease costs and sublease recoveries. Actual costs and sublease recoveries could vary significantly from the estimated amounts and result in additional lease charges or recoveries, and such amounts could be material.
Purchase of Treasury Stock Purchase of treasury stock

On February 26, 2018, the Company announced that its board of directors approved a share repurchase program for up to 1.5 million shares of the Company's common stock. Under the share repurchase program, shares may be repurchased from time to time in open market transactions at prevailing market prices, in privately negotiated transactions or by other means in accordance with federal securities laws, including Rule 10b-18 under the Securities Exchange Act of 1934, as amended. The share repurchase program has no time limit and may be modified, suspended, superseded or terminated at any time by the Company's board of directors. The Company repurchased 18,406 shares of its common stock under the program in open market transactions during the three months ended April 1, 2018 for $0.3 million. The repurchased shares are held as treasury stock at cost.
Segment Reporting Each segment's accounting policies are described in the summary of significant accounting policies in Note 1 to the Company's audited financial statements contained in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2017. The primary measure of segment profit or loss used by the chief operating decision maker to assess performance and allocate resources is Adjusted EBITDA, which is defined as earnings attributable to the applicable operating segments before interest expense, income taxes, depreciation and amortization, impairment and other lease charges, stock-compensation expense, other expense (income), net, and certain significant items for each segment that management believes are related to strategic changes and/or are not related to the ongoing operation of the Company's restaurants
Net Income per Share The Company computes basic net income (loss) per share by dividing net income (loss) applicable to common shares by the weighted average number of common shares outstanding during each period. Our non-vested restricted shares contain a non-forfeitable right to receive dividends on a one-to-one per share ratio to common shares and are thus considered participating securities. The impact of the participating securities is included in the computation of basic net income per share pursuant to the two-class method. The two-class method of computing earnings per share is an earnings allocation formula that determines earnings attributable to common shares and participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. Net income per common share is computed by dividing undistributed earnings allocated to common stockholders by the weighted average number of common shares outstanding for the period. In applying the two-class method, undistributed earnings are allocated to both common shares and non-vested restricted shares based on the weighted average shares outstanding during the period.Diluted earnings per share reflects the potential dilution that could occur if our restricted stock units were to be converted into common shares. Restricted stock units with performance conditions are only included in the diluted earnings per share calculation to the extent that performance conditions have been met at the measurement date. We compute diluted earnings per share by adjusting the basic weighted average number of common shares by the dilutive effect of the restricted stock units, determined using the treasury stock method.
Recent Accounting Pronouncements Recent Accounting Pronouncements
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which requires lessee recognition of lease assets and lease liabilities on the balance sheet and disclosure of key information about leasing arrangements. For the Company, the new standard is effective for interim and annual periods beginning after December 15, 2018, and early adoption is permitted. A modified retrospective approach is required with an option to use certain practical expedients. The new guidance is required to be applied at the beginning of the earliest comparative period presented. The Company is currently evaluating the impact on its financial statements. Although the impact is not currently estimable, the Company expects to recognize lease assets and lease liabilities for most of the leases it currently accounts for as operating leases. In addition, the Company will be required to record an initial adjustment to retained earnings associated with previously deferred gains on sale-leaseback transactions, and for any future sale-leaseback transactions, the gain, adjusted for any off-market terms, will be recorded immediately. Currently the Company amortizes sale-leaseback gains over the lease term. The Company is continuing its assessment and may identify other impacts.
In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment, which eliminates the requirement to calculate the implied fair value of goodwill if the fair value of a reporting unit is less than the carrying amount of the reporting unit. Instead, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss will be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. The guidance will be effective for interim and annual periods beginning after December 15, 2019. Early adoption is permitted for any goodwill impairment tests after January 1, 2017. This standard may have an impact on the Company's financial statements if goodwill impairment is recognized in future periods.
v3.8.0.1
Prepaid Expenses and Other Current Assets (Tables)
3 Months Ended
Apr. 01, 2018
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]  
Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets, consist of the following:
 
April 1, 2018
 
December 31, 2017
Prepaid contract expenses
$
3,851

 
$
3,681

Assets held for sale(1)
1,005

 
2,705

Other
3,745

 
3,719

 
$
8,601

 
$
10,105


(1) One closed Pollo Tropical restaurant property owned by the Company that was classified as held for sale as of December 31, 2017 was sold in January 2018 for $1.8 million.
v3.8.0.1
Impairment of Long-Lived Assets and Other Lease Charges (Tables)
3 Months Ended
Apr. 01, 2018
Property, Plant and Equipment [Abstract]  
Summary of Impairment on Long-Lived Assets and Other Lease Charges by Segment A summary of impairment on long-lived assets and other lease charges (recoveries) recorded by segment is as follows:
 
Three Months Ended
 
April 1, 2018
 
April 2, 2017
Pollo Tropical
$
(541
)
 
$
32,071

Taco Cabana
(121
)
 
343

 
$
(662
)
 
$
32,414

v3.8.0.1
Other Liabilities (Tables)
3 Months Ended
Apr. 01, 2018
Other Liabilities Disclosure [Abstract]  
Other Liabilities, Current Other liabilities, current, consist of the following:
 
April 1, 2018
 
December 31, 2017
Accrued workers' compensation and general liability claims
$
5,425

 
$
5,083

Sales and property taxes
1,617

 
2,279

Accrued occupancy costs
6,896

 
7,813

Other
5,681

 
6,642

 
$
19,619

 
$
21,817

Other Liabilities, Long-term Other liabilities, long-term, consist of the following:
 
April 1, 2018
 
December 31, 2017
Accrued occupancy costs
$
19,218

 
$
20,985

Deferred compensation
794

 
1,029

Accrued workers’ compensation and general liability claims
6,102

 
6,102

Other
4,000

 
3,946

 
$
30,114

 
$
32,062

Activity in the Closed-Store Reserve The following table presents the activity in the closed-restaurant reserve, of which $3.2 million and $5.3 million are included in long-term accrued occupancy costs at April 1, 2018 and December 31, 2017, respectively, with the remainder in current accrued occupancy costs.
 
Three Months Ended April 1, 2018
 
Year Ended December 31, 2017
Balance, beginning of period
$
12,994

 
$
4,912

Provisions for restaurant closures

 
8,767

Additional lease charges (recoveries), net
(720
)
 
(1,301
)
Payments, net
(2,456
)
 
(5,528
)
Other adjustments(1)
189

 
6,144

Balance, end of period
$
10,007

 
$
12,994


(1) For the year ended December 31, 2017, includes the transfer of accruals to expense operating lease payments on a straight-line basis.
v3.8.0.1
Stockholder's Equity (Tables)
3 Months Ended
Apr. 01, 2018
Equity [Abstract]  
Schedule of Non-vested Restricted Shares Activity A summary of all employee (and non-employee director) non-vested restricted shares and restricted stock units activity for the three months ended April 1, 2018 is as follows:
 
Non-Vested Shares
 
Restricted Stock Units
 
Shares
 
Weighted
Average
Grant Date
Fair Value
 
Units
 
Weighted
Average
Grant Date
Fair Value
Outstanding at December 31, 2017
239,500

 
$
24.81

 
143,946

 
$
23.11

Granted
153,769

 
18.70

 
112,169

 
6.96

Vested/Released
(67,057
)
 
27.83

 
(9,722
)
 
45.19

Forfeited
(5,167
)
 
33.87

 
(10,641
)
 
59.45

Outstanding at April 1, 2018
321,045

 
$
20.75

 
235,752

 
$
12.88

Schedule of Restricted Stock Units Activity A summary of all employee (and non-employee director) non-vested restricted shares and restricted stock units activity for the three months ended April 1, 2018 is as follows:
 
Non-Vested Shares
 
Restricted Stock Units
 
Shares
 
Weighted
Average
Grant Date
Fair Value
 
Units
 
Weighted
Average
Grant Date
Fair Value
Outstanding at December 31, 2017
239,500

 
$
24.81

 
143,946

 
$
23.11

Granted
153,769

 
18.70

 
112,169

 
6.96

Vested/Released
(67,057
)
 
27.83

 
(9,722
)
 
45.19

Forfeited
(5,167
)
 
33.87

 
(10,641
)
 
59.45

Outstanding at April 1, 2018
321,045

 
$
20.75

 
235,752

 
$
12.88

v3.8.0.1
Business Segment Information (Tables)
3 Months Ended
Apr. 01, 2018
Segment Reporting [Abstract]  
Schedule of Segment Reporting Information, by Segment  
Three Months Ended
 
Pollo Tropical
 
Taco Cabana
 
Other
 
Consolidated
April 1, 2018:
 
 
 
 
 
 
 
 
Restaurant sales
 
$
94,478

 
$
74,355

 
$

 
$
168,833

Franchise revenue
 
464

 
187

 

 
651

Cost of sales
 
31,015

 
22,550

 

 
53,565

Restaurant wages and related expenses(1)
 
22,156

 
24,327

 

 
46,483

Restaurant rent expense
 
4,297

 
4,595

 

 
8,892

Other restaurant operating expenses
 
12,115

 
11,335

 

 
23,450

Advertising expense
 
3,316

 
2,897

 

 
6,213

General and administrative expense(2)
 
8,042

 
6,877

 

 
14,919

Adjusted EBITDA
 
14,447

 
2,511

 

 
16,958

Depreciation and amortization
 
5,316

 
3,683

 

 
8,999

Capital expenditures
 
8,173

 
6,911

 
84

 
15,168

April 2, 2017:
 
 
 
 
 
 
 
 
Restaurant sales
 
$
99,310

 
$
75,667

 
$

 
$
174,977

Franchise revenue
 
449

 
181

 

 
630

Cost of sales
 
29,947

 
21,001

 

 
50,948

Restaurant wages and related expenses(1)
 
24,046

 
24,086

 

 
48,132

Restaurant rent expense
 
5,375

 
4,487

 

 
9,862

Other restaurant operating expenses
 
13,389

 
10,679

 

 
24,068

Advertising expense
 
4,325

 
3,214

 

 
7,539

General and administrative expense(2)
 
8,841

 
6,857

 

 
15,698

Adjusted EBITDA
 
14,722

 
6,494

 

 
21,216

Depreciation and amortization
 
6,083

 
3,103

 

 
9,186

Capital expenditures
 
8,663

 
2,696

 
315

 
11,674

Identifiable Assets:
 
 
 
 
 
 
 
 
April 1, 2018
 
$
223,114

 
$
169,560

 
$
26,410

 
$
419,084

December 31, 2017
 
227,194

 
167,237

 
28,882

 
423,313


(1) Includes stock-based compensation expense of $17 and $109 for the three months ended April 1, 2018 and April 2, 2017, respectively.
(2) Includes stock-based compensation expense of $872 and $537 for the three months ended April 1, 2018 and April 2, 2017, respectively.
Reconciliation of Consolidated Net Income (Loss) to Adjusted EBITDA A reconciliation of consolidated net income (loss) to Adjusted EBITDA follows:
Three Months Ended
 
Pollo Tropical
 
Taco Cabana
 
Consolidated
April 1, 2018:
 
 
 
 
 
 
Net income
 
 
 
 
 
$
4,184

Provision for income taxes
 
 
 
 
 
1,625

Income (loss) before taxes
 
$
8,128

 
$
(2,319
)
 
$
5,809

Add
 
 
 
 
 
 
     Non-general and administrative expense adjustments
 
 
 
 
 
 
          Depreciation and amortization
 
5,316

 
3,683

 
8,999

          Impairment and other lease charges
 
(541
)
 
(121
)
 
(662
)
          Interest expense
 
528

 
541

 
1,069

          Other expense (income), net
 
346

 
20

 
366

          Stock-based compensation expense in restaurant wages
 
5

 
12

 
17

                Total Non-general and administrative expense adjustments
 
5,654

 
4,135

 
9,789

     General and administrative expense adjustments
 
 
 
 
 
 
          Stock-based compensation expense
 
467

 
405

 
872

          Plan restructuring costs and retention bonuses
 
198

 
290

 
488

               Total General and administrative expense adjustments
 
665

 
695

 
1,360

Adjusted EBITDA
 
$
14,447

 
$
2,511

 
$
16,958

 
 
 
 
 
 
 
April 2, 2017:
 
 
 
 
 
 
Net loss
 
 
 
 
 
$
(15,060
)
Benefit from income taxes
 
 
 
 
 
(8,642
)
Income (loss) before taxes
 
$
(25,096
)
 
$
1,394

 
$
(23,702
)
Add
 
 
 
 
 
 
     Non-general and administrative expense adjustments
 
 
 
 
 
 
          Depreciation and amortization
 
6,083

 
3,103

 
9,186

          Impairment and other lease charges
 
32,071

 
343

 
32,414

          Interest expense
 
249

 
335

 
584

          Other expense (income), net
 
197

 
257

 
454

          Stock-based compensation expense in restaurant wages
 
45

 
64

 
109

          Unused pre-production costs in advertising expense
 
322

 

 
322

                Total Non-general and administrative expense adjustments
 
38,967

 
4,102

 
43,069

     General and administrative expense adjustments
 
 
 
 
 
 
          Stock-based compensation expense
 
315

 
222

 
537

          Terminated capital project
 
477

 
359

 
836

          Board and shareholder matter costs
 
458

 
346

 
804

          Plan restructuring costs and retention bonuses
 
74

 
71

 
145

          Legal settlements and related costs
 
(473
)
 

 
(473
)
               Total General and administrative expense adjustments
 
851

 
998

 
1,849

Adjusted EBITDA
 
$
14,722

 
$
6,494

 
$
21,216

v3.8.0.1
Net Income (Loss) per Share (Tables)
3 Months Ended
Apr. 01, 2018
Earnings Per Share [Abstract]  
Schedule of Earnings Per Share The computation of basic and diluted net income (loss) per share is as follows:
 
Three Months Ended
 
April 1, 2018
 
April 2, 2017
Basic and diluted net income (loss) per share:
 
 
 
Net income (loss)
$
4,184

 
$
(15,060
)
Less: income allocated to participating securities
40

 

Net income (loss) available to common shareholders
$
4,144

 
$
(15,060
)
Weighted average common shares, basic
26,874,016

 
26,774,103

Restricted stock units
5,815

 

Weighted average common shares, diluted
26,879,831

 
26,774,103

 
 
 
 
Basic net income (loss) per share
$
0.15

 
$
(0.56
)
Diluted net income (loss) per share
$
0.15

 
$
(0.56
)
v3.8.0.1
Basis of Presentation - Narrative (Details)
3 Months Ended 12 Months Ended
Apr. 01, 2018
segment
restaurant
Apr. 02, 2017
Dec. 30, 2018
Dec. 31, 2017
Entity Information [Line Items]        
Number of operating segments | segment 2      
Fiscal period duration 91 days 91 days   364 days
Forecast        
Entity Information [Line Items]        
Fiscal period duration     364 days  
Minimum | Forecast        
Entity Information [Line Items]        
Fiscal period duration     364 days  
Maximum | Forecast        
Entity Information [Line Items]        
Fiscal period duration     371 days  
Entity Operated Units | Pollo Tropical        
Entity Information [Line Items]        
Number of restaurants 146      
Entity Operated Units | Pollo Tropical | Florida        
Entity Information [Line Items]        
Number of restaurants 137      
Entity Operated Units | Pollo Tropical | Georgia        
Entity Information [Line Items]        
Number of restaurants 9      
Entity Operated Units | Taco Cabana        
Entity Information [Line Items]        
Number of restaurants 166      
Franchised Units | Pollo Tropical        
Entity Information [Line Items]        
Number of restaurants 31      
Franchised Units | Pollo Tropical | Florida        
Entity Information [Line Items]        
Number of restaurants 6      
Franchised Units | Pollo Tropical | Puerto Rico        
Entity Information [Line Items]        
Number of restaurants 17      
Franchised Units | Pollo Tropical | Panama        
Entity Information [Line Items]        
Number of restaurants 4      
Franchised Units | Pollo Tropical | Guyana        
Entity Information [Line Items]        
Number of restaurants 2      
Franchised Units | Pollo Tropical | Bahamas        
Entity Information [Line Items]        
Number of restaurants 1      
Franchised Units | Pollo Tropical | Venezuela        
Entity Information [Line Items]        
Number of restaurants 1      
Franchised Units | Taco Cabana        
Entity Information [Line Items]        
Number of restaurants 7      
Franchised Units | Taco Cabana | New Mexico        
Entity Information [Line Items]        
Number of restaurants 5      
Franchised Units | Taco Cabana | Texas        
Entity Information [Line Items]        
Number of restaurants 2