Document and Entity Information

3 Months Ended

Apr. 2, 2017

May 3, 2017

Document And Entity Information [Abstract]

Entity Registrant Name

FIESTA RESTAURANT GROUP, INC.

Entity Central Index Key

0001534992

Current Fiscal Year End Date

--12-31

Entity Filer Category

Large Accelerated Filer

Document Type

10-Q

Document Period End Date

Apr. 02, 2017

Document Fiscal Year Focus

2017

Document Fiscal Period Focus

Q1

Amendment Flag

false

Entity Common Stock, Shares Outstanding

27,063,649

CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)

In Thousands, unless otherwise specified

Apr. 2, 2017

Jan. 1, 2017

Current assets:

Cash

$ 7,712

$ 4,196

Trade receivables

9,207

8,771

Inventories

2,688

2,865

Prepaid rent

3,639

3,575

Income tax receivable

210

3,304

Prepaid expenses and other current assets

5,908

4,231

Total current assets

29,364

26,942

Property and equipment, net

241,705

270,920

Goodwill

123,484

Deferred income taxes

26,225

14,377

Other assets

5,867

5,842

Total assets

426,645

441,565

Current liabilities:

Current portion of long-term debt

91

89

Accounts payable

14,481

16,165

Accrued payroll, related taxes and benefits

12,999

12,275

Accrued real estate taxes

3,537

6,924

Other liabilities

12,455

11,316

Total current liabilities

43,563

46,769

Long-term debt, net of current portion

74,399

71,423

Lease financing obligations

1,664

Deferred income—sale-leaseback of real estate

26,264

27,165

Other liabilities

30,967

30,369

Total liabilities

176,857

177,390

Commitments and contingencies

Stockholders' equity:

Common stock, par value $.01; authorized 100,000,000 shares, issued 27,063,800 and 26,884,992 shares, respectively, and outstanding 26,787,205 and 26,755,640 shares, respectively.

268

267

Additional paid-in capital

163,923

163,204

Retained earnings

85,597

100,704

Total stockholders' equity

249,788

264,175

Total liabilities and stockholders' equity

$ 426,645

$ 441,565

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)

Apr. 2, 2017

Jan. 1, 2017

Statement of Financial Position [Abstract]

Common stock, par value (usd per share)

$ 0.01

Common stock, shares authorized

100,000,000

Common stock, shares issued

27,063,800

26,884,992

Common stock, shares outstanding

26,787,205

26,755,640

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)

In Thousands, except Share data, unless otherwise specified

3 Months Ended

Apr. 2, 2017

Apr. 3, 2016

Revenues:

Restaurant sales

$ 174,977

$ 175,939

Franchise royalty revenues and fees

630

738

Total revenues

175,607

176,677

Costs and expenses:

Cost of sales

50,948

54,050

Restaurant wages and related expenses (including stock-based compensation expense of $109 and $36, respectively)

48,132

45,052

Restaurant rent expense

9,862

8,921

Other restaurant operating expenses

24,068

22,388

Advertising expense

7,539

6,995

General and administrative (including stock-based compensation expense of $537 and $975, respectively)

16,008

13,848

Depreciation and amortization

9,186

8,336

Pre-opening costs

424

1,182

Impairment and other lease charges

32,414

12

Other expense (income), net

144

(248)

Total operating expenses

198,725

160,536

Income (loss) from operations

(23,118)

16,141

Interest expense

584

558

Income (loss) before income taxes

(23,702)

15,583

Provision for (benefit from) income taxes

(8,642)

5,688

Net income (loss)

$ (15,060)

$ 9,895

Basic net income (loss) per share (usd per share)

$ (0.56)

$ 0.37

Diluted net income (loss) per share (usd per share)

$ (0.56)

$ 0.37

Basic weighted average common shares outstanding

26,774,103

26,605,717

Diluted weighted average common shares outstanding

26,774,103

26,612,021

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) (USD $)

In Thousands, unless otherwise specified

3 Months Ended

Apr. 2, 2017

Apr. 3, 2016

Stock-based compensation

$ 600

$ 1,000

Restaurant Wages And Related Expenses

Stock-based compensation

109

36

General and Administrative Expense

Stock-based compensation

$ 537

$ 975

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (USD $)

In Thousands, except Share data, unless otherwise specified

Total

Common Stock

Additional Paid-In Capital

Retained Earnings

Beginning balance at Jan. 03, 2016

$ 243,982

$ 266

$ 159,724

$ 83,992

Beginning shares at Jan. 03, 2016

26,571,602

Increase (Decrease) in Stockholders' Equity

Stock-based compensation

1,011

Vesting of restricted shares (in shares)

59,040

Vesting of restricted shares

0

Tax deficiency from stock-based compensation

(43)

Net income (loss)

9,895

Ending balance at Apr. 03, 2016

254,845

266

160,692

93,887

Ending shares at Apr. 03, 2016

26,630,642

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

Vesting of restricted shares (in shares)

31,565

Vesting of restricted shares

1

0

Cumulative effect of adopting a new accounting standard (Note 1)

26

73

(47)

Net income (loss)

(15,060)

Ending balance at Apr. 02, 2017

$ 249,788

$ 268

$ 163,923

$ 85,597

Ending shares at Apr. 02, 2017

26,787,205

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)

In Thousands, unless otherwise specified

3 Months Ended

Apr. 2, 2017

Apr. 3, 2016

Cash flows from operating activities:

Net income (loss)

$ (15,060)

$ 9,895

Adjustments to reconcile net income to net cash provided from operating activities:

Loss (gain) on disposals of property and equipment

838

(39)

Stock-based compensation

646

1,011

Impairment and other lease charges

32,414

12

Depreciation and amortization

9,186

8,336

Amortization of deferred financing costs

77

Amortization of deferred gains from sale-leaseback transactions

(901)

Deferred income taxes

(11,848)

0

Changes in other operating assets and liabilities

(3,140)

(380)

Net cash provided from operating activities

12,212

18,011

Capital expenditures:

New restaurant development

(8,571)

(14,086)

Restaurant remodeling

(217)

(243)

Other restaurant capital expenditures

(1,689)

(910)

Corporate and restaurant information systems

(1,197)

(1,552)

Total capital expenditures

(11,674)

(16,791)

Properties purchased for sale-leaseback

0

(2,663)

Proceeds from disposals of other properties

0

236

Net cash used in investing activities

(11,674)

(19,218)

Cash flows from financing activities:

Excess tax benefit from vesting of restricted shares

0

92

Borrowings on revolving credit facility

5,000

6,400

Repayments on revolving credit facility

(2,000)

(6,500)

Principal payments on capital leases

(22)

(13)

Net cash provided by (used in) financing activities

2,978

(21)

Net increase (decrease) in cash

3,516

(1,228)

Cash, beginning of period

4,196

5,281

Cash, end of period

7,712

4,053

Supplemental disclosures:

Interest paid on long-term debt

522

473

Interest paid on lease financing obligations

36

35

Accruals for capital expenditures

6,754

7,764

Income tax payments, net

$ 86

$ 282

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 2, 2017, the Company owned and operated 180 Pollo Tropical^® restaurants and 167 Taco Cabana^® restaurants. The Pollo Tropical restaurants included 131 located in Florida, 30 located in Texas, 16 located in Georgia and three located in Tennessee. The Taco Cabana restaurants included 166 located in Texas and one located in Oklahoma. At April 2, 2017, the Company franchised a total of 34 Pollo Tropical restaurants and seven Taco Cabana restaurants. The franchised Pollo Tropical restaurants included 17 in Puerto Rico, one in the Bahamas, two in Guyana, one in Venezuela, four in Panama, two in Guatemala, and seven 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 January 1, 2017 contained 52 weeks. The three months ended April 2, 2017 and April 3, 2016 each contained thirteen weeks. The fiscal year ending December 31, 2017 will contain 52 weeks.

Basis of Presentation. The accompanying unaudited condensed consolidated financial statements for the three months ended 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 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 January 1, 2017 included in the Company's Annual Report on Form 10-K for the fiscal year ended January 1, 2017. The January 1, 2017 balance sheet data is derived from those audited financial statements.

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 and carrying value of the Company's senior credit facility were approximately $72.9 million at April 2, 2017 and $69.9 million at January 1, 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 2.

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.

Guidance Adopted in 2017. In March 2016, the Financial Accounting Standards Board issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting (Topic 718), to simplify various aspects of the accounting and presentation of share-based payments, including the income tax effects of awards and forfeiture assumptions. In the first quarter of 2017, the Company prospectively adopted the amendments in this guidance that relate to the classification of excess tax benefits or tax benefit deficiencies from share-based payment arrangements in the statement of cash flows and income statement. Excess tax benefits from share-based payment arrangements result from share-based compensation windfall deductions in excess of compensation costs for financial reporting purposes and tax benefit deficiencies result from share-based compensation deduction shortfalls. During the three months ended April 2, 2017, the Company recognized $0.1 million of tax benefit deficiencies, which pursuant to the adopted guidance increased income tax expense and decreased net income by $0.1 million. Effective January 2, 2017, the Company elected to change its accounting policy to recognize forfeitures as they occur. The new forfeiture policy election was adopted using a modified retrospective approach with a $0.1 million cumulative-effect adjustment to beginning retained earnings in the first quarter of 2017 as a result of adopting the standard.

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.

A summary of impairment on long-lived assets and other lease charges recorded by segment is as follows:



	Three Months Ended
	April 2, 2017		April 3, 2016
Pollo Tropical	$	32,071	$	—
Taco Cabana	343		12
	$	32,414	$	12

On April 24, 2017, the Company announced a strategic renewal plan to drive long-term value that includes the closure of 30 Pollo Tropical restaurants outside its core Florida markets. The Company has subsequently closed all Pollo Tropical locations in Dallas-Fort Worth and Austin, Texas, and Nashville, Tennessee. The Company will continue to operate 19 Pollo Tropical restaurants outside of Florida, including 13 in Atlanta and six in south Texas. Up to five closed restaurants in Texas may be rebranded as Taco Cabana restaurants.

In the first quarter of 2017, the Company recognized impairment charges with respect to the 30 restaurants that it subsequently closed in the second quarter of 2017, seven of which were impaired in 2016, as well as an additional impairment charge related to previously closed restaurants primarily as a result of the decision not to convert a location to a Taco Cabana restaurant. The Company also recognized an impairment charge with respect to three Taco Cabana restaurants that it continues to operate. Impairment and other lease charges for the three months ended April 2, 2017 consisted of impairment charges for Pollo Tropical and Taco Cabana restaurants of $32.0 million and $0.3 million, respectively, and lease and other charges related to closed Pollo Tropical restaurants of $0.1 million, net of recoveries. The Company will recognize lease and other charges related to the closed restaurants in the second quarter of 2017.

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. 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 consist of leasehold improvements related to Pollo Tropical restaurants that may be rebranded as Taco Cabana restaurants and the estimated fair value of owned properties.

Other Liabilities

Other liabilities, current, consist of the following:



	April 2, 2017		January 1, 2017
Accrued workers' compensation and general liability claims	$	5,673	$	4,838
Sales and property taxes	1,834		1,844
Accrued occupancy costs	2,104		2,161
Other	2,844		2,473
	$	12,455	$	11,316

Other liabilities, long-term, consist of the following:



	April 2, 2017		January 1, 2017
Accrued occupancy costs	$	20,175	$	20,172
Deferred compensation	1,826		2,027
Accrued workers’ compensation and general liability claims	4,030		4,030
Other	4,936		4,140
	$	30,967	$	30,369

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-store reserve, of which $2.6 million and $3.1 million are included in long-term accrued occupancy costs at April 2, 2017 and January 1, 2017, respectively, with the remainder in other current liabilities.



	Three Months Ended April 2, 2017			Year Ended January 1, 2017
Balance, beginning of period	$	4,912		$	1,832
Provisions for restaurant closures	421			3,093
Additional lease charges, net of (recoveries)	(281		)	(237		)
Payments, net	(708		)	(806		)
Other adjustments	171			1,030
Balance, end of period	$	4,515		$	4,912

Stock-Based Compensation

During the three months ended April 2, 2017 and April 3, 2016, the Company granted certain employees 187,342 and 50,087 non-vested restricted shares, respectively, under the Fiesta Restaurant Group, Inc. 2012 Stock Incentive Plan (the "Fiesta Plan"). These shares 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 to employees during the three months ended April 2, 2017 and April 3, 2016 was $20.75 and $35.25, respectively.

During the three months ended April 2, 2017 and April 3, 2016, the Company granted certain employees 11,745 and 5,762 restricted stock units, respectively, under the Fiesta Plan. The restricted stock units granted during the three months ended April 2, 2017 and April 3, 2016 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 and April 3, 2016 was $20.75 and $35.25, respectively.

Also during the three months ended April 3, 2016, the Company granted 33,691 non-vested restricted shares and 33,691 restricted stock units, respectively, under the Fiesta Plan to certain employees subject to performance conditions. The non-vested restricted shares vest and become non-forfeitable over a four year vesting period subject to the attainment of financial performance conditions. The restricted stock units vest and become non-forfeitable at the end of a three year vesting period. The number of shares into which the restricted stock units convert is based on the attainment of certain financial performance conditions and for the restricted stock units granted during the three months ended April 3, 2016, ranges from no shares, if the minimum financial performance condition is not met, to 67,382 shares, if the maximum performance condition is met. The weighted average fair value at grant date for both restricted non-vested shares and restricted stock units subject to financial performance conditions granted during the three months ended April 3, 2016 was $35.25.

Stock-based compensation expense for the three months ended April 2, 2017 was $0.6 million, and for the three months ended April 3, 2016 was $1.0 million. At April 2, 2017, the total unrecognized stock-based compensation expense related to non-vested restricted shares and restricted stock units was approximately $7.0 million. At April 2, 2017, the remaining weighted average vesting period for non-vested restricted shares was 3.2 years and restricted stock units was 2.0 years.

A summary of all non-vested restricted shares and restricted stock units activity for the three months ended April 2, 2017 is as follows:



	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	187,342		20.75		11,745		20.75
Vested/Released	(31,463	)	35.04		(102	)	50.38
Forfeited	(8,636	)	40.95		(914	)	42.39
Outstanding at April 2, 2017	276,595		$	26.53	62,174		$	41.76

The fair value of the non-vested restricted shares and restricted stock units is based on the closing price on the date of grant.

Business Segment Information

The Company is engaged in the fast-casual restaurant industry, with two restaurant concepts (each of which is an operating segment): Pollo Tropical and Taco Cabana. Pollo Tropical restaurants offer a wide variety of freshly prepared Caribbean inspired food while our Taco Cabana restaurants offer a broad selection of freshly prepared Mexican inspired food.

Each segment's accounting policies are the same as those 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 January 1, 2017. The Company reports more than one measure of segment profit or loss to the chief operating decision maker for the purposes of allocating resources to the segments and assessing their performance. The primary measures of segment profit or loss used to assess performance and allocate resources are income (loss) before taxes and Adjusted EBITDA, which is defined as earnings attributable to the applicable operating segment before interest, income taxes, depreciation and amortization, impairment and other lease charges, stock-based compensation expense and other income and expense. Although the chief operating decision maker uses Adjusted EBITDA as a measure of segment profitability, in accordance with Accounting Standards Codification 280, Segment Reporting, the following table includes segment income (loss) before taxes, which is the measure of segment profit or loss determined in accordance with the measurement principles that are most consistent with the principles used in measuring the corresponding amounts in the consolidated financial statements.

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, a current income tax receivable, and advisory fees related to a previously proposed and terminated separation transaction.



Three Months Ended	Pollo Tropical			Taco Cabana		Other			Consolidated
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⁾	8,894			7,114		—			16,008
Depreciation and amortization	6,083			3,103		—			9,186
Pre-opening costs	332			92		—			424
Impairment and other lease charges	32,071			343		—			32,414
Interest expense	249			335		—			584
Income (loss) before taxes	(25,096		)	1,394		—			(23,702		)
Capital expenditures	8,663			2,696		315			11,674
April 3, 2016:
Restaurant sales	$	98,906		$	77,033	$	—		$	175,939
Franchise revenue	577			161		—			738
Cost of sales	31,604			22,446		—			54,050
Restaurant wages and related expenses ⁽¹⁾	22,896			22,156		—			45,052
Restaurant rent expense	4,644			4,277		—			8,921
Other restaurant operating expenses	12,592			9,796		—			22,388
Advertising expense	3,762			3,233		—			6,995
General and administrative expense⁽²⁾	7,685			5,462		701			13,848
Depreciation and amortization	5,278			3,058		—			8,336
Pre-opening costs	1,114			68		—			1,182
Impairment and other lease charges	—			12		—			12
Interest expense	251			307		—			558
Income (loss) before taxes	9,669			6,615		(701		)	15,583
Capital expenditures	14,099			1,634		1,058			16,791
Identifiable Assets:
April 2, 2017	$	247,967		$	170,169	$	8,509		$	426,645
January 1, 2017	263,868			165,195		12,502			441,565

(1) Includes stock-based compensation expense of $109 and $36 for the three months ended April 2, 2017 and April 3, 2016, respectively.

(2) Includes stock-based compensation expense of $537 and $975 for the three months ended April 2, 2017 and April 3, 2016, respectively.

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 th

e 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.

For the three months ended April 2, 2017, all restricted stock units outstanding were excluded from the computation of diluted earnings per share because to do so would have been antidilutive as a result of the net loss in the first quarter of 2017. Weighted average outstanding restricted stock units totaling 7,407 shares for the three months ended April 3, 2016, were not included in the computation of diluted earnings per share because to do so would have been antidilutive.

The computation of basic and diluted net income (loss) per share is as follows:



	Three Months Ended
	April 2, 2017			April 3, 2016
Basic and diluted net income (loss) per share:
Net income (loss)	$	(15,060	)	$	9,895
Less: income allocated to participating securities	—			(93		)
Net income (loss) available to common shareholders	$	(15,060	)	$	9,802
Weighted average common shares, basic	26,774,103			26,605,717
Restricted stock units	—			6,304
Weighted average common shares, diluted	26,774,103			26,612,021

Basic net income (loss) per share	$	(0.56	)	$	0.37
Diluted net income (loss) per share	$	(0.56	)	$	0.37

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. The maximum potential liability for future rental payments that the Company could be required to make under these leases at April 2, 2017 was $1.6 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. The Company is a party to legal proceedings incidental to the conduct of business, including the matter described below. The Company records accruals for outstanding legal matters when it believes it is probable that a loss will be incurred and the amount can be reasonably estimated. The Company evaluates, on a quarterly basis, developments in legal matters that could affect the amount of any accrual and developments that would make a loss contingency both probable and reasonably estimable. If a loss contingency is not both probable and estimable, the Company does not establish an accrued liability.

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 Company has recorded a charge of $0.8 million to cover the estimated costs related to the settlement, including estimated payments to individuals that opt-in to the settlement, premium payments to named individuals, attorneys’ fees for the individuals'

counsel, and related settlement administration costs. The charge does not include legal fees incurred by Pollo Tropical in defending the action. The settlement, which is subject to approval by an arbitrator and a judicial body, will result in dismissal with prejudice for the named individuals and all individuals that opt-in to the settlement.

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.

Recent Accounting Pronouncements

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 amends the guidance in former Topic 605, Revenue Recognition, and provides for either a full retrospective adoption in which the standard is applied to all of the periods presented or a modified retrospective adoption in which the cumulative effect of initially applying the standard is recognized at the date of initial application. The new standard provides accounting guidance for all revenue arising from contracts with customers and affects all entities that enter into contracts to provide goods or services to their customers unless the contracts are in the scope of other US GAAP requirements. The guidance also provides a model for the measurement and recognition of gains and losses on the sale of certain non-financial assets, such as property and equipment, including real estate. The Company is currently evaluating the impact of the provisions of Topic 606; however, the Company does not believe the standard will impact its recognition of revenue from company-owned restaurants or its recognition of franchise royalty revenues, which are based on a percent of gross sales. The Company expects the provisions to primarily impact franchise and development fees as well as gift card programs and does not expect the standard to have a material effect on its financial statements. The Company does not plan to early adopt the standard and plans to use the modified retrospective approach to adopt the standard. For the Company, the new standard is effective for interim and annual periods beginning after December 15, 2017.

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, for the Company's leases that are classified as sale-leaseback transactions, the Company will be required to record an initial adjustment to retained earnings associated with the previously deferred gains, and for any future 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, which may identify other impacts.

In March 2016, the FASB issued ASU No. 2016-04, Recognition of Breakage for Certain Prepaid Stored-Value Products (Topic 405-20), which creates an exception under Topic 405-20 to derecognize financial liabilities related to certain prepaid stored-value products using a breakage model consistent with the revenue breakage model in Topic 606. The new guidance will be effective concurrent with Topic 606, which is effective for the Company for interim and annual periods beginning after December 15, 2017. The Company does not expect this standard to have a material effect on its financial statements.

Basis of Presentation (Policies)

3 Months Ended

Apr. 2, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Consolidation

Text Block

Fiscal Year

Text Block

Basis of Presentation

Text Block

Fair Value of Financial Instruments

Text Block

Long-Lived Assets

Text Block

Use of Estimates

Text Block

Recent Accounting Pronouncements

Text Block

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.

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 January 1, 2017 contained 52 weeks. The three months ended April 2, 2017 and April 3, 2016 each contained thirteen weeks. The fiscal year ending December 31, 2017 will contain 52 weeks.

Basis of Presentation

Basis of Presentation. The accompanying unaudited condensed consolidated financial statements for the three months ended 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 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 January 1, 2017 included in the Company's Annual Report on Form 10-K for the fiscal year ended January 1, 2017. The January 1, 2017 balance sheet data is derived from those audited financial statements.

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 2.

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.

Recent Accounting Pronouncements

Guidance Adopted in 2017. In March 2016, the Financial Accounting Standards Board issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting (Topic 718), to simplify various aspects of the accounting and presentation of share-based payments, including the income tax effects of awards and forfeiture assumptions. In the first quarter of 2017, the Company prospectively adopted the amendments in this guidance that relate to the classification of excess tax benefits or tax benefit deficiencies from share-based payment arrangements in the statement of cash flows and income statement. Excess tax benefits from share-based payment arrangements result from share-based compensation windfall deductions in excess of compensation costs for financial reporting purposes and tax benefit deficiencies result from share-based compensation deduction shortfalls. During the three months ended April 2, 2017, the Company recognized $0.1 million of tax benefit deficiencies, which pursuant to the adopted guidance increased income tax expense and decreased net income by $0.1 million. Effective January 2, 2017, the Company elected to change its accounting policy to recognize forfeitures as they occur. The new forfeiture policy election was adopted using a modified retrospective approach with a $0.1 million cumulative-effect adjustment to beginning retained earnings in the first quarter of 2017 as a result of adopting the standard.Recent Accounting Pronouncements

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 amends the guidance in former Topic 605, Revenue Recognition, and provides for either a full retrospective adoption in which the standard is applied to all of the periods presented or a modified retrospective adoption in which the cumulative effect of initially applying the standard is recognized at the date of initial application. The new standard provides accounting guidance for all revenue arising from contracts with customers and affects all entities that enter into contracts to provide goods or services to their customers unless the contracts are in the scope of other US GAAP requirements. The guidance also provides a model for the measurement and recognition of gains and losses on the sale of certain non-financial assets, such as property and equipment, including real estate. The Company is currently evaluating the impact of the provisions of Topic 606; however, the Company does not believe the standard will impact its recognition of revenue from company-owned restaurants or its recognition of franchise royalty revenues, which are based on a percent of gross sales. The Company expects the provisions to primarily impact franchise and development fees as well as gift card programs and does not expect the standard to have a material effect on its financial statements. The Company does not plan to early adopt the standard and plans to use the modified retrospective approach to adopt the standard. For the Company, the new standard is effective for interim and annual periods beginning after December 15, 2017.

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, for the Company's leases that are classified as sale-leaseback transactions, the Company will be required to record an initial adjustment to retained earnings associated with the previously deferred gains, and for any future 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, which may identify other impacts.

In March 2016, the FASB issued ASU No. 2016-04, Recognition of Breakage for Certain Prepaid Stored-Value Products (Topic 405-20), which creates an exception under Topic 405-20 to derecognize financial liabilities related to certain prepaid stored-value products using a breakage model consistent with the revenue breakage model in Topic 606. The new guidance will be effective concurrent with Topic 606, which is effective for the Company for interim and annual periods beginning after December 15, 2017. The Company does not expect this standard to have a material effect on its financial statements.

Impairment of Long-Lived Assets and Other Lease Charges (Tables)

Schedule of Impairment on Long-Lived Assets and Other Lease Charges by Segment

A summary of impairment on long-lived assets and other lease charges recorded by segment is as follows:



	Three Months Ended
	April 2, 2017		April 3, 2016
Pollo Tropical	$	32,071	$	—
Taco Cabana	343		12
	$	32,414	$	12

Other Liabilities (Tables)

Other Liabilities, Current

Other liabilities, current, consist of the following:



	April 2, 2017		January 1, 2017
Accrued workers' compensation and general liability claims	$	5,673	$	4,838
Sales and property taxes	1,834		1,844
Accrued occupancy costs	2,104		2,161
Other	2,844		2,473
	$	12,455	$	11,316

Other Liabilities, Long-term

Other liabilities, long-term, consist of the following:



	April 2, 2017		January 1, 2017
Accrued occupancy costs	$	20,175	$	20,172
Deferred compensation	1,826		2,027
Accrued workers’ compensation and general liability claims	4,030		4,030
Other	4,936		4,140
	$	30,967	$	30,369

Activity in the Closed-Store Reserve

The following table presents the activity in the closed-store reserve, of which $2.6 million and $3.1 million are included in long-term accrued occupancy costs at April 2, 2017 and January 1, 2017, respectively, with the remainder in other current liabilities.



	Three Months Ended April 2, 2017			Year Ended January 1, 2017
Balance, beginning of period	$	4,912		$	1,832
Provisions for restaurant closures	421			3,093
Additional lease charges, net of (recoveries)	(281		)	(237		)
Payments, net	(708		)	(806		)
Other adjustments	171			1,030
Balance, end of period	$	4,515		$	4,912

Stock-Based Compensation (Tables)

Schedule of Non-vested Restricted Shares Activity

A summary of all non-vested restricted shares and restricted stock units activity for the three months ended April 2, 2017 is as follows:



	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	187,342		20.75		11,745		20.75
Vested/Released	(31,463	)	35.04		(102	)	50.38
Forfeited	(8,636	)	40.95		(914	)	42.39
Outstanding at April 2, 2017	276,595		$	26.53	62,174		$	41.76

Schedule of Restricted Stock Units Activity

A summary of all non-vested restricted shares and restricted stock units activity for the three months ended April 2, 2017 is as follows:



	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	187,342		20.75		11,745		20.75
Vested/Released	(31,463	)	35.04		(102	)	50.38
Forfeited	(8,636	)	40.95		(914	)	42.39
Outstanding at April 2, 2017	276,595		$	26.53	62,174		$	41.76

Business Segment Information (Tables)

Schedule of Segment Reporting Information, by Segment



Three Months Ended	Pollo Tropical			Taco Cabana		Other			Consolidated
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⁾	8,894			7,114		—			16,008
Depreciation and amortization	6,083			3,103		—			9,186
Pre-opening costs	332			92		—			424
Impairment and other lease charges	32,071			343		—			32,414
Interest expense	249			335		—			584
Income (loss) before taxes	(25,096		)	1,394		—			(23,702		)
Capital expenditures	8,663			2,696		315			11,674
April 3, 2016:
Restaurant sales	$	98,906		$	77,033	$	—		$	175,939
Franchise revenue	577			161		—			738
Cost of sales	31,604			22,446		—			54,050
Restaurant wages and related expenses ⁽¹⁾	22,896			22,156		—			45,052
Restaurant rent expense	4,644			4,277		—			8,921
Other restaurant operating expenses	12,592			9,796		—			22,388
Advertising expense	3,762			3,233		—			6,995
General and administrative expense⁽²⁾	7,685			5,462		701			13,848
Depreciation and amortization	5,278			3,058		—			8,336
Pre-opening costs	1,114			68		—			1,182
Impairment and other lease charges	—			12		—			12
Interest expense	251			307		—			558
Income (loss) before taxes	9,669			6,615		(701		)	15,583
Capital expenditures	14,099			1,634		1,058			16,791
Identifiable Assets:
April 2, 2017	$	247,967		$	170,169	$	8,509		$	426,645
January 1, 2017	263,868			165,195		12,502			441,565

(1) Includes stock-based compensation expense of $109 and $36 for the three months ended April 2, 2017 and April 3, 2016, respectively.

(2) Includes stock-based compensation expense of $537 and $975 for the three months ended April 2, 2017 and April 3, 2016, respectively.

Net Income (Loss) per Share (Tables)

Schedule of Earnings Per Share

The computation of basic and diluted net income (loss) per share is as follows:



	Three Months Ended
	April 2, 2017			April 3, 2016
Basic and diluted net income (loss) per share:
Net income (loss)	$	(15,060	)	$	9,895
Less: income allocated to participating securities	—			(93		)
Net income (loss) available to common shareholders	$	(15,060	)	$	9,802
Weighted average common shares, basic	26,774,103			26,605,717
Restricted stock units	—			6,304
Weighted average common shares, diluted	26,774,103			26,612,021

Basic net income (loss) per share	$	(0.56	)	$	0.37
Diluted net income (loss) per share	$	(0.56	)	$	0.37

Basis of Presentation - Narrative (Details)

3 Months Ended

12 Months Ended

Apr. 2, 2017

Apr. 3, 2016

Jan. 1, 2017

Dec. 31, 2017

Forecast

Dec. 31, 2017

Minimum

Forecast

Dec. 31, 2017

Maximum

Forecast

Apr. 2, 2017

Entity Operated Units

Pollo Tropical

restaurant

Apr. 2, 2017

Entity Operated Units

Pollo Tropical

Florida

restaurant

Apr. 2, 2017

Entity Operated Units

Pollo Tropical

Texas

restaurant

Apr. 2, 2017

Entity Operated Units

Pollo Tropical

Georgia

restaurant

Apr. 2, 2017

Entity Operated Units

Pollo Tropical

Tennessee

restaurant

Apr. 2, 2017

Entity Operated Units

Taco Cabana

restaurant

Apr. 2, 2017

Entity Operated Units

Taco Cabana

Texas

restaurant

Apr. 2, 2017

Entity Operated Units

Taco Cabana

Oklahoma

restaurant

Apr. 2, 2017

Franchised Units

Pollo Tropical

restaurant

Apr. 2, 2017

Franchised Units

Pollo Tropical

Florida

restaurant

Apr. 2, 2017

Franchised Units

Pollo Tropical

Puerto Rico

restaurant

Apr. 2, 2017

Franchised Units

Pollo Tropical

Bahamas

restaurant

Apr. 2, 2017

Franchised Units

Pollo Tropical

Guyana

restaurant

Apr. 2, 2017

Franchised Units

Pollo Tropical

Venezuela

restaurant

Apr. 2, 2017

Franchised Units

Pollo Tropical

Panama

restaurant

Apr. 2, 2017

Franchised Units

Pollo Tropical

Guatemala

restaurant

Apr. 2, 2017

Franchised Units

Taco Cabana

restaurant

Apr. 2, 2017

Franchised Units

Taco Cabana

Texas

restaurant

Apr. 2, 2017

Franchised Units

Taco Cabana

New Mexico

restaurant

Entity Information [Line Items]

Number of restaurants

180

131

30

16

3

167

166

1

34

7

17

1

2

1

4

2

7

2

5

Fiscal period duration

91 days

371 days

364 days

371 days

Basis of Presentation - Fair Value Disclosures (Details) (USD $)

In Millions, unless otherwise specified

Apr. 2, 2017

Jan. 1, 2017

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Carrying value of senior credit facility

$ 72.9

$ 69.9

Level 2

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Fair value of senior credit facility

$ 72.9

$ 69.9

Basis of Presentation - Guidance Adopted in 2017 (Details) (USD $)

3 Months Ended

Apr. 2, 2017

New Accounting Pronouncements or Change in Accounting Principle [Line Items]

Cumulative-effect adjustment to beginning retained earnings

$ 26,000

ASU 2016-09

New Accounting Pronouncements or Change in Accounting Principle [Line Items]

Tax deficiencies from share-based compensation

100,000

Effect of adopting new guidance to net income

100,000

Cumulative-effect adjustment to beginning retained earnings

$ 100,000

Impairment of Long-Lived Assets and Other Lease Charges - Summary by Segment (Details) (USD $)

In Thousands, unless otherwise specified

3 Months Ended

Apr. 2, 2017

Apr. 3, 2016

Impairment and Other Lease Charges [Line Items]

Impairment and other lease charges

$ 32,414

$ 12

Pollo Tropical

Impairment and Other Lease Charges [Line Items]

Impairment and other lease charges

32,071

0

Taco Cabana

Impairment and Other Lease Charges [Line Items]

Impairment and other lease charges

$ 343

$ 12

Impairment of Long-Lived Assets and Other Lease Charges - Narrative (Details) (USD $)

3 Months Ended

Apr. 2, 2017

Level 3

Apr. 24, 2017

Subsequent Event

Restaurants, Brand Conversion

Maximum

Forecast

restaurant

Apr. 2, 2017

Pollo Tropical

Jan. 1, 2017

Pollo Tropical

Restaurants, Open

restaurant

Apr. 24, 2017

Pollo Tropical

Subsequent Event

Outside Florida

restaurant

Apr. 24, 2017

Pollo Tropical

Subsequent Event

Atlanta

restaurant

Apr. 24, 2017

Pollo Tropical

Subsequent Event

South Texas

restaurant

Apr. 24, 2017

Pollo Tropical

Subsequent Event

Restaurants, Closed

restaurant

Apr. 2, 2017

Taco Cabana

Apr. 2, 2017

Taco Cabana

Restaurants, Open

restaurant

Impairment and Other Lease Charges [Line Items]

Number of restaurants

5

7

19

13

6

30

3

Asset impairment charges

$ 32,000,000.0

$ 300,000

Lease charges

100,000

Fair value of impaired assets

$ 15,200,000

Other Liabilities - Current (Details) (USD $)

In Thousands, unless otherwise specified

Apr. 2, 2017

Jan. 1, 2017

Other Liabilities Disclosure [Abstract]

Accrued workers' compensation and general liability claims

$ 5,673

$ 4,838

Sales and property taxes

1,834

1,844

Accrued occupancy costs

2,104

2,161

Other

2,844

2,473

Other liabilities, current

$ 12,455

$ 11,316

Other Liabilities - Long-term (Details) (USD $)

In Thousands, unless otherwise specified

Apr. 2, 2017

Jan. 1, 2017

Other Liabilities Disclosure [Abstract]

Accrued occupancy costs

$ 20,175

$ 20,172

Deferred compensation

1,826

2,027

Accrued workers’ compensation and general liability claims

4,030

Other

4,936

4,140

Other liabilities, long-term

$ 30,967

$ 30,369

Other Liabilities - Narrative (Details) (Closed Stores, USD $)

In Thousands, unless otherwise specified

Apr. 2, 2017

Jan. 1, 2017

Jan. 3, 2016

Restructuring Cost and Reserve [Line Items]

Closed-store reserve

$ 4,515

$ 4,912

$ 1,832

Other Liabilities, Long-Term

Restructuring Cost and Reserve [Line Items]

Closed-store reserve

$ 2,600

$ 3,100

Other Liabilities - Restructuring Reserve (Details) (Closed Stores, USD $)

In Thousands, unless otherwise specified

3 Months Ended

12 Months Ended

Apr. 2, 2017

Jan. 1, 2017

Closed Stores

Activity in the Closed-Store Reserve

Balance, beginning of period

$ 4,912

$ 1,832

Provisions for restaurant closures

421

3,093

Additional lease charges, net of (recoveries)

(281)

(237)

Payments, net

(708)

(806)

Other adjustments

171

1,030

Balance, end of period

$ 4,515

$ 4,912

Stock-Based Compensation - Narrative (Details) (USD $)

3 Months Ended

Apr. 2, 2017

Apr. 3, 2016

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Share-based compensation expense

$ 600,000

$ 1,000,000.0

Unrecognized stock-based compensation expense

$ 7,000,000.0

Nonvested Restricted Shares

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Shares granted in period

187,342

Weighted average grant date fair value, grants in period (usd per share)

$ 20.75

Share-based compensation cost not yet recognized, period for recognition

3 years 2 months 12 days

Nonvested Restricted Shares |
Management

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Shares granted in period

187,342

50,087

Vesting period

4 years

Weighted average grant date fair value, grants in period (usd per share)

$ 20.75

$ 35.25

Nonvested Restricted Shares |
Executive Officer

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Shares granted in period

33,691

Vesting period

4 years

Weighted average grant date fair value, grants in period (usd per share)

$ 35.25

Restricted Stock Units

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Shares granted in period

11,745

Weighted average grant date fair value, grants in period (usd per share)

$ 20.75

Share-based compensation cost not yet recognized, period for recognition

2 years 0 months 0 days

Restricted Stock Units |
Management

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Shares granted in period

11,745

5,762

Vesting period

4 years

Weighted average grant date fair value, grants in period (usd per share)

$ 20.75

$ 35.25

Restricted Stock Units |
Executive Officer

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Shares granted in period

33,691

Vesting period

3 years

Weighted average grant date fair value, grants in period (usd per share)

$ 35.25

Restricted Stock Units |
Executive Officer |
Minimum

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Shares to be issued at end of performance period

0

Restricted Stock Units |
Executive Officer |
Maximum

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Shares to be issued at end of performance period

67,382

Stock-Based Compensation - Non-vested Restricted Shares and Restricted Stock Units Activity (Details) (USD $)

3 Months Ended

Apr. 2, 2017

Non-Vested Shares

Non-vested Restricted Shares and Restricted Stock Units

Outstanding at beginning of period (in shares)

129,352

Granted (in shares)

187,342

Vested/Released (in shares)

(31,463)

Forfeited (in shares)

(8,636)

Outstanding at end of period (in shares)

276,595

Weighted Average Grant Date Price

Outstanding at beginning of period (usd per share)

$ 37.94

Granted (usd per share)

$ 20.75

Vested/Released (usd per share)

$ 35.04

Forfeited (usd per share)

$ 40.95

Outstanding at end of period (usd per share)

$ 26.53

Restricted Stock Units

Non-vested Restricted Shares and Restricted Stock Units

Outstanding at beginning of period (in shares)

51,445

Granted (in shares)

11,745

Vested/Released (in shares)

(102)

Forfeited (in shares)

(914)

Outstanding at end of period (in shares)

62,174

Weighted Average Grant Date Price

Outstanding at beginning of period (usd per share)

$ 46.59

Granted (usd per share)

$ 20.75

Vested/Released (usd per share)

$ 50.38

Forfeited (usd per share)

$ 42.39

Outstanding at end of period (usd per share)

$ 41.76

Business Segment Information (Details) (USD $)

In Thousands, unless otherwise specified

3 Months Ended

Apr. 2, 2017

segment

Apr. 3, 2016

Jan. 1, 2017

Segment Reporting [Abstract]

Number of operating segments

2

Segment Reporting Information [Line Items]

Restaurant sales

$ 174,977

$ 175,939

Franchise revenue

630

738

Cost of sales

50,948

54,050

Restaurant wages and related expenses

48,132

45,052

Restaurant rent expense

9,862

8,921

Other restaurant operating expenses

24,068

22,388

Advertising expense

7,539

6,995

General and administrative expense

16,008

13,848

Depreciation and amortization

9,186

8,336

Pre-opening costs

424

1,182

Impairment and other lease charges

32,414

12

Interest expense

584

558

Income (loss) before taxes

(23,702)

15,583

Capital expenditures

11,674

16,791

Identifiable assets

426,645

441,565

Stock-based compensation

600

1,000

Restaurant Wages And Related Expenses

Segment Reporting Information [Line Items]

Stock-based compensation

109

36

General and Administrative Expense

Segment Reporting Information [Line Items]

Stock-based compensation

537

975

Pollo Tropical

Segment Reporting Information [Line Items]

Impairment and other lease charges

32,071

0

Taco Cabana

Segment Reporting Information [Line Items]

Impairment and other lease charges

343

12

Operating Segments |
Pollo Tropical

Segment Reporting Information [Line Items]

Restaurant sales

99,310

98,906

Franchise revenue

449

577

Cost of sales

29,947

31,604

Restaurant wages and related expenses

24,046

22,896

Restaurant rent expense

5,375

4,644

Other restaurant operating expenses

13,389

12,592

Advertising expense

4,325

3,762

General and administrative expense

8,894

7,685

Depreciation and amortization

6,083

5,278

Pre-opening costs

332

1,114

Impairment and other lease charges

32,071

0

Interest expense

249

251

Income (loss) before taxes

(25,096)

9,669

Capital expenditures

8,663

14,099

Identifiable assets

247,967

263,868

Operating Segments |
Taco Cabana

Segment Reporting Information [Line Items]

Restaurant sales

75,667

77,033

Franchise revenue

181

161

Cost of sales

21,001

22,446

Restaurant wages and related expenses

24,086

22,156

Restaurant rent expense

4,487

4,277

Other restaurant operating expenses

10,679

9,796

Advertising expense

3,214

3,233

General and administrative expense

7,114

5,462

Depreciation and amortization

3,103

3,058

Pre-opening costs

92

68

Impairment and other lease charges

343

12

Interest expense

335

307

Income (loss) before taxes

1,394

6,615

Capital expenditures

2,696

1,634

Identifiable assets

170,169

165,195

Other

Segment Reporting Information [Line Items]

Restaurant sales

0

Franchise revenue

0

Cost of sales

0

Restaurant wages and related expenses

0

Restaurant rent expense

0

Other restaurant operating expenses

0

Advertising expense

0

General and administrative expense

0

701

Depreciation and amortization

0

Pre-opening costs

0

Impairment and other lease charges

0

Interest expense

0

Income (loss) before taxes

0

(701)

Capital expenditures

315

1,058

Identifiable assets

$ 8,509

$ 12,502

Net Income (Loss) per Share - Narrative (Details) (Restricted Stock Units)

3 Months Ended

Apr. 3, 2016

Restricted Stock Units

Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]

Weighted average antidilutive securities excluded from computation of diluted earnings per share (in shares)

7,407

Net Income (Loss) per Share - Computation of Basic and Diluted Net Income per Share (Details) (USD $)

In Thousands, except Share data, unless otherwise specified

3 Months Ended

Apr. 2, 2017

Apr. 3, 2016

Earnings Per Share [Abstract]

Net income (loss)

$ (15,060)

$ 9,895

Less: income allocated to participating securities

0

(93)

Net income (loss) available to common shareholders

$ (15,060)

$ 9,802

Weighted average common shares, basic

26,774,103

26,605,717

Restricted stock units (in shares)

0

6,304

Weighted average common shares, diluted

26,774,103

26,612,021

Basic net income (loss) per common share (usd per share)

$ (0.56)

$ 0.37

Diluted net income (loss) per common share (usd per share)

$ (0.56)

$ 0.37

Commitments and Contingencies (Details) (USD $)

In Millions, unless otherwise specified

0 Months Ended

Apr. 2, 2017

restaurant

Sep. 30, 2016

Fair Labor Standards Act Legal Demand Letter

plaintiff

Commitments and Contingencies Disclosure [Abstract]

Number of subleases

3

Maximum potential liability for future rental payments

$ 1.6

Loss Contingencies [Line Items]

Number of named individuals related to settlement

7

Recorded charge to cover estimated costs related to settlement

$ 0.8