ZOE'S KITCHEN, INC., 10-K filed on 2/23/2017
Annual Report
Document and Entity Information (USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended
Dec. 26, 2016
Feb. 23, 2017
Jul. 11, 2016
Document and Entity Information [Abstract]
 
 
 
Document Type
10-K 
 
 
Amendment Flag
false 
 
 
Document Period End Date
Dec. 26, 2016 
 
 
Entity Registrant Name
Zoe's Kitchen, Inc. 
 
 
Entity CIK
0001594879 
 
 
Entity Filer Category
Large Accelerated Filer 
 
 
Entity Voluntary Filers
No 
 
 
Entity Current Reporting Status
Yes 
 
 
Current Fiscal Year End Date
--12-26 
 
 
Entity Well-known Seasoned Issuer
No 
 
 
Document Fiscal Year Focus
2016 
 
 
Document Fiscal Period Focus
FY 
 
 
Entity Common Stock Outstanding
 
19,481,902 
 
Entity Public Float
 
 
$ 651 
Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Dec. 26, 2016
Dec. 28, 2015
Current assets:
 
 
Cash and cash equivalents
$ 5,493 
$ 19,131 
Trade accounts receivable, net of allowance for doubtful accounts
2,287 
853 
Other accounts receivable
3,708 
1,305 
Inventories
1,878 
1,660 
Prepaid expenses and other
1,818 
1,526 
Assets held for sale
0 
2,128 
Total current assets
15,184 
26,603 
Property and equipment, net
162,033 
131,819 
Goodwill
29,528 
29,528 
Intangibles, net
7,962 
9,568 
Other long-term assets
512 
476 
Total long-term assets
200,035 
171,391 
Total assets
215,219 
197,994 
Current liabilities:
 
 
Accounts payable
7,229 
6,418 
Accrued expenses and other
14,260 
12,918 
Total current liabilities
21,489 
19,336 
Long-term liabilities:
 
 
Deemed landlord financing
29,777 
28,415 
Deferred rent
28,375 
20,264 
Deferred income taxes
5,476 
4,743 
Other long-term liabilities, net
136 
280 
Total long-term liabilities
63,764 
53,702 
Total liabilities
85,253 
73,038 
Commitments and Contingencies (Note 12)
   
   
Stockholders' equity:
 
 
Common stock, $0.01 par value, 135,000,000 shares authorized as of December 26, 2016 and December 28, 2015; 19,460,467 and 19,385,645 shares issued, outstanding as of December 26, 2016 and December 28, 2015, respectively
195 
194 
Additional paid-in capital
148,482 
145,276 
Accumulated deficit
(18,711)
(20,514)
Total stockholders' equity
129,966 
124,956 
Total liabilities and stockholders' equity
$ 215,219 
$ 197,994 
Consolidated Balance Sheets (Parenthetical) (USD $)
Dec. 26, 2016
Dec. 28, 2015
Statement of Financial Position [Abstract]
 
 
Common stock, par value (USD per share)
$ 0.01 
$ 0.01 
Common stock, shares authorized (in shares)
135,000,000 
135,000,000 
Common stock, issued (in shares)
19,460,467 
19,385,645 
Common stock, outstanding (in shares)
19,460,467 
19,385,645 
Consolidated Statements of Operations (USD $)
In Thousands, except Share data, unless otherwise specified
12 Months Ended
Dec. 26, 2016
Dec. 28, 2015
Dec. 29, 2014
Revenue:
 
 
 
Restaurant sales
$ 275,756 
$ 226,354 
$ 171,256 
Royalty fees
207 
203 
477 
Total revenue
275,963 
226,557 
171,733 
Restaurant operating costs (excluding depreciation and amortization):
 
 
 
Cost of sales
83,502 
70,518 
56,843 
Labor
81,129 
64,756 
48,300 
Store operating expenses
55,921 
43,217 
31,919 
General and administrative expenses
30,358 
26,666 
26,744 
Depreciation
14,453 
11,368 
8,900 
Amortization
1,606 
1,638 
1,573 
Pre-opening costs
2,214 
2,554 
2,109 
Casualty loss
0 
353 
0 
Loss from disposal of equipment
355 
325 
144 
Total operating expenses
269,538 
221,395 
176,532 
Income (loss) from operations
6,425 
5,162 
(4,799)
Other income and expenses:
 
 
 
Interest expense, net
3,848 
3,270 
3,535 
Other income
(87)
(71)
0 
Loss on extinguishment of debt
0 
0 
978 
Loss on interest cap
0 
0 
6 
Total other expenses
3,761 
3,199 
4,519 
Income (loss) before provision for income taxes
2,664 
1,963 
(9,318)
Provision for income taxes
861 
839 
699 
Net income (loss)
$ 1,803 
$ 1,124 
$ (10,017)
Earnings per share
 
 
 
Basic and diluted
$ 0.09 
$ 0.06 
$ (0.58)
Weighted average shares outstanding
 
 
 
Basic
19,434,622 
19,344,896 
17,409,673 
Diluted
19,586,447 
19,552,708 
17,409,673 
Consolidated Statements of Stockholders' Equity (USD $)
In Thousands, except Share data, unless otherwise specified
Total
Common Stock
Additional Paid-in Capital
Accumulated Deficit
Beginning balance at Dec. 30, 2013
$ 33,579 
$ 126 
$ 45,074 
$ (11,621)
Common stock, outstanding (in shares) at Dec. 30, 2013
 
12,561,414 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
Issuance of common stock in connection with the IPO, net of transaction expenses (in shares)
 
6,708,332 
 
 
Issuance of common stock in connection with the IPO, net of transaction expenses
91,037 
67 
90,970 
 
Equity-based compensation
6,332 
 
6,332 
 
Proceeds from exercise of stock options (in shares)
 
22,500 
 
 
Proceeds from exercise of stock options
338 
 
338 
 
Net income (loss)
(10,017)
 
 
(10,017)
Ending balance at Dec. 29, 2014
121,269 
193 
142,714 
(21,638)
Common stock, outstanding (in shares) at Dec. 29, 2014
 
19,292,246 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
Equity-based compensation
1,191 
 
1,191 
 
Proceeds from exercise of stock options (in shares)
91,177 
91,177 
 
 
Proceeds from exercise of stock options
1,372 
1 
1,371 
 
Shares issued from restricted stock units (in shares)
 
2,222 
 
 
Net income (loss)
1,124 
 
 
1,124 
Ending balance at Dec. 28, 2015
124,956 
194 
145,276 
(20,514)
Common stock, outstanding (in shares) at Dec. 28, 2015
19,385,645 
19,385,645 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
Equity-based compensation
2,125 
 
2,125 
 
Proceeds from exercise of stock options (in shares)
70,190 
70,190 
 
 
Proceeds from exercise of stock options
1,082 
1 
1,081 
 
Shares issued from restricted stock units (in shares)
 
4,632 
 
 
Net income (loss)
1,803 
 
 
1,803 
Ending balance at Dec. 26, 2016
$ 129,966 
$ 195 
$ 148,482 
$ (18,711)
Common stock, outstanding (in shares) at Dec. 26, 2016
19,460,467 
19,460,467 
 
 
Consolidated Statements of Cash Flows (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 26, 2016
Dec. 28, 2015
Dec. 29, 2014
Cash flows from operating activities:
 
 
 
Net income (loss)
$ 1,803 
$ 1,124 
$ (10,017)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
Depreciation
14,453 
11,368 
8,900 
Amortization of intangible assets
1,606 
1,638 
1,573 
Equity-based compensation
2,125 
1,191 
6,332 
Deferred income taxes
753 
742 
606 
Amortization of loan costs
23 
20 
77 
Bad debt expense
60 
48 
11 
Casualty loss
0 
353 
0 
Loss from disposal of equipment
355 
325 
144 
Loss on extinguishment of debt
0 
0 
978 
Accretion of deemed landlord financing
308 
284 
219 
Changes in operating assets and liabilities:
 
 
 
Trade accounts receivable
(1,494)
(223)
(106)
Other accounts receivable
(2,404)
(141)
23 
Inventories
(218)
(378)
(347)
Prepaid expenses and other
(342)
(471)
(555)
Accounts payable
697 
641 
1,279 
Accrued expenses and other
250 
3,124 
3,235 
Deferred rent
8,089 
6,608 
5,401 
Net cash provided by operating activities
26,064 
26,253 
17,753 
Cash flows from investing activities:
 
 
 
Purchase of property and equipment
(45,845)
(38,403)
(31,102)
Acquisition purchase price, net of cash acquired
0 
0 
(9,136)
Proceeds from sale-leaseback transactions
4,663 
0 
0 
Proceeds from sale of property and equipment
75 
108 
158 
Net cash used in investing activities
(41,107)
(38,295)
(40,080)
Cash flows from financing activities:
 
 
 
Proceeds from line of credit
0 
0 
7,900 
Payments on long-term debt
0 
0 
(49,300)
Proceeds from issuance of common stock, net of underwriter fees
0 
0 
96,314 
Payment of costs associated with initial public offering
0 
0 
(2,538)
Purchase of common stock
0 
0 
(2,733)
Proceeds from deemed landlord financing
323 
508 
603 
Proceeds from exercise of common stock
1,082 
1,372 
338 
Payment of loan acquisition fees
0 
(97)
(16)
Net cash provided by financing activities
1,405 
1,783 
50,568 
Net change in cash and cash equivalents
(13,638)
(10,259)
28,241 
Cash and cash equivalents:
 
 
 
Beginning of year
19,131 
29,390 
1,149 
End of year
5,493 
19,131 
29,390 
Supplemental disclosure of cash flow information
 
 
 
Cash paid for interest related to long-term debt
19 
16 
812 
Cash paid for interest related to deemed landlord financing
3,866 
3,292 
2,750 
Non-cash deemed landlord financing
730 
4,400 
2,550 
Change in accrued purchases of property and equipment
$ 1,057 
$ (555)
$ (691)
Nature of Operations and Summary of Significant Accounting Policies
Nature of Operations and Summary of Significant Accounting Policies
Nature of Operations and Summary of Significant Accounting Policies
Nature of Operations
Zoe’s Kitchen, Inc. (the "Company", "Zoës", "we" or "us"), primarily develops and operates fast-casual restaurants serving a distinct menu of freshly prepared Mediterranean-inspired dishes. As of December 26, 2016, we operated 201 Company-owned restaurants and three franchise restaurants in 20 states across the United States. We have determined that we have one operating and reportable segment. All of our revenues are derived in the United States. All of our assets are located in the United States.
On April 16, 2014, we completed an initial public offering (the "IPO") of 6,708,332 shares of common stock at a price to the public of $15.00 per share, which included 874,999 shares sold to the underwriters pursuant to their over-allotment option. All share and per share data have been retroactively restated in the accompanying financial statements to give effect to a 125,614.14:1 stock split, which became effective on April 14, 2014. After underwriter discounts and commissions and offering expenses, we received net proceeds from the offering of approximately $91.0 million. A portion of these proceeds were used to repay all of the outstanding borrowings under the 2011 Credit Facility (as defined herein, see Note 8).
On August 19, 2014, we completed a follow-on offering of 5,175,000 shares of common stock at a public offering price of $30.25 per share, which included 675,000 shares sold to the underwriters pursuant to their over-allotment option. All of the shares in the offering were offered by selling stockholders, except for 94,100 shares offered by us, the proceeds of which were used to repurchase the same number of shares from certain of our officers at the public offering price per share. We did not receive any net proceeds from the sale of shares of common stock by the selling stockholders. The repurchased shares were constructively retired as we do not intend to reissue the shares within a reasonable period of time.
On November 19, 2014, we completed a follow-on offering of 4,370,000 shares of common stock at a price of $32.00 per share, which included 570,000 shares sold to the underwriters pursuant to their over-allotment option. All of the shares in the offering were offered by the selling stockholders. We did not receive any proceeds from the offering.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Zoe's Kitchen USA, LLC and Soho Franchising, LLC. All intercompany accounts and transactions have been eliminated in consolidation. The consolidated financial statements presented herein reflect our financial position, results of operations, cash flows and changes in equity in conformity with accounting principles and practices generally accepted in the United States of America ("GAAP").
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions, such as valuation of long-lived, definite and indefinite-lived assets, estimated useful lives of assets, the reasonably assured lease terms of operating leases, the construction costs of leases where the Company is considered the owner during and after the construction period, allowance for doubtful accounts, the fair value of equity-based compensation, the calculation of self-insurance reserves and deferred tax valuation allowances, that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Fiscal Year
We operate on a 52- or 53-week fiscal year that ends on the last Monday of the calendar year. All fiscal years presented herein consist of 52 weeks.
Earnings per Share
Basic earnings per share is calculated by dividing net income (loss) by the weighted average shares outstanding during the period, without consideration of common stock equivalents. Diluted net income (loss) per share is calculated by adjusting weighted average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method. See Note 14 for discussion of stock split.
Revenue Recognition — Restaurant Sales
We recognize restaurant sales when food and beverage products are sold. Restaurant sales are reported net of sales tax collected from customers.
Gift Cards
Revenues from the sale of gift cards are deferred and recognized when redeemed. Deferred gift card revenue is included in accrued liabilities in our consolidated balance sheets. Our gift cards do not have an expiration date and we do not deduct non-usage fees from outstanding gift card balances. We recognize gift card breakage revenue by applying our estimate of the rate of gift card breakage over the estimated period of redemption. These estimates are based on our historical redemptions. We recognize breakage revenues exclusive of amounts subject to state unclaimed property laws.
We recognized gift card breakage in restaurant sales of $0.4 million, $0.3 million and $0.2 million during the years December 26, 2016, December 28, 2015 and December 29, 2014, respectively
Royalty fee Accounting
Royalties are recognized as revenue when earned. Our franchise agreement requires the franchisees to remit continuing royalty fees at a specified percentage of the franchisee's gross sales.
Cash and Cash Equivalents
We consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.
During the year, cash balances may exceed the federally insured limits at the banks where we maintain our deposits. We do not believe we are exposed to any significant credit risk on cash and cash equivalents.
Accounts Receivable
Trade accounts receivable, net of allowance for doubtful accounts, consists primarily of receivables from catering on-account sales, credit card sales receivables and royalty fee receivables. Other accounts receivable consists primarily of tenant allowances due from landlords. Management determines the allowance for doubtful accounts based on historical losses and current economic conditions. On a continuing basis, management analyzes delinquent receivables, and once these receivables are determined to be uncollectible, they are written off either against an existing allowance account or as a direct charge to the consolidated statement of operations.
Inventories
Inventories consist primarily of food, beverage, and paper products. All inventories are recorded at the lower of cost, as determined on a first-in, first-out ("FIFO") method, or market.
Property and Equipment
Property and equipment are stated at cost, less accumulated depreciation. Expenditures for improvements and renewals that extend the useful lives are capitalized. Upon sale, retirement, or other disposition of these assets, the costs and related accumulated depreciation are removed from the respective accounts and any gain or loss on the disposition is included in our consolidated statement of operations. Maintenance and repair costs are expensed as incurred.
Depreciation is calculated using the straight-line method based on the following estimated lives:
Building under deemed landlord financing
 
39 years
Leasehold improvements
 
7 - 20 years
Furniture and fixtures
 
7 years
Automotive equipment
 
4 - 5 years
Computer equipment
 
3 - 5 years
Machinery and equipment
 
5 years

Leasehold improvements are depreciated over the shorter of the lease term of the respective leases, or the estimated useful life of the asset.
Goodwill
Goodwill represents the excess of the cost of the business acquired over the fair value of its net assets at the date of acquisition. We account for goodwill under Accounting Standards Codification ("ASC") 350, Intangibles — Goodwill and Other, which requires that goodwill and indefinite lived intangible assets are not amortized but tested for impairment at least annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. For purposes of applying ASC 350, we have identified a single reporting unit, as that term is defined in ASC 350, to which goodwill is attributable.
We performed our annual impairment testing of goodwill as of the last day of the fiscal year. The fair value of our reporting unit was estimated primarily using the expected present value of future cash flows, using estimates, judgments and assumptions that management believes were appropriate in the circumstances.
Trade Name
A trade name is considered to be an important element associated with the sales appeal of certain products and services. The trade name distinguishes goods and services from competitors, indicates the source of the goods and services, and serves as an indication of the quality of the product. Our trade name consists of various protected words, symbols, and designs that help identify our products and services such as the "Zoës Kitchen" trademark. This capitalized cost is being amortized on a straight-line basis over an estimated useful life of 20 years.
Favorable Leases
A leasehold interest represents the future lease obligations under the in-place contractual lease terms that are either above or below market value. The value of acquired leases that were determined to be favorable to market rents are capitalized and amortized on a straight-line basis over the lease term from the date of acquisition.
Reacquired Rights
Reacquired rights intangible assets arise from our franchise acquisitions. We amortize these reacquired rights on a straight-line basis over the remaining terms of the original franchise agreements.
Impairment of Long-Lived Assets
We evaluate impairment of long-lived assets whenever events or changes in circumstances indicate that the net carrying amounts may not be recoverable. We compare estimated undiscounted cash flows from operating activities to the carrying value of related assets for the individual restaurants. If the sum of the estimated undiscounted cash flows is less than the carrying value, an impairment loss would be recognized for the difference between the carrying value and the estimated fair value of the assets based on the discounted future cash flows of the assets using a rate that approximates our weighted average cost of capital.
We recognized no impairment losses during the years ended December 26, 2016, December 28, 2015 and December 29, 2014.
Loan Costs
Loan costs are amortized on a straight-line basis over the remaining life of the debt as a component of interest expense and included in other long-term assets on our consolidated balance sheet. GAAP requires that the effective yield method be used to amortize loan financing costs; however, the effect of using the straight-line method is not materially different from the results that would have been obtained under the effective yield method. Loan costs related to the 2015 Credit Facility (as defined herein, see Note 8) were $0.1 million, net of accumulated amortization as of December 26, 2016 and December 28, 2015.
Sales Taxes
Sales taxes are imposed by state, county, and city governmental authorities, collected from customers and remitted to the appropriate governmental agency. Our accounting policy is to record the sales taxes collected as a liability on our books and then remove the liability when the sales tax is remitted. There is no impact on the consolidated statement of operations as restaurant sales are recorded net of sales tax.
Deferred Rent
Certain leases contain annual escalation clauses based on fixed escalation terms. The excess of cumulative rent expense (recognized on the straight-line basis) over cumulative rent payments made on leases with fixed escalation terms is recognized as deferred rent liability in the accompanying balance sheets. Also included in deferred rent are tenant improvement allowances that we commonly negotiate when opening new restaurants to help fund build-out costs. These costs typically include general construction to alter the layout of the restaurant and leasehold improvements. When we are the beneficiary of each of the improvements, we capitalize the assets and record a deferred liability for the amount of cash received from the landlord, which is amortized on a straight-line basis over the lease term as defined below. If the landlord is deemed to be the owner of leasehold improvements purchased with such allowances, neither an asset nor a liability is recorded by us. The amortization of the deferred liability related to these tenant improvements is recorded as a reduction of rent expense. Tenant improvement allowances, net of amortization, totaled $18.2 million and $12.5 million as of December 26, 2016 and December 28, 2015, respectively. For leases where we are considered to be the owner of the construction project and receive tenant improvement allowances, we record these amounts received as a component of the deemed landlord financing liability. See Note 10.
Lease term is determined at lease inception and includes the initial term of the lease plus any renewal periods that are reasonably assured to occur. The lease term begins when we have the right to control the use of the property.
Additionally, certain of our operating leases contain clauses that provide additional contingent rent based on a percentage of sales greater than certain specified target amounts. We recognize contingent rent expense provided the achievement of that target is considered probable.
Insurance Reserves
Beginning on September 27, 2014, we self-insure a portion of our expected losses under our worker's compensation insurance program. To limit our exposure to losses, we maintain stop-loss coverage through third-party insurers. Insurance liabilities representing estimated costs to settle reported claims and incurred but not reported are included in accrued expenses and other.
Advertising Costs
Advertising costs are expensed as incurred and are included in general and administrative and store operating expenses on the consolidated statement of operations. Advertising costs for the years ended December 26, 2016, December 28, 2015 and December 29, 2014 were $0.07 million, $0.04 million and $0.07 million, respectively.
Pre-opening Costs
Pre-opening costs primarily consist of new employee training, initial print materials, marketing, payroll expenses and rent incurred in connection with new restaurant openings and are expensed as incurred. For the years ended December 26, 2016, December 28, 2015 and December 29, 2014, pre-opening costs were $2.2 million, $2.6 million and $2.1 million, respectively.
Fair Value of Financial Instruments
The carrying amounts of our financial instruments, which include accounts receivable, accounts payable, and other accrued expenses, approximate their fair values due to their short maturities. The carrying amount of our previously existing long-term debt approximates its fair value due to the variable component of the interest rate.
Income Taxes
We use the liability method of accounting for income taxes in accordance with Financial Accounting Standards Board ("FASB") ASC 740, Income Taxes. Under this method, a deferred tax asset or liability is recognized for the estimated future tax effects attributable to temporary differences between the financial statement basis and the tax basis of assets and liabilities as well as tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period of the change. We and our subsidiaries file a consolidated federal income tax return.
Significant judgment is required in evaluating our uncertain tax positions and determining our provision for income taxes. We assess the income tax position and record the liabilities for all years subject to examination based upon management's evaluation of the facts, circumstances, and information available at the reporting date.
We continue to monitor and evaluate the rationale for recording a valuation allowance against our deferred tax assets. As the Company increases earnings and utilizes deferred tax assets, it is possible the valuation allowance could be reduced or eliminated.
Comprehensive Income (Loss)
Comprehensive income (loss) is the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. Comprehensive income (loss) is the same as net income (loss) for all periods presented. Therefore, a separate statement of comprehensive income (loss) is not included in the accompanying consolidated financial statements.
Recently Issued Accounting Standards
In January 2017, the FASB issued Accounting Standard Update ("ASU") No. 2017-04, “Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment,” which eliminates Step 2 from the goodwill impairment test. Under the new standard, annual and interim goodwill impairment tests will compare the fair value of a reporting unit with its carrying amount. An impairment charge will be recognized for the amount by which the carrying amount exceeds the reporting unit's fair value, not to exceed the total amount of goodwill. The pronouncement is effective for goodwill impairments tests in fiscal years beginning after December 15, 2019 and should will be applied on a prospective basis. Early adoption is permitted for goodwill impairment tests performed after January 1, 2017. We are currently evaluating the impact of adopting this update.
In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash payments,” which provides specific guidance regarding presentation and classification on a variety of cash payments and receipts. Among the issues addressed is the classification of proceeds from the settlement of insurance claims. This pronouncement is effective for reporting periods beginning after December 15, 2017 and early adoption is permitted. We do not expect the adoption of ASU 2016-15 to have a material impact on our financial position or results of operations.
In March 2016, the FASB issued ASU No. 2016-09, “Compensation – Stock Compensation (Topic 718).” The pronouncement was issued to simplify the accounting for share-based payment transactions, including income tax consequences, the classification of awards as either equity or liabilities, and the classification on the statement of cash flows. This pronouncement is effective for reporting periods beginning after December 15, 2016. We do not expect the adoption of ASU 2016-09 to have a material impact on our financial position or results of operations.
In March 2016, the FASB issued ASU No. 2016-04, "Liabilities - Extinguishments of Liabilities (Subtopic 405-20)", which amends subtopic 405-20 to provide a scope exception that requires breakage for prepaid stored-value product liabilities to be accounted for consistent with the breakage guidance in Topic 606. The amendment is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. We do not expect the adoption of ASU 2016-04 to have a material impact on our financial position or results of operations.
In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)," which requires entities to recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements. Previous lease accounting did not require certain lease types to be recognized on the balance sheet. This update is an amendment to the codification and is effective for fiscal years beginning after December 15, 2018 including interim periods within those fiscal years applied using a modified retrospective approach. Early adoption is permitted. We are currently evaluating the impact of the adoption of ASU 2016-02 on our financial position and results of operations, but expect that it will result in a significant increase in our long-term assets and liabilities given we have a significant number of leases. In addition, rental payments under most of our leases for which we are the accounting owner will no longer be considered debt service applied to deemed landlord financing and interest expense. Instead, these rental payments will be classified as rent expense.
In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers." This update was issued to replace the current revenue recognition guidance, creating a more comprehensive revenue model. In August 2015, the FASB issued ASU 2015-14 to defer the effective date for adoption. The update is now effective for reporting periods beginning after December 15, 2017. In March 2016, April 2016 and May 2016, the FASB also issued ASU 2016-08, ASU 2016-10 and ASU 2016-12, respectively, to further clarify performance obligations and licensing implementation guidance and other general topics. We expect to adopt the new standard using the modified retrospective approach for the fiscal year and quarter beginning December 26, 2017. We do not expect the adoption to have an impact on revenue from Company-owned restaurants or the recognition of royalty fees from our franchise agreement. In addition, we do not expect a material impact related to recognition of gift card breakage.
Business Combination
Business Combination
Business Combination
On November 10, 2014, we purchased from one of our franchisees three franchise restaurants in Louisiana, two restaurants under development and area development rights in Louisiana, which will allow for us to further expand our Company-owned operations in this market. The purchase price for the acquisition was $8.0 million in cash. Simultaneous to the acquisition, we repaid $0.06 million to the Louisiana franchisee, which resulted in a decrease of our unearned franchise fees. The acquired restaurants contributed revenues of approximately $0.6 million from the date of the acquisition through December 29, 2014. Goodwill recorded in connection with the acquisition was attributable to synergies expected to arise from cost saving opportunities as well as future expected cash flows. The allocation of the purchase price to the estimated fair value of the assets acquired and liabilities assumed at the acquisition date is as follows (in thousands):
Cash
 
$
2

Inventories
 
19

Prepaid rent
 
20

Property, plant and equipment
 
1,242

Deposits
 
10

Favorable leases
 
356

Reacquired rights
 
1,125

Goodwill
 
5,302

Accrued expenses
 
(50
)
Royalties payable
 
(33
)
Total purchase price
 
$
7,993



The pro forma impact of the acquisition and the current period results are not presented as it is not considered material to our consolidated financial statements
On January 8, 2014, we acquired two franchise restaurants in Mobile, Alabama and Destin, Florida from one of our franchisees which will allow for us to expand our Company-owned operations to these markets. The purchase price for the acquisition was $1.1 million in cash. The acquired restaurants contributed revenues of approximately $2.5 million from the date of acquisition through December 29, 2014. Goodwill recorded in connection with the acquisition was attributable to synergies expected to arise from cost saving opportunities as well as future expected cash flows. The allocation of the purchase price to the estimated fair value of the assets acquired and liabilities assumed at the acquisition date is as follows (in thousands):
Cash
 
$
2

Inventories
 
15

Property, plant and equipment
 
167

Reacquired rights
 
91

Goodwill
 
892

Accounts payable
 
(3
)
Royalties payable
 
(17
)
Total purchase price
 
$
1,147


The pro forma impact of the acquisition and the current period results are not presented as it is not considered material to our consolidated financial statements.
Assets Held for Sale
Assets Held for Sale
Assets Held for Sale
The following summarizes the financial statement carrying amounts of assets and liabilities associated with the restaurants classified as held for sale (in thousands):
 
 
2016
 
2015
Land
 
$
—

 
$
807

Leasehold improvements
 
—

 
1,321

Total Assets held for sale
 
$
—

 
$
2,128


As of December 28, 2015, the Company had reached an agreement to sell a parcel of land and certain leasehold improvements. The sale excludes all personal property and non-structural improvements related to the property. The Company classifies assets as held for sale and ceases depreciation of the assets when those assets meet the held for sale criteria, as defined in GAAP.
Property and Equipment
Property and equipment consists of the following at December 26, 2016 and December 28, 2015 (in thousands):
 
 
2016
 
2015
Buildings under deemed landlord financing
 
$
23,830

 
$
23,100

Leasehold improvements
 
125,666

 
96,276

Machinery and equipment
 
32,566

 
23,894

Furniture and fixtures
 
6,604

 
5,150

Automobiles
 
4,019

 
3,985

Computer equipment
 
9,848

 
6,421

Construction in progress
 
6,256

 
6,805

Total property and equipment, gross
 
208,789

 
165,631

Less: Accumulated depreciation
 
(46,756
)
 
(33,812
)
Total property and equipment, net
 
$
162,033

 
$
131,819


Depreciation expense was $14.5 million, $11.4 million and $8.9 million for the years ended December 26, 2016, December 28, 2015 and December 29, 2014, respectively.
As a result of the application of build-to-suit lease guidance contained in ASC 840, Leases, we have determined that we are the accounting owner of a total of 44 and 43 landlord shell buildings under deemed landlord financing as of December 26, 2016 and December 28, 2015, respectively. There were six and nine of these buildings under construction as of December 26, 2016 and December 28, 2015, respectively. We have recorded these as buildings under deemed landlord financing in the table above. We capitalize the landlord's estimated construction costs of the shell building. See Note 10 for additional information.
We capitalize internal payroll and travel costs directly related to the successful development, design and construction of our new restaurants. Capitalized internal payroll and travel costs were $0.7 million, $0.6 million and $0.3 million for the years ended December 26, 2016, December 28, 2015 and December 29, 2014, respectively.
Property and Equipment
Property and Equipment/Casualty Loss/Assets Held for Sale
Assets Held for Sale
The following summarizes the financial statement carrying amounts of assets and liabilities associated with the restaurants classified as held for sale (in thousands):
 
 
2016
 
2015
Land
 
$
—

 
$
807

Leasehold improvements
 
—

 
1,321

Total Assets held for sale
 
$
—

 
$
2,128


As of December 28, 2015, the Company had reached an agreement to sell a parcel of land and certain leasehold improvements. The sale excludes all personal property and non-structural improvements related to the property. The Company classifies assets as held for sale and ceases depreciation of the assets when those assets meet the held for sale criteria, as defined in GAAP.
Property and Equipment
Property and equipment consists of the following at December 26, 2016 and December 28, 2015 (in thousands):
 
 
2016
 
2015
Buildings under deemed landlord financing
 
$
23,830

 
$
23,100

Leasehold improvements
 
125,666

 
96,276

Machinery and equipment
 
32,566

 
23,894

Furniture and fixtures
 
6,604

 
5,150

Automobiles
 
4,019

 
3,985

Computer equipment
 
9,848

 
6,421

Construction in progress
 
6,256

 
6,805

Total property and equipment, gross
 
208,789

 
165,631

Less: Accumulated depreciation
 
(46,756
)
 
(33,812
)
Total property and equipment, net
 
$
162,033

 
$
131,819


Depreciation expense was $14.5 million, $11.4 million and $8.9 million for the years ended December 26, 2016, December 28, 2015 and December 29, 2014, respectively.
As a result of the application of build-to-suit lease guidance contained in ASC 840, Leases, we have determined that we are the accounting owner of a total of 44 and 43 landlord shell buildings under deemed landlord financing as of December 26, 2016 and December 28, 2015, respectively. There were six and nine of these buildings under construction as of December 26, 2016 and December 28, 2015, respectively. We have recorded these as buildings under deemed landlord financing in the table above. We capitalize the landlord's estimated construction costs of the shell building. See Note 10 for additional information.
We capitalize internal payroll and travel costs directly related to the successful development, design and construction of our new restaurants. Capitalized internal payroll and travel costs were $0.7 million, $0.6 million and $0.3 million for the years ended December 26, 2016, December 28, 2015 and December 29, 2014, respectively.
Goodwill
Goodwill
Goodwill
The following is a reconciliation of the beginning and ending balances of the Company's goodwill at December 26, 2016 and December 28, 2015 (in thousands):
 
 
 
Balance December 29, 2014
 
$
29,528

Additions, disposals and impairment
 
—

Balance December 28, 2015
 
$
29,528

Additions, disposals and impairment
 
—

Balance December 26, 2016
 
$
29,528

Intangible Assets
Intangible Assets
Intangible Assets
Intangible assets are summarized in the following tables as of December 26, 2016 and December 28, 2015 (in thousands):
 
 
2016
 
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net
Trade name
 
$
10,000

 
$
(4,583
)
 
$
5,417

Favorable leases
 
355

 
(50
)
 
305

Reacquired rights
 
6,620

 
(4,380
)
 
2,240

Total intangible assets
 
$
16,975

 
$
(9,013
)
 
$
7,962

 
 
 
2015
 
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net
Trade name
 
$
10,000

 
$
(4,083
)
 
$
5,917

Favorable leases
 
355

 
(26
)
 
329

Reacquired rights
 
6,712

 
(3,390
)
 
3,322

Total intangible assets
 
$
17,067

 
$
(7,499
)
 
$
9,568


Estimated amortization expense for the five succeeding years and the aggregate thereafter is (in thousands):
 
 
Trade Name
 
Favorable Leases
 
Reacquired Rights
 
Total
2017
 
$
500

 
$
23

 
$
956

 
$
1,479

2018
 
500

 
23

 
548

 
1,071

2019
 
500

 
23

 
353

 
876

2020
 
500

 
23

 
203

 
726

2021
 
500

 
23

 
156

 
679

Thereafter
 
2,917

 
190

 
24

 
3,131

Total
 
$
5,417

 
$
305


$
2,240

 
$
7,962

Accrued Expenses and Other
Accrued Expenses and Other
Accrued Expenses and Other
Accrued expenses and other consisted of the following at December 26, 2016 and December 28, 2015 (in thousands):
 
 
2016
 
2015
Accrued payroll and payroll taxes
 
$
5,448

 
$
5,365

Accrued capital purchases
 
2,347

 
1,403

Sales tax payable
 
1,218

 
1,274

Gift card payable
 
1,200

 
1,121

Other accrued expenses
 
4,047

 
3,755

Total accrued expenses and other
 
$
14,260

 
$
12,918

Bank Line of Credit and Term Loan
Bank Line of Credit and Term Loan
Bank Line of Credit and Term Loan
On April 16, 2014, we repaid in full our outstanding $37.5 million term loan and $2.9 million line of credit (the "2011 Credit Facility") with a portion of the proceeds from our IPO. Upon repayment, the 2011 Credit Facility and all related agreements were terminated. In addition, we wrote-off all unamortized loan costs, resulting in a loss on extinguishment of debt of $1.0 million.
On February 6, 2015, we entered into a credit facility with Wells Fargo Bank, National Association (the "2015 Credit Facility"). The 2015 Credit Facility consists of a revolving loan commitment in the aggregate amount of $20.0 million, together with an incremental revolving credit commitment up to an aggregate amount of $30.0 million. The 2015 Credit Facility has a five year term and matures on February 6, 2020. As of December 26, 2016, we had no indebtedness under the 2015 Credit Facility.
Revolving credit loans under the 2015 Credit Facility bear interest, at the Company’s election, at either the base rate plus an applicable margin, or LIBOR plus an applicable margin. The base rate consists of the highest of the prime rate, the federal funds rate plus 0.5% and LIBOR plus 1.0%. The applicable margin and associated loan commitment fee consists of two pricing levels based on the Company’s consolidated total debt ratio. If this debt ratio is greater than or equal to 2.50 to 1, then the unused commitment fee is 0.15% per annum, and the applicable margin is LIBOR plus 1.5% or the base rate plus 0.5%. If this debt ratio is less than 2.50 to 1, then the unused commitment fee is 0.125% per annum and the applicable margin is LIBOR plus 1.0% or the base rate.
The 2015 Credit Facility includes specific financial covenants such as a leverage ratio and an interest coverage ratio. We are also subject to other customary covenants, including limitations on additional borrowings, dividend payments and acquisitions. As of December 26, 2016, we were in compliance with these financial and other customary covenants.
Income Taxes
Income Taxes
Income Taxes
Our income tax provision for the years ended December 26, 2016, December 28, 2015 and December 29, 2014 consists of the following (in thousands):
 
 
2016
 
2015
 
2014
Current
 
 
 
 

 
 

Federal
 
$
—

 
$
—

 
$
—

State
 
128

 
97

 
93

Subtotal Current
 
128

 
97

 
93

Deferred
 
 
 
 

 
 

Federal
 
665

 
660

 
569

State
 
68

 
82

 
37

Subtotal Deferred
 
733

 
742

 
606

Total income tax provision
 
$
861

 
$
839

 
$
699


Total income tax expense differed from the amount which would have been provided by applying the statutory federal income tax rate of 35% to earnings before taxes as follows (in thousands):
 
 
2016
 
2015
 
2014
Income tax expense (benefit) at federal statutory rate
 
$
932

 
$
687

 
$
(3,277
)
State income taxes
 
138

 
129

 
(238
)
Increase (decrease) in valuation allowance
 
(370
)
 
(68
)
 
2,323

Equity-based compensation
 
—

 
—

 
1,701

Deferred taxes
 
83

 
30

 
147

Meals and entertainment
 
78

 
61

 
43

Total income tax provision
 
$
861

 
$
839

 
$
699



Significant components of our deferred tax assets and liabilities at December 26, 2016 and December 28, 2015 are as follows:
 
 
2016
 
2015
Non-current:
 
 
 
 

Deferred tax assets:
 
 
 
 

Net operating loss
 
$
6,045

 
$
6,351

Landlord contributions
 
8,644

 
6,354

Deferred rent
 
3,474

 
2,157

Stock compensation
 
1,391

 
784

Deemed landlord financing
 
9,522

 
8,541

Charitable contributions
 
94

 
108

Deferred revenue
 
455

 
426

Depreciation
 
236

 
151

Other
 
223

 
56

Valuation allowance
 
(8,831
)
 
(9,201
)
Deferred tax liabilities:
 
 
 
 

Goodwill
 
5,476

 
4,743

Property and equipment
 
21,253

 
15,727

Net deferred tax liabilities, non-current
 
5,476

 
4,743

Total net deferred tax liabilities
 
$
5,476

 
$
4,743



Due to our early adoption of ASU 2015-17 on a prospective basis all deferred taxes are presented as non-current as of December 26, 2016 and December 28, 2015. ASC 740 requires that we reduce our deferred income tax assets by a valuation allowance if, based on the weight of the available evidence, it is more likely than not that all or a portion of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences are deductible. We have established a valuation allowance of $8.8 million and $9.2 million as of December 26, 2016 and December 28, 2015, respectively, against our net deferred tax assets due to the fact that it is not more likely than not that there will be sufficient taxable income in the future when the temporary differences are deductible.
A rollforward of activity in the valuation allowances follows:
Balance at December 30, 2013
 
$
6,947

Addition to valuation allowance
 
2,323

Deductions
 
—

Balance at December 29, 2014
 
9,270

Addition to valuation allowance
 
—

Deductions
 
(69
)
Balance at December 28, 2015
 
9,201

Addition to valuation allowance
 
—

Deductions
 
(370
)
Balance at December 26, 2016
 
$
8,831



We have recorded a full valuation allowance for the net amount of the deferred tax assets which are in excess of the indefinite-lived intangible asset deferred tax liabilities. The indefinite-lived intangible asset deferred tax liability in the amount of $5.5 million and $4.7 million as of December 26, 2016 and December 28, 2015, respectively, related to the book-tax basis difference in goodwill has not been netted against the deferred tax assets due to the uncertainty inherent in the reversal of this deferred tax liability.
At December 26, 2016, we have unused federal and state net operating loss carryforwards of $19.1 million and $11.1 million, respectively. Such losses expire in various amounts at varying times beginning in 2027 through 2036. Of these amounts, we have approximately $4.5 million of federal and state NOL carryforwards related to excess stock compensation that will be recorded in additional paid in capital when realized as a reduction in taxes payable. These NOL carryforwards result in a deferred tax asset of $6.0 million and $6.4 million at December 26, 2016 and December 28, 2015, respectively. We use the "with and without" method when determining when excess tax benefits have been realized. Certain tax attributes are subject to annual limitations under Internal Revenue Code Section 382 as a result of changes in ownership. A valuation allowance is recorded against the net deferred tax assets, exclusive of indefinite-lived intangibles discussed above, including these carryforwards. We file income tax returns, which can be periodically audited by various federal and state jurisdictions. We are generally no longer subject to federal or state income examinations for years prior to fiscal year 2010.
We continue to monitor and evaluate the rationale for recording a valuation allowance against our deferred tax assets. As the Company increases earnings and utilizes deferred tax assets, it is possible the valuation allowance could be reduced or eliminated.
Leases
Leases
Leases
We lease space for various restaurant locations under long-term non-cancelable operating leases from unrelated third-parties. Most of our leases are classified as operating leases under ASC 840. Rent expense, including rent-free periods if applicable, is recognized on a straight-line basis over the lease term. The lease term for these types of leases begins on the date we become legally obligated for the rent payments or we take possession of the building or land, whichever is earlier. The lease term includes cancelable option periods where failure to exercise such options would result in an economic penalty.
In some cases, the asset we will lease requires construction to ready the space for its intended use, and in certain cases, we have involvement with the construction of leased assets. The construction period begins when we take possession of the building or land from the property owner and continues until the space is substantially complete and ready for its intended use. In accordance with ASC 840-40-55, we must consider the nature and extent of our involvement during the construction period, and in some cases, our involvement results in us being considered the accounting owner of the construction project. In such cases, we capitalize the landlord's construction costs, including the value of costs incurred up to the date we execute our lease (e.g., the building "shell") and costs incurred during the remainder of construction period, as such costs are incurred. Additionally, ASC 840-40-55 requires us to recognize a financing obligation for construction costs incurred by the landlord. Once construction is complete, we are required to perform a sale-leaseback analysis pursuant to ASC 840-40 to determine if we can remove the landlord's assets and associated financing obligations from the consolidated balance sheet. In certain leases, we maintain various forms of "continuing involvement" in the property, thereby precluding us from derecognizing the asset and associated financing obligations following the construction completion. In those cases, we will continue to account for the landlord's asset as if we are the legal owner, and the financing obligation, similar to other debt, until the lease expires or is modified to remove the continuing involvement that prohibits de-recognition. Once de-recognition is permitted we would be required to account for the lease as either operating or capital in accordance with ASC 840.
We determined that we were the accounting owner of a total of 44 and 43 leased buildings as a result of the application of build-to-suit lease accounting as of December 26, 2016 and December 28, 2015, respectively. There were six and nine of these buildings under construction as of December 26, 2016 and December 28, 2015, respectively.
The future minimum rental payments required under these leases, excluding real estate taxes, common area maintenance charges ("CAM"), insurance, deferred lease incentives and contingent rent for opened restaurants and restaurants under development, including those accounted for as deemed landlord financing, during the next five years and thereafter in the aggregate, are as follows (in thousands):
 
 
Deemed landlord financing(1)
 
Operating leases
2017
 
4,531

 
17,197

2018
 
4,782

 
17,387

2019
 
4,880

 
17,713

2020
 
4,937

 
18,099

2021
 
5,026

 
17,931

Thereafter
 
72,070

 
230,344

Total
 
$
96,226

 
$
318,671

 
(1)Amounts include minimum rental payments for six leases under construction as of December 26, 2016 where we are deemed the accounting owner. Final classification of lease payments as deemed landlord financing or operating leases is subject to change pending sale leaseback analysis performed at the store opening date.


Rent expense excluding real estate taxes, CAM, insurance, deferred lease incentives and contingent rent charged to operations under our operating leases on a straight-line basis was $17.3 million, $13.1 million and $9.7 million for the years ended December 26, 2016, December 28, 2015 and December 29, 2014, respectively. Contingent rent was $0.1 million per year for the years ended December 26, 2016, December 28, 2015 and December 29, 2014. Rent expense incurred prior to restaurant openings is included in pre-opening costs on the consolidated statement of operations in the amount of $0.3 million, $0.2 million and $0.6 million for the years ended December 26, 2016, December 28, 2015 and December 29, 2014, respectively.
Deemed landlord financing obligations totaled $29.8 million and $28.4 million for the years ended December 26, 2016 and December 28, 2015, respectively.
Related Party Transactions
Related Party Transactions
Related Party Transactions
Corporate Development and Administrative Services Agreement
Zoe's Investors, LLC ("Zoe's Investors"), our sole shareholder as of December 29, 2013, entered into a Corporate Development and Administrative Services Agreement with Brentwood Private Equity IV, LLC ("Brentwood"), an owner of membership interests in Zoe's Investors. Under the terms of the agreement, Brentwood provided assistance in the corporate development activities and our business growth efforts. As consideration for services provided, we provided reimbursement for business expenses related to performance of this agreement and an annual consulting fee based on Adjusted EBITDA as defined in the agreement. We had no expenses related to this agreement during the years ended December 26, 2016 and December 28, 2015. During the year ended December 29, 2014, we expensed approximately $0.1 million related to this agreement. The Brentwood agreement was terminated prior to our IPO. In addition, one person associated with Brentwood currently serves on our Board of Directors.
Repurchase of shares
In connection with our follow-on offering completed on August 19, 2014, we repurchased 94,100 shares of our common stock from certain of our officers at a price per share equal to the net proceeds per share in the offering. We did not receive net proceeds from the offering.
Commitments and Contingencies
Commitments and Contingencies
Commitments and Contingencies
Franchise Agreement
Our Kentucky franchise agreement, which requires the franchisee to remit continuing royalty fees at a specified percentage of the franchisee's gross sales revenue, provides that we as franchisor, or its authorized representative, will: (a) provide franchisee with written schedules of all foods, food products, beverages, and other items for sale, and the furniture, fixtures, supplies and equipment necessary and required for the operation of the restaurant; (b) provide franchisee with a list of approved suppliers for the products and services necessary and required for the restaurant; (c) upon the reasonable written request of franchisee, render reasonable advisory services by telephone or in writing pertaining to the operation of the restaurant; (d) provide franchisee with a sample of the standard Zoës Kitchen menu, and any modifications to the menu; (e) loan franchisee a copy of the System's operating manual and any supplements to the manual that may be published by us; and, (f) provide franchisee the opportunity to participate in group purchasing programs that we may use, develop, sponsor or provide on terms and conditions determined solely by us. In addition, as a condition to the commencement of business by any of our franchises, the franchisee must attend and successfully complete our training program. The costs related to our franchise agreement are not significant.
Litigation
We are currently involved in various claims and legal actions that arise in the ordinary course of our business, including claims resulting from employment related matters. None of these claims, most of which are covered by insurance, has had a material effect on us, and as of the date of this report, other than as set forth below, we are not party to any material pending legal proceedings and are not aware of any claims that could have a material adverse effect on our business, financial condition, results of operations or cash flows. However, a significant increase in the number of these claims or an increase in amounts owing under successful claims could materially and adversely affect our business, financial condition, results of operations or cash flows.
On October 31, 2014, Forsyth Consulting, Inc. ("Forsyth"), a former music vendor for the Company, filed a complaint against the Company in the Circuit Court of Jefferson County, Alabama alleging breach of contract with respect to its prior music service contract. We have removed the action to federal court and, on December 19, 2014, we filed a counterclaim in the United States District Court for the Northern District of Alabama, alleging breach of contract and tortious interference with business relations claims against Forsyth. The discovery period is complete, and the parties have filed motions for summary judgment. We do not anticipate the results of this proceeding to have a material effect on our results of operations.
Equity-based Compensation
Equity-based Compensation
Equity-based Compensation
In connection with the IPO, we adopted the 2014 Omnibus Incentive Plan (the “2014 Incentive Plan”), which provides for grants of stock options, stock appreciation rights, restricted stock, other stock-based awards and other cash-based awards available to directors, officers and other employees of us and our subsidiaries, as well as others performing consulting or advisory services to us. The number of shares of common stock available for issuance under the 2014 Incentive Plan may not exceed 1,905,799.
The following table summarizes our stock option plan activity:
 
 
Number of units
 
Weighted-average exercise price
Outstanding at December 29, 2014
 
521,470

 
$
16.64

Granted
 
360,250

 
35.77

Exercised
 
(91,177
)
 
15.05

Forfeited
 
(76,036
)
 
26.75

Expired
 
(2,342
)
 
35.01

Outstanding at December 28, 2015
 
712,165

 
$
25.38

Granted
 
139,531

 
26.98

Exercised
 
(70,190
)
 
29.43

Forfeited
 
(57,085
)
 
15.42

Expired
 
(13,824
)
 
29.17

Outstanding at December 26, 2016
 
710,597

 
$
26.28



 
 
Shares
 
Weighted-average exercise price per share
 
Weighted-average remaining years of contractual life
 
Aggregate intrinsic value (in thousands)
Outstanding as of December 26, 2016
 
710,597

 
$
26.28

 
8.1
 
$
2,568

Vested and expected to vest as of December 26, 2016
 
662,898

 
26.02

 
8.0
 
2,508

Exercisable as of December 26, 2016
 
265,691

 
21.71

 
7.6
 
1,704


Total intrinsic value of options exercised was $1.5 million, $2.0 million, and $0.3 million in years ended December 26, 2016, December 28, 2015 and December 29, 2014, respectively. Total fair value of shares vested was $1.4 million, $0.5 million and $1.2 million in years December 26, 2016, December 28, 2015 and December 29, 2014, respectively.
The following table reflects the weighted-average assumptions utilized in the Black-Scholes option-pricing model to value the stock options granted in the years ended December 26, 2016, December 28, 2015 and December 29, 2014:
 
 
2016
 
2015
 
2014
Expected volatility (1)
 
31.83%
 
35.78%
 
34.98%
Risk-free rate of return
 
1.35%
 
1.65%
 
1.78%
Expected life (in years) (2)
 
6.3
 
6.3
 
5.1
Dividend yield
 
0%
 
0%
 
0%
Weighted-average fair value per share at date of grant
 
$9.14
 
$13.53
 
$5.74
 
 
 
 
 
 
 
(1) Expected volatility was based on competitors within the industry.
(2) Expected life was calculated using the simplified method, which is an average of the contractual term of the option and its ordinary vesting period, as we do not have sufficient historical data for determining the expected term of our stock option awards.

There were 250,000 stock options granted, included in the summary of stock option plan activity, that vested immediately upon completion of the IPO and the remainder of the options will vest in four equal annual installments following the date of the grant with a contractual term of 10 years.
The following table summarizes our restricted stock unit plan activity:
 
 
Restricted Stock Units
 
Weighted-average grant-date fair value
Non-vested at December 29, 2014
 
6,666

 
$
15.00

Granted
 
7,235

 
34.56

Vested
 
(2,222
)
 
15.00

Forfeited
 
—

 
—

Non-vested at December 28, 2015
 
11,679

 
27.12

Granted
 
82,381

 
28.05

Vested
 
(4,632
)
 
25.18

Forfeited
 
(6,017
)
 
$
27.42

Non-vested at December 26, 2016
 
83,411

 
$
28.13



All of the outstanding restricted stock units vest in three equal annual installments following the date of the grant.
We recognized as a component of general and administrative expenses $2.1 million, $1.2 million and $6.3 million of equity-based compensation expense related to these awards in years ended December 26, 2016, December 28, 2015 and December 29, 2014, respectively. Of the total equity-based compensation recognized for the year ended December 29, 2014, $4.9 million is related to accelerated vesting of outstanding equity awards at the IPO and $1.2 million is related to stock options granted at the date of the IPO. As of December 26, 2016, total unrecognized compensation expense related to non-vested stock awards, including an estimate for pre-vesting forfeitures, was $5.0 million, which is expected to be recognized over a weighted-average period of 2.3 years.
Earnings per Share
Earnings per Share
Earnings per Share
Basic earnings per share is calculated by dividing net income (loss) by the weighted average shares outstanding during the period, without consideration of common stock equivalents. Diluted earnings per share is calculated by adjusting weighted average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method.
On April 16, 2014, we completed our IPO, giving effect to a 125,614.14:1 stock split, which became effective on April 14, 2014. All share and per share data have been retroactively restated to reflect the stock split. All share amounts throughout these financial statement have been adjusted as applicable.
The following table presents the computation of basic and diluted earnings per share for the years ended December 26, 2016, December 28, 2015 and December 29, 2014 (in thousands, except share and per share data):
 
 
2016
 
2015
 
2014
Net income (loss)
 
$
1,803

 
$
1,124

 
$
(10,017
)
Shares:
 
 
 
 
 
 
    Basic weighted average shares outstanding
 
19,434,622

 
19,344,896

 
17,409,673

    Diluted weighted average shares outstanding
 
19,586,447

 
19,552,708

 
17,409,673

Earnings per share:
 


 


 


    Basic and diluted EPS
 
$
0.09

 
$
0.06

 
$
(0.58
)


During the year ended December 26, 2016, 420,981 stock options and 4,750 restricted stock units were excluded from the diluted earnings per share calculation because their inclusion would have been anti-dilutive. During the year ended December 28, 2015, 292,561 stock options and 159 restricted stock units were excluded from the diluted earnings per share calculation because their inclusion would have been anti-dilutive. During the year ended December 29, 2014, 162,900 stock options and 2,718 restricted stock units were excluded from the diluted earnings per share calculation because their inclusion would have been anti-dilutive.
Quarterly Financial Data (Unaudited)
Quarterly Financial Data (unaudited)
Quarterly Financial Data (unaudited)
The following tables set forth certain unaudited consolidated financial information for each of the four quarters in 2016 and 2015 (in thousands, except share and per share data):
 
 
Quarter Ended
 
 
December 26, 2016
 
October 3, 2016
 
July 11, 2016
 
April 18, 2016
 
December 28, 2015
 
October 5, 2015
 
July 13, 2015
 
April 20, 2015
Total revenue
 
$
61,983

 
$
67,296

 
$
66,273

 
$
80,411

 
$
52,691

 
$
56,384

 
$
54,474

 
$
63,008

Income (loss) from operations
 
(1,270
)
 
2,053

 
2,806

 
2,836

 
9

 
1,585

 
1,681

 
1,887

Net income (loss)
 
(501
)
 
(293
)
 
1,201

 
1,396

 
2,568

 
(2,256
)
 
120

 
692

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) per share, basic and diluted
 
$
(0.03
)
 
$
(0.02
)
 
$
0.06

 
$
0.07

 
$
0.13

 
$
(0.12
)
 
$
0.01

 
$
0.04

Weighted average shares outstanding, basic
 
19,460,467

 
19,458,921

 
19,436,315

 
19,396,815

 
19,384,091

 
19,379,907

 
19,334,939

 
19,296,710

Weighted average shares outstanding, diluted
 
19,460,467

 
19,458,921

 
19,631,272

 
19,568,815

 
19,561,225

 
19,379,907

 
19,557,645

 
19,519,675

Nature of Operations and Summary of Significant Accounting Policies (Policies)
Principles of Consolidation 
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Zoe's Kitchen USA, LLC and Soho Franchising, LLC. All intercompany accounts and transactions have been eliminated in consolidation.
Basis of Accounting 
The consolidated financial statements presented herein reflect our financial position, results of operations, cash flows and changes in equity in conformity with accounting principles and practices generally accepted in the United States of America ("GAAP").
Use of Estimates 
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions, such as valuation of long-lived, definite and indefinite-lived assets, estimated useful lives of assets, the reasonably assured lease terms of operating leases, the construction costs of leases where the Company is considered the owner during and after the construction period, allowance for doubtful accounts, the fair value of equity-based compensation, the calculation of self-insurance reserves and deferred tax valuation allowances, that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Fiscal Year 
We operate on a 52- or 53-week fiscal year that ends on the last Monday of the calendar year. All fiscal years presented herein consist of 52 weeks.
Earnings per Share 
Basic earnings per share is calculated by dividing net income (loss) by the weighted average shares outstanding during the period, without consideration of common stock equivalents. Diluted net income (loss) per share is calculated by adjusting weighted average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method.
Revenue Recognition - Restaurant Sales 
We recognize restaurant sales when food and beverage products are sold. Restaurant sales are reported net of sales tax collected from customers.
Gift Cards 
Revenues from the sale of gift cards are deferred and recognized when redeemed. Deferred gift card revenue is included in accrued liabilities in our consolidated balance sheets. Our gift cards do not have an expiration date and we do not deduct non-usage fees from outstanding gift card balances. We recognize gift card breakage revenue by applying our estimate of the rate of gift card breakage over the estimated period of redemption. These estimates are based on our historical redemptions. We recognize breakage revenues exclusive of amounts subject to state unclaimed property laws.
Royalty Fee Accounting 
Royalties are recognized as revenue when earned. Our franchise agreement requires the franchisees to remit continuing royalty fees at a specified percentage of the franchisee's gross sales.
Cash and Cash Equivalents 
We consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.
Accounts Receivable 
Trade accounts receivable, net of allowance for doubtful accounts, consists primarily of receivables from catering on-account sales, credit card sales receivables and royalty fee receivables. Other accounts receivable consists primarily of tenant allowances due from landlords. Management determines the allowance for doubtful accounts based on historical losses and current economic conditions. On a continuing basis, management analyzes delinquent receivables, and once these receivables are determined to be uncollectible, they are written off either against an existing allowance account or as a direct charge to the consolidated statement of operations.
Inventories 
Inventories consist primarily of food, beverage, and paper products. All inventories are recorded at the lower of cost, as determined on a first-in, first-out ("FIFO") method, or market.
Property and Equipment 
Property and equipment are stated at cost, less accumulated depreciation. Expenditures for improvements and renewals that extend the useful lives are capitalized. Upon sale, retirement, or other disposition of these assets, the costs and related accumulated depreciation are removed from the respective accounts and any gain or loss on the disposition is included in our consolidated statement of operations. Maintenance and repair costs are expensed as incurred.
Depreciation is calculated using the straight-line method based on the following estimated lives:
Building under deemed landlord financing
 
39 years
Leasehold improvements
 
7 - 20 years
Furniture and fixtures
 
7 years
Automotive equipment
 
4 - 5 years
Computer equipment
 
3 - 5 years
Machinery and equipment
 
5 years

Leasehold improvements are depreciated over the shorter of the lease term of the respective leases, or the estimated useful life of the asset.
Goodwill 
Goodwill represents the excess of the cost of the business acquired over the fair value of its net assets at the date of acquisition. We account for goodwill under Accounting Standards Codification ("ASC") 350, Intangibles — Goodwill and Other, which requires that goodwill and indefinite lived intangible assets are not amortized but tested for impairment at least annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. For purposes of applying ASC 350, we have identified a single reporting unit, as that term is defined in ASC 350, to which goodwill is attributable.
Intangible Assets 
Trade Name
A trade name is considered to be an important element associated with the sales appeal of certain products and services. The trade name distinguishes goods and services from competitors, indicates the source of the goods and services, and serves as an indication of the quality of the product. Our trade name consists of various protected words, symbols, and designs that help identify our products and services such as the "Zoës Kitchen" trademark. This capitalized cost is being amortized on a straight-line basis over an estimated useful life of 20 years.
Favorable Leases
A leasehold interest represents the future lease obligations under the in-place contractual lease terms that are either above or below market value. The value of acquired leases that were determined to be favorable to market rents are capitalized and amortized on a straight-line basis over the lease term from the date of acquisition.
Reacquired Rights
Reacquired rights intangible assets arise from our franchise acquisitions. We amortize these reacquired rights on a straight-line basis over the remaining terms of the original franchise agreements.
Impairment of Long-Lived Assets 
We evaluate impairment of long-lived assets whenever events or changes in circumstances indicate that the net carrying amounts may not be recoverable. We compare estimated undiscounted cash flows from operating activities to the carrying value of related assets for the individual restaurants. If the sum of the estimated undiscounted cash flows is less than the carrying value, an impairment loss would be recognized for the difference between the carrying value and the estimated fair value of the assets based on the discounted future cash flows of the assets using a rate that approximates our weighted average cost of capital.
Loan Costs 
Loan costs are amortized on a straight-line basis over the remaining life of the debt as a component of interest expense and included in other long-term assets on our consolidated balance sheet. GAAP requires that the effective yield method be used to amortize loan financing costs; however, the effect of using the straight-line method is not materially different from the results that would have been obtained under the effective yield method.
Sales Taxes 
Sales taxes are imposed by state, county, and city governmental authorities, collected from customers and remitted to the appropriate governmental agency. Our accounting policy is to record the sales taxes collected as a liability on our books and then remove the liability when the sales tax is remitted. There is no impact on the consolidated statement of operations as restaurant sales are recorded net of sales tax.
Deferred Rent 
Certain leases contain annual escalation clauses based on fixed escalation terms. The excess of cumulative rent expense (recognized on the straight-line basis) over cumulative rent payments made on leases with fixed escalation terms is recognized as deferred rent liability in the accompanying balance sheets. Also included in deferred rent are tenant improvement allowances that we commonly negotiate when opening new restaurants to help fund build-out costs. These costs typically include general construction to alter the layout of the restaurant and leasehold improvements. When we are the beneficiary of each of the improvements, we capitalize the assets and record a deferred liability for the amount of cash received from the landlord, which is amortized on a straight-line basis over the lease term as defined below. If the landlord is deemed to be the owner of leasehold improvements purchased with such allowances, neither an asset nor a liability is recorded by us. The amortization of the deferred liability related to these tenant improvements is recorded as a reduction of rent expense. Tenant improvement allowances, net of amortization, totaled $18.2 million and $12.5 million as of December 26, 2016 and December 28, 2015, respectively. For leases where we are considered to be the owner of the construction project and receive tenant improvement allowances, we record these amounts received as a component of the deemed landlord financing liability. See Note 10.
Lease term is determined at lease inception and includes the initial term of the lease plus any renewal periods that are reasonably assured to occur. The lease term begins when we have the right to control the use of the property.
Additionally, certain of our operating leases contain clauses that provide additional contingent rent based on a percentage of sales greater than certain specified target amounts. We recognize contingent rent expense provided the achievement of that target is considered probable.
Insurance Reserves 
Beginning on September 27, 2014, we self-insure a portion of our expected losses under our worker's compensation insurance program. To limit our exposure to losses, we maintain stop-loss coverage through third-party insurers. Insurance liabilities representing estimated costs to settle reported claims and incurred but not reported are included in accrued expenses and other.
Advertising Costs 
Advertising costs are expensed as incurred and are included in general and administrative and store operating expenses on the consolidated statement of operations.
Pre-opening costs 
Pre-opening costs primarily consist of new employee training, initial print materials, marketing, payroll expenses and rent incurred in connection with new restaurant openings and are expensed as incurred.
Fair Value of Financial Instruments 
The carrying amounts of our financial instruments, which include accounts receivable, accounts payable, and other accrued expenses, approximate their fair values due to their short maturities. The carrying amount of our previously existing long-term debt approximates its fair value due to the variable component of the interest rate.
Income Taxes 
We use the liability method of accounting for income taxes in accordance with Financial Accounting Standards Board ("FASB") ASC 740, Income Taxes. Under this method, a deferred tax asset or liability is recognized for the estimated future tax effects attributable to temporary differences between the financial statement basis and the tax basis of assets and liabilities as well as tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period of the change. We and our subsidiaries file a consolidated federal income tax return.
Significant judgment is required in evaluating our uncertain tax positions and determining our provision for income taxes. We assess the income tax position and record the liabilities for all years subject to examination based upon management's evaluation of the facts, circumstances, and information available at the reporting date.
We continue to monitor and evaluate the rationale for recording a valuation allowance against our deferred tax assets. As the Company increases earnings and utilizes deferred tax assets, it is possible the valuation allowance could be reduced or eliminated.
Comprehensive Income (Loss) 
Comprehensive income (loss) is the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. Comprehensive income (loss) is the same as net income (loss) for all periods presented. Therefore, a separate statement of comprehensive income (loss) is not included in the accompanying consolidated financial statements.
Recently Issued Accounting Standards 
Recently Issued Accounting Standards
In January 2017, the FASB issued Accounting Standard Update ("ASU") No. 2017-04, “Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment,” which eliminates Step 2 from the goodwill impairment test. Under the new standard, annual and interim goodwill impairment tests will compare the fair value of a reporting unit with its carrying amount. An impairment charge will be recognized for the amount by which the carrying amount exceeds the reporting unit's fair value, not to exceed the total amount of goodwill. The pronouncement is effective for goodwill impairments tests in fiscal years beginning after December 15, 2019 and should will be applied on a prospective basis. Early adoption is permitted for goodwill impairment tests performed after January 1, 2017. We are currently evaluating the impact of adopting this update.
In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash payments,” which provides specific guidance regarding presentation and classification on a variety of cash payments and receipts. Among the issues addressed is the classification of proceeds from the settlement of insurance claims. This pronouncement is effective for reporting periods beginning after December 15, 2017 and early adoption is permitted. We do not expect the adoption of ASU 2016-15 to have a material impact on our financial position or results of operations.
In March 2016, the FASB issued ASU No. 2016-09, “Compensation – Stock Compensation (Topic 718).” The pronouncement was issued to simplify the accounting for share-based payment transactions, including income tax consequences, the classification of awards as either equity or liabilities, and the classification on the statement of cash flows. This pronouncement is effective for reporting periods beginning after December 15, 2016. We do not expect the adoption of ASU 2016-09 to have a material impact on our financial position or results of operations.
In March 2016, the FASB issued ASU No. 2016-04, "Liabilities - Extinguishments of Liabilities (Subtopic 405-20)", which amends subtopic 405-20 to provide a scope exception that requires breakage for prepaid stored-value product liabilities to be accounted for consistent with the breakage guidance in Topic 606. The amendment is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. We do not expect the adoption of ASU 2016-04 to have a material impact on our financial position or results of operations.
In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)," which requires entities to recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements. Previous lease accounting did not require certain lease types to be recognized on the balance sheet. This update is an amendment to the codification and is effective for fiscal years beginning after December 15, 2018 including interim periods within those fiscal years applied using a modified retrospective approach. Early adoption is permitted. We are currently evaluating the impact of the adoption of ASU 2016-02 on our financial position and results of operations, but expect that it will result in a significant increase in our long-term assets and liabilities given we have a significant number of leases. In addition, rental payments under most of our leases for which we are the accounting owner will no longer be considered debt service applied to deemed landlord financing and interest expense. Instead, these rental payments will be classified as rent expense.
In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers." This update was issued to replace the current revenue recognition guidance, creating a more comprehensive revenue model. In August 2015, the FASB issued ASU 2015-14 to defer the effective date for adoption. The update is now effective for reporting periods beginning after December 15, 2017. In March 2016, April 2016 and May 2016, the FASB also issued ASU 2016-08, ASU 2016-10 and ASU 2016-12, respectively, to further clarify performance obligations and licensing implementation guidance and other general topics. We expect to adopt the new standard using the modified retrospective approach for the fiscal year and quarter beginning December 26, 2017. We do not expect the adoption to have an impact on revenue from Company-owned restaurants or the recognition of royalty fees from our franchise agreement. In addition, we do not expect a material impact related to recognition of gift card breakage.
Nature of Operations and Summary of Significant Accounting Policies (Tables)
Schedule of Property and Equipment Estimated Useful Lives
Depreciation is calculated using the straight-line method based on the following estimated lives:
Building under deemed landlord financing
 
39 years
Leasehold improvements
 
7 - 20 years
Furniture and fixtures
 
7 years
Automotive equipment
 
4 - 5 years
Computer equipment
 
3 - 5 years
Machinery and equipment
 
5 years
Property and equipment consists of the following at December 26, 2016 and December 28, 2015 (in thousands):
 
 
2016
 
2015
Buildings under deemed landlord financing
 
$
23,830

 
$
23,100

Leasehold improvements
 
125,666

 
96,276

Machinery and equipment
 
32,566

 
23,894

Furniture and fixtures
 
6,604

 
5,150

Automobiles
 
4,019

 
3,985

Computer equipment
 
9,848

 
6,421

Construction in progress
 
6,256

 
6,805

Total property and equipment, gross
 
208,789

 
165,631

Less: Accumulated depreciation
 
(46,756
)
 
(33,812
)
Total property and equipment, net
 
$
162,033

 
$
131,819

Business Combination (Tables)
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed 
The allocation of the purchase price to the estimated fair value of the assets acquired and liabilities assumed at the acquisition date is as follows (in thousands):
Cash
 
$
2

Inventories
 
19

Prepaid rent
 
20

Property, plant and equipment
 
1,242

Deposits
 
10

Favorable leases
 
356

Reacquired rights
 
1,125

Goodwill
 
5,302

Accrued expenses
 
(50
)
Royalties payable
 
(33
)
Total purchase price
 
$
7,993

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed 
The allocation of the purchase price to the estimated fair value of the assets acquired and liabilities assumed at the acquisition date is as follows (in thousands):
Cash
 
$
2

Inventories
 
15

Property, plant and equipment
 
167

Reacquired rights
 
91

Goodwill
 
892

Accounts payable
 
(3
)
Royalties payable
 
(17
)
Total purchase price
 
$
1,147

Assets Held for Sale (Tables)
Disclosure of Long Lived Assets Held-for-sale
The following summarizes the financial statement carrying amounts of assets and liabilities associated with the restaurants classified as held for sale (in thousands):
 
 
2016
 
2015
Land
 
$
—

 
$
807

Leasehold improvements
 
—

 
1,321

Total Assets held for sale
 
$
—

 
$
2,128

Property and Equipment (Tables)
Schedule of Property and Equipment
Depreciation is calculated using the straight-line method based on the following estimated lives:
Building under deemed landlord financing
 
39 years
Leasehold improvements
 
7 - 20 years
Furniture and fixtures
 
7 years
Automotive equipment
 
4 - 5 years
Computer equipment
 
3 - 5 years
Machinery and equipment
 
5 years
Property and equipment consists of the following at December 26, 2016 and December 28, 2015 (in thousands):
 
 
2016
 
2015
Buildings under deemed landlord financing
 
$
23,830

 
$
23,100

Leasehold improvements
 
125,666

 
96,276

Machinery and equipment
 
32,566

 
23,894

Furniture and fixtures
 
6,604

 
5,150

Automobiles
 
4,019

 
3,985

Computer equipment
 
9,848

 
6,421

Construction in progress
 
6,256

 
6,805

Total property and equipment, gross
 
208,789

 
165,631

Less: Accumulated depreciation
 
(46,756
)
 
(33,812
)
Total property and equipment, net
 
$
162,033

 
$
131,819

Goodwill (Tables)
Schedule of Goodwill
The following is a reconciliation of the beginning and ending balances of the Company's goodwill at December 26, 2016 and December 28, 2015 (in thousands):
 
 
 
Balance December 29, 2014
 
$
29,528

Additions, disposals and impairment
 
—

Balance December 28, 2015
 
$
29,528

Additions, disposals and impairment
 
—

Balance December 26, 2016
 
$
29,528

Intangible Assets (Tables)
Schedule of Intangible Assets 
Intangible assets are summarized in the following tables as of December 26, 2016 and December 28, 2015 (in thousands):
 
 
2016
 
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net
Trade name
 
$
10,000

 
$
(4,583
)
 
$
5,417

Favorable leases
 
355

 
(50
)
 
305

Reacquired rights
 
6,620

 
(4,380
)
 
2,240

Total intangible assets
 
$
16,975

 
$
(9,013
)
 
$
7,962

 
 
 
2015
 
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net
Trade name
 
$
10,000

 
$
(4,083
)
 
$
5,917

Favorable leases
 
355

 
(26
)
 
329

Reacquired rights
 
6,712

 
(3,390
)
 
3,322

Total intangible assets
 
$
17,067

 
$
(7,499
)
 
$
9,568

Estimated Amortization Expense 
Estimated amortization expense for the five succeeding years and the aggregate thereafter is (in thousands):
 
 
Trade Name
 
Favorable Leases
 
Reacquired Rights
 
Total
2017
 
$
500

 
$
23

 
$
956

 
$
1,479

2018
 
500

 
23

 
548

 
1,071

2019
 
500

 
23

 
353

 
876

2020
 
500

 
23

 
203

 
726

2021
 
500

 
23

 
156

 
679

Thereafter
 
2,917

 
190

 
24

 
3,131

Total
 
$
5,417

 
$
305


$
2,240

 
$
7,962

Accrued Expenses and Other (Tables)
Schedule of Accrued Expenses
Accrued expenses and other consisted of the following at December 26, 2016 and December 28, 2015 (in thousands):
 
 
2016
 
2015
Accrued payroll and payroll taxes
 
$
5,448

 
$
5,365

Accrued capital purchases
 
2,347

 
1,403

Sales tax payable
 
1,218

 
1,274

Gift card payable
 
1,200

 
1,121

Other accrued expenses
 
4,047

 
3,755

Total accrued expenses and other
 
$
14,260

 
$
12,918

Income Taxes (Tables)
Schedule of Income Tax Provision 
Our income tax provision for the years ended December 26, 2016, December 28, 2015 and December 29, 2014 consists of the following (in thousands):
 
 
2016
 
2015
 
2014
Current
 
 
 
 

 
 

Federal
 
$
—

 
$
—

 
$
—

State
 
128

 
97

 
93

Subtotal Current
 
128

 
97

 
93

Deferred
 
 
 
 

 
 

Federal
 
665

 
660

 
569

State
 
68

 
82

 
37

Subtotal Deferred
 
733

 
742

 
606

Total income tax provision
 
$
861

 
$
839

 
$
699

Schedule of Effective Income Tax Rate Reconciliation 
Total income tax expense differed from the amount which would have been provided by applying the statutory federal income tax rate of 35% to earnings before taxes as follows (in thousands):
 
 
2016
 
2015
 
2014
Income tax expense (benefit) at federal statutory rate
 
$
932

 
$
687

 
$
(3,277
)
State income taxes
 
138

 
129

 
(238
)
Increase (decrease) in valuation allowance
 
(370
)
 
(68
)
 
2,323

Equity-based compensation
 
—

 
—

 
1,701

Deferred taxes
 
83

 
30

 
147

Meals and entertainment
 
78

 
61

 
43

Total income tax provision
 
$
861

 
$
839

 
$
699

Schedule of Components of Deferred Tax Assets and Liabilities 
Significant components of our deferred tax assets and liabilities at December 26, 2016 and December 28, 2015 are as follows:
 
 
2016
 
2015
Non-current:
 
 
 
 

Deferred tax assets:
 
 
 
 

Net operating loss
 
$
6,045

 
$
6,351

Landlord contributions
 
8,644

 
6,354

Deferred rent
 
3,474

 
2,157

Stock compensation
 
1,391

 
784

Deemed landlord financing
 
9,522

 
8,541

Charitable contributions
 
94

 
108

Deferred revenue
 
455

 
426

Depreciation
 
236

 
151

Other
 
223

 
56

Valuation allowance
 
(8,831
)
 
(9,201
)
Deferred tax liabilities:
 
 
 
 

Goodwill
 
5,476

 
4,743

Property and equipment
 
21,253

 
15,727

Net deferred tax liabilities, non-current
 
5,476

 
4,743

Total net deferred tax liabilities
 
$
5,476

 
$
4,743

Summary of Valuation Allowance 
A rollforward of activity in the valuation allowances follows:
Balance at December 30, 2013
 
$
6,947

Addition to valuation allowance
 
2,323

Deductions
 
—

Balance at December 29, 2014
 
9,270

Addition to valuation allowance
 
—

Deductions
 
(69
)
Balance at December 28, 2015
 
9,201

Addition to valuation allowance
 
—

Deductions
 
(370
)
Balance at December 26, 2016
 
$
8,831

Leases (Tables)
Schedule of Future Minimum Rental Payments for Operating Leases
The future minimum rental payments required under these leases, excluding real estate taxes, common area maintenance charges ("CAM"), insurance, deferred lease incentives and contingent rent for opened restaurants and restaurants under development, including those accounted for as deemed landlord financing, during the next five years and thereafter in the aggregate, are as follows (in thousands):
 
 
Deemed landlord financing(1)
 
Operating leases
2017
 
4,531

 
17,197

2018
 
4,782

 
17,387

2019
 
4,880

 
17,713

2020
 
4,937

 
18,099

2021
 
5,026

 
17,931

Thereafter
 
72,070

 
230,344

Total
 
$
96,226

 
$
318,671

 
(1)Amounts include minimum rental payments for six leases under construction as of December 26, 2016 where we are deemed the accounting owner. Final classification of lease payments as deemed landlord financing or operating leases is subject to change pending sale leaseback analysis performed at the store opening date.
Equity-based Compensation (Tables)
Summary of Stock Option Activity 
The following table summarizes our stock option plan activity:
 
 
Number of units
 
Weighted-average exercise price
Outstanding at December 29, 2014
 
521,470

 
$
16.64

Granted
 
360,250

 
35.77

Exercised
 
(91,177
)
 
15.05

Forfeited
 
(76,036
)
 
26.75

Expired
 
(2,342
)
 
35.01

Outstanding at December 28, 2015
 
712,165

 
$
25.38

Granted
 
139,531

 
26.98

Exercised
 
(70,190
)
 
29.43

Forfeited
 
(57,085
)
 
15.42

Expired
 
(13,824
)
 
29.17

Outstanding at December 26, 2016
 
710,597

 
$
26.28

Schedule of Stock Option, Vested and Expected to Vest, Outstanding and Exercisable 
 
 
Shares
 
Weighted-average exercise price per share
 
Weighted-average remaining years of contractual life
 
Aggregate intrinsic value (in thousands)
Outstanding as of December 26, 2016
 
710,597

 
$
26.28

 
8.1
 
$
2,568

Vested and expected to vest as of December 26, 2016
 
662,898

 
26.02

 
8.0
 
2,508

Exercisable as of December 26, 2016
 
265,691

 
21.71

 
7.6
 
1,704

Schedule of Weighted-Average Assumptions Used to Value Stock Options 
The following table reflects the weighted-average assumptions utilized in the Black-Scholes option-pricing model to value the stock options granted in the years ended December 26, 2016, December 28, 2015 and December 29, 2014:
 
 
2016
 
2015
 
2014
Expected volatility (1)
 
31.83%
 
35.78%
 
34.98%
Risk-free rate of return
 
1.35%
 
1.65%
 
1.78%
Expected life (in years) (2)
 
6.3
 
6.3
 
5.1
Dividend yield
 
0%
 
0%
 
0%
Weighted-average fair value per share at date of grant
 
$9.14
 
$13.53
 
$5.74
 
 
 
 
 
 
 
(1) Expected volatility was based on competitors within the industry.
(2) Expected life was calculated using the simplified method, which is an average of the contractual term of the option and its ordinary vesting period, as we do not have sufficient historical data for determining the expected term of our stock option awards.

Schedule of Restricted Stock Unit Plan Activity 
The following table summarizes our restricted stock unit plan activity:
 
 
Restricted Stock Units
 
Weighted-average grant-date fair value
Non-vested at December 29, 2014
 
6,666

 
$
15.00

Granted
 
7,235

 
34.56

Vested
 
(2,222
)
 
15.00

Forfeited
 
—

 
—

Non-vested at December 28, 2015
 
11,679

 
27.12

Granted
 
82,381

 
28.05

Vested
 
(4,632
)
 
25.18

Forfeited
 
(6,017
)
 
$
27.42

Non-vested at December 26, 2016
 
83,411

 
$
28.13

Earnings per Share (Tables)
Schedule of Net Loss Per Share, Basic and Diluted
The following table presents the computation of basic and diluted earnings per share for the years ended December 26, 2016, December 28, 2015 and December 29, 2014 (in thousands, except share and per share data):
 
 
2016
 
2015
 
2014
Net income (loss)
 
$
1,803

 
$
1,124

 
$
(10,017
)
Shares:
 
 
 
 
 
 
    Basic weighted average shares outstanding
 
19,434,622

 
19,344,896

 
17,409,673

    Diluted weighted average shares outstanding
 
19,586,447

 
19,552,708

 
17,409,673

Earnings per share:
 


 


 


    Basic and diluted EPS
 
$
0.09

 
$
0.06

 
$
(0.58
)
Quarterly Financial Data (Unaudited) (Tables)
Schedule of Unaudited Quarterly Financial Data
The following tables set forth certain unaudited consolidated financial information for each of the four quarters in 2016 and 2015 (in thousands, except share and per share data):
 
 
Quarter Ended
 
 
December 26, 2016
 
October 3, 2016
 
July 11, 2016
 
April 18, 2016
 
December 28, 2015
 
October 5, 2015
 
July 13, 2015
 
April 20, 2015
Total revenue
 
$
61,983

 
$
67,296

 
$
66,273

 
$
80,411

 
$
52,691

 
$
56,384

 
$
54,474

 
$
63,008

Income (loss) from operations
 
(1,270
)
 
2,053

 
2,806

 
2,836

 
9

 
1,585

 
1,681

 
1,887

Net income (loss)
 
(501
)
 
(293
)
 
1,201

 
1,396

 
2,568

 
(2,256
)
 
120

 
692

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) per share, basic and diluted
 
$
(0.03
)
 
$
(0.02
)
 
$
0.06

 
$
0.07

 
$
0.13

 
$
(0.12
)
 
$
0.01

 
$
0.04

Weighted average shares outstanding, basic
 
19,460,467

 
19,458,921

 
19,436,315

 
19,396,815

 
19,384,091

 
19,379,907

 
19,334,939

 
19,296,710

Weighted average shares outstanding, diluted
 
19,460,467

 
19,458,921

 
19,631,272

 
19,568,815

 
19,561,225

 
19,379,907

 
19,557,645

 
19,519,675

Nature of Operations and Summary of Significant Accounting Policies - Nature of Operations (Details)
12 Months Ended
Dec. 26, 2016
segment
state
Dec. 28, 2015
Dec. 29, 2014
Franchisor Disclosure [Line Items]
 
 
 
Number of states in which the Company has restaurants
20 
 
 
Number of operating segments
1 
 
 
Days in fiscal year
364 days 
364 days 
364 days 
Company-owned
 
 
 
Franchisor Disclosure [Line Items]
 
 
 
Number of restaurants
201 
 
 
Franchised
 
 
 
Franchisor Disclosure [Line Items]
 
 
 
Number of restaurants
3 
 
 
Trade name
 
 
 
Franchisor Disclosure [Line Items]
 
 
 
Useful life of trade name
20 years 
 
 
Minimum
 
 
 
Franchisor Disclosure [Line Items]
 
 
 
Fiscal period duration
364 days 
 
 
Maximum
 
 
 
Franchisor Disclosure [Line Items]
 
 
 
Fiscal period duration
371 days 
 
 
Nature of Operations and Summary of Significant Accounting Policies - Fiscal Year (Details)
12 Months Ended
Dec. 26, 2016
Dec. 28, 2015
Dec. 29, 2014
Days In Fiscal Year
364 days 
364 days 
364 days 
Minimum
 
 
 
Fiscal period duration
364 days 
 
 
Maximum
 
 
 
Fiscal period duration
371 days 
 
 
Nature of Operations and Summary of Significant Accounting Policies - IPO (Details) (Common Stock, USD $)
0 Months Ended
Nov. 19, 2014
Aug. 19, 2014
Apr. 16, 2014
Nov. 19, 2014
Aug. 19, 2014
Apr. 16, 2014
Class of Stock [Line Items]
 
 
 
 
 
 
Shares issued (in shares)
4,370,000 
5,175,000 
6,708,332 
 
 
 
IPO price per share (USD per share)
 
 
 
$ 32 
$ 30.25 
$ 15 
Stock split, conversion ratio
 
 
125,614.14 
 
 
 
Proceeds from issuance IPO, net of discounts, commissions and offering expenses
$ 0 
$ 0 
$ 91,000,000 
 
 
 
Over-Allotment Option
 
 
 
 
 
 
Class of Stock [Line Items]
 
 
 
 
 
 
Shares issued (in shares)
570,000 
675,000 
874,999 
 
 
 
Officer
 
 
 
 
 
 
Class of Stock [Line Items]
 
 
 
 
 
 
Shares repurchased (in shares)
 
94,100 
 
 
 
 
Nature of Operations and Summary of Significant Accounting Policies - Gift Cards (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 26, 2016
Dec. 28, 2015
Dec. 29, 2014
Organization, Consolidation and Presentation of Financial Statements [Abstract]
 
 
 
Gift card breakage revenue
$ 0.4 
$ 0.3 
$ 0.2 
Nature of Operations and Summary of Significant Accounting Policies - Property and Equipment Estimated Useful Lives (Details)
12 Months Ended
Dec. 26, 2016
Buildings under deemed landlord financing
 
Property, Plant and Equipment [Line Items]
 
Estimated useful lives
39 years 
Leasehold improvements |
Minimum
 
Property, Plant and Equipment [Line Items]
 
Estimated useful lives
7 years 
Leasehold improvements |
Maximum
 
Property, Plant and Equipment [Line Items]
 
Estimated useful lives
20 years 
Furniture and fixtures
 
Property, Plant and Equipment [Line Items]
 
Estimated useful lives
7 years 
Automotive equipment |
Minimum
 
Property, Plant and Equipment [Line Items]
 
Estimated useful lives
4 years 
Automotive equipment |
Maximum
 
Property, Plant and Equipment [Line Items]
 
Estimated useful lives
5 years 
Computer equipment |
Minimum
 
Property, Plant and Equipment [Line Items]
 
Estimated useful lives
3 years 
Computer equipment |
Maximum
 
Property, Plant and Equipment [Line Items]
 
Estimated useful lives
5 years 
Machinery and equipment
 
Property, Plant and Equipment [Line Items]
 
Estimated useful lives
5 years 
Nature of Operations and Summary of Significant Accounting Policies - Impairment of Long-Lived Assets (Details) (USD $)
12 Months Ended
Dec. 26, 2016
Dec. 28, 2015
Dec. 29, 2014
Property, Plant and Equipment [Abstract]
 
 
 
Impairment of long-lived assets
$ 0 
$ 0 
$ 0 
Nature of Operations and Summary of Significant Accounting Policies - Loan Costs (Details) (USD $)
In Millions, unless otherwise specified
Dec. 26, 2016
Dec. 28, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]
 
 
Loan costs, net
$ 0.1 
$ 0.1 
Nature of Operations and Summary of Significant Accounting Policies - Deferred Rent (Details) (USD $)
In Millions, unless otherwise specified
Dec. 26, 2016
Dec. 28, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]
 
 
Tenant improvement allowances, net
$ 18.2 
$ 12.5 
Nature of Operations and Summary of Significant Accounting Policies - Advertising and Pre-Opening Costs (Details) (USD $)
12 Months Ended
Dec. 26, 2016
Dec. 28, 2015
Dec. 29, 2014
Organization, Consolidation and Presentation of Financial Statements [Abstract]
 
 
 
Advertising costs
$ 70,000 
$ 40,000 
$ 70,000 
Pre-opening costs
$ 2,214,000 
$ 2,554,000 
$ 2,109,000 
Business Combination - Narrative (Details) (USD $)
In Millions, unless otherwise specified
0 Months Ended 2 Months Ended 0 Months Ended 12 Months Ended 0 Months Ended
Nov. 10, 2014
franchisee
Nov. 10, 2014
Louisiana Franchise Restaurants
Dec. 29, 2014
Louisiana Franchise Restaurants
Jan. 8, 2014
Mobile, Alabama and Destin, Florida Franchise Restaurants
franchisee
Dec. 29, 2014
Mobile, Alabama and Destin, Florida Franchise Restaurants
Nov. 10, 2014
Franchised
Louisiana Franchise Restaurants
restaurant
Jan. 8, 2014
Franchised
Mobile, Alabama and Destin, Florida Franchise Restaurants
restaurant
Nov. 10, 2014
Under development
Louisiana Franchise Restaurants
restaurant
Business Acquisition [Line Items]
 
 
 
 
 
 
 
 
Number of franchisees involved in acquisition
1 
 
 
1 
 
 
 
 
Number of restaurants acquired
 
 
 
 
 
3 
2 
2 
Total purchase price
 
$ 8.0 
 
$ 1.1 
 
 
 
 
Fees repaid
 
0.06 
 
 
 
 
 
 
Contributed revenues from acquisition
 
 
$ 0.6 
 
$ 2.5 
 
 
 
Business Combination - Schedule of Recognized Identified Assets Acquired and Liabilities Assumed (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 26, 2016
Dec. 28, 2015
Dec. 29, 2014
Nov. 10, 2014
Louisiana Franchise Restaurants
Jan. 8, 2014
Mobile, Alabama and Destin, Florida Franchise Restaurants
Business Acquisition [Line Items]
 
 
 
 
 
Cash
 
 
 
$ 2 
$ 2 
Inventory
 
 
 
19 
15 
Prepaid rent
 
 
 
20 
 
Property, plant and equipment
 
 
 
1,242 
167 
Deposits
 
 
 
10 
 
Favorable leases
 
 
 
356 
 
Reacquired rights
 
 
 
1,125 
91 
Goodwill
29,528 
29,528 
29,528 
5,302 
892 
Accrued expenses
 
 
 
(50)
 
Royalties payable
 
 
 
(33)
(17)
Accounts payable
 
 
 
 
(3)
Total purchase price
 
 
 
$ 7,993 
$ 1,147 
Assets Held for Sale (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 26, 2016
Dec. 28, 2015
Long Lived Assets Held-for-sale [Line Items]
 
 
Total Assets held for sale
$ 0 
$ 2,128 
Land
 
 
Long Lived Assets Held-for-sale [Line Items]
 
 
Total Assets held for sale
0 
807 
Leasehold Improvements
 
 
Long Lived Assets Held-for-sale [Line Items]
 
 
Total Assets held for sale
$ 0 
$ 1,321 
- Property and Equipment (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 26, 2016
Dec. 28, 2015
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
$ 208,789 
$ 165,631 
Less: Accumulated depreciation
(46,756)
(33,812)
Total property and equipment, net
162,033 
131,819 
Buildings under deemed landlord financing
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
23,830 
23,100 
Leasehold improvements
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
125,666 
96,276 
Machinery and equipment
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
32,566 
23,894 
Furniture and fixtures
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
6,604 
5,150 
Automobiles
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
4,019 
3,985 
Computer equipment
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
9,848 
6,421 
Construction in progress
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
$ 6,256 
$ 6,805 
Property and Equipment - Narrative (Details) (USD $)
12 Months Ended
Dec. 26, 2016
building
Dec. 28, 2015
building
Dec. 29, 2014
Property, Plant and Equipment [Abstract]
 
 
 
Depreciation
$ 14,453,000 
$ 11,368,000 
$ 8,900,000 
Number of buildings, accounting owner, under landlord financing
44 
43 
 
Number of buildings under construction
6 
9 
 
Capitalized internal payroll
$ 700,000 
$ 600,000 
$ 300,000 
Goodwill - Schedule of Goodwill (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 26, 2016
Dec. 28, 2015
Nov. 10, 2014
Louisiana Franchise Restaurants
Jan. 8, 2014
Mobile, Alabama and Destin, Florida Franchise Restaurants
Goodwill [Roll Forward]
 
 
 
 
Beginning balance
$ 29,528 
$ 29,528 
$ 5,302 
$ 892 
Additions, disposals and impairment
0 
0 
 
 
Ending balance
$ 29,528 
$ 29,528 
$ 5,302 
$ 892 
Intangible Assets - Intangible Assets (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 26, 2016
Dec. 28, 2015
Acquired Finite-Lived Intangible Assets [Line Items]
 
 
Gross Carrying Amount
$ 16,975 
$ 17,067 
Accumulated Amortization
(9,013)
(7,499)
Net
7,962 
9,568 
Trade name
 
 
Acquired Finite-Lived Intangible Assets [Line Items]
 
 
Gross Carrying Amount
10,000 
10,000 
Accumulated Amortization
(4,583)
(4,083)
Net
5,417 
5,917 
Favorable leases
 
 
Acquired Finite-Lived Intangible Assets [Line Items]
 
 
Gross Carrying Amount
355 
355 
Accumulated Amortization
(50)
(26)
Net
305 
329 
Reacquired rights
 
 
Acquired Finite-Lived Intangible Assets [Line Items]
 
 
Gross Carrying Amount
6,620 
6,712 
Accumulated Amortization
(4,380)
(3,390)
Net
$ 2,240 
$ 3,322 
Intangible Assets - Estimated Amortization Expense (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 26, 2016
Dec. 28, 2015
Acquired Finite-Lived Intangible Assets [Line Items]
 
 
2017
$ 1,479 
 
2018
1,071 
 
2019
876 
 
2020
726 
 
2021
679 
 
Thereafter
3,131 
 
Net
7,962 
9,568 
Trade name
 
 
Acquired Finite-Lived Intangible Assets [Line Items]
 
 
2017
500 
 
2018
500 
 
2019
500 
 
2020
500 
 
2021
500 
 
Thereafter
2,917 
 
Net
5,417 
5,917 
Favorable leases
 
 
Acquired Finite-Lived Intangible Assets [Line Items]
 
 
2017
23 
 
2018
23 
 
2019
23 
 
2020
23 
 
2021
23 
 
Thereafter
190 
 
Net
305 
329 
Reacquired rights
 
 
Acquired Finite-Lived Intangible Assets [Line Items]
 
 
2017
956 
 
2018
548 
 
2019
353 
 
2020
203 
 
2021
156 
 
Thereafter
24 
 
Net
$ 2,240 
$ 3,322 
Accrued Expenses and Other - Accrued Expenses (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 26, 2016
Dec. 28, 2015
Payables and Accruals [Abstract]
 
 
Accrued payroll and payroll taxes
$ 5,448 
$ 5,365 
Accrued capital purchases
2,347 
1,403 
Sales tax payable
1,218 
1,274 
Gift card payable
1,200 
1,121 
Other accrued expenses
4,047 
3,755 
Total accrued expenses and other
$ 14,260 
$ 12,918 
Bank Line of Credit and Term Loan - Narrative (Details) (USD $)
12 Months Ended 0 Months Ended 12 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended
Dec. 26, 2016
Dec. 28, 2015
Dec. 29, 2014
Apr. 16, 2014
Credit Facility 2011
Secured Debt
Apr. 16, 2014
Credit Facility 2011
Term Loan
Secured Debt
Apr. 16, 2014
Credit Facility 2011
2011 Line of Credit
Secured Debt
Feb. 6, 2015
Credit Facility 2015
Line of Credit
Revolving Credit Facility
Dec. 26, 2016
Credit Facility 2015
Line of Credit
Revolving Credit Facility
Feb. 6, 2015
Credit Facility 2015
Line of Credit
Revolving Credit Facility
Dec. 26, 2016
Credit Facility 2015
Line of Credit
Revolving Credit Facility
Federal Funds Rate
Dec. 26, 2016
Credit Facility 2015
Line of Credit
Revolving Credit Facility
London Interbank Offered Rate (LIBOR)
Dec. 26, 2016
Credit Facility 2015
Line of Credit
Revolving Credit Facility
Scenario One (greater than)
Dec. 26, 2016
Credit Facility 2015
Line of Credit
Revolving Credit Facility
Scenario One (greater than)
Dec. 26, 2016
Credit Facility 2015
Line of Credit
Revolving Credit Facility
Scenario One (greater than)
Base Rate
Dec. 26, 2016
Credit Facility 2015
Line of Credit
Revolving Credit Facility
Scenario One (greater than)
London Interbank Offered Rate (LIBOR)
Dec. 26, 2016
Credit Facility 2015
Line of Credit
Revolving Credit Facility
Scenario Two (less than)
Dec. 26, 2016
Credit Facility 2015
Line of Credit
Revolving Credit Facility
Scenario Two (less than)
Dec. 26, 2016
Credit Facility 2015
Line of Credit
Revolving Credit Facility
Scenario Two (less than)
London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Extinguishment of debt
 
 
 
 
$ 37,500,000 
$ 2,900,000 
 
 
 
 
 
 
 
 
 
 
 
 
Loss on extinguishment of debt
0 
0 
978,000 
1,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Borrowing capacity
 
 
 
 
 
 
 
 
20,000,000.0 
 
 
 
 
 
 
 
 
 
Maximum borrowing capacity
 
 
 
 
 
 
 
 
30,000,000.0 
 
 
 
 
 
 
 
 
 
Term (in years)
 
 
 
 
 
 
5 years 
 
 
 
 
 
 
 
 
 
 
 
Line of credit, outstanding amount
 
 
 
 
 
 
 
$ 0 
 
 
 
 
 
 
 
 
 
 
Basis spread on variable rate
 
 
 
 
 
 
 
 
 
0.50% 
1.00% 
 
 
0.50% 
1.50% 
 
 
1.00% 
Debt ratio (greater than or equal to)
 
 
 
 
 
 
 
 
 
 
 
 
2.50 
 
 
 
 
 
Unused commitment fee
 
 
 
 
 
 
 
 
 
 
 
0.15% 
 
 
 
0.125% 
 
 
Debt ratio (less than)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.50 
 
Income Taxes - Schedule of Income Tax Provision (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 26, 2016
Dec. 28, 2015
Dec. 29, 2014
Current
 
 
 
Federal
$ 0 
$ 0 
$ 0 
State
128 
97 
93 
Subtotal Current
128 
97 
93 
Deferred
 
 
 
Federal
665 
660 
569 
State
68 
82 
37 
Subtotal Deferred
733 
742 
606 
Total income tax provision
$ 861 
$ 839 
$ 699 
Income Taxes - Tax Rate Information (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 26, 2016
Dec. 28, 2015
Dec. 29, 2014
Income Tax Disclosure [Abstract]
 
 
 
Federal statutory income tax rate
35.00% 
35.00% 
35.00% 
Income tax expense (benefit) at federal statutory rate
$ 932 
$ 687 
$ (3,277)
State income taxes
138 
129 
(238)
Increase (decrease) in valuation allowance
(370)
(68)
2,323 
Equity-based compensation
0 
0 
1,701 
Deferred taxes
83 
30 
147 
Meals and entertainment
78 
61 
43 
Total income tax provision
$ 861 
$ 839 
$ 699 
Income Taxes - Components of Deferred Tax Assets and Liabilities (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 26, 2016
Dec. 28, 2015
Non-current:
 
 
Net operating loss
$ 6,045 
$ 6,351 
Landlord contributions
8,644 
6,354 
Deferred rent
3,474 
2,157 
Stock compensation
1,391 
784 
Deemed landlord financing
9,522 
8,541 
Charitable contributions
94 
108 
Deferred revenue
455 
426 
Depreciation
236 
151 
Other
223 
56 
Valuation allowance
(8,831)
(9,201)
Deferred tax liabilities:
 
 
Goodwill
5,476 
4,743 
Property and equipment
21,253 
15,727 
Net deferred tax liabilities, non-current
5,476 
4,743 
Total net deferred tax liabilities
$ 5,476 
$ 4,743 
Income Taxes - Narrative (Details) (USD $)
Dec. 26, 2016
Dec. 28, 2015
Income Tax Disclosure [Abstract]
 
 
Valuation allowance
$ 8,831,000 
$ 9,201,000 
Operating Loss Carryforwards [Line Items]
 
 
Total net deferred tax liabilities
5,476,000 
4,743,000 
Net operating loss carryforwards to be recorded in additional paid in capital
4,500,000 
 
Deferred tax assets, operating loss carryforwards
6,045,000 
6,351,000 
Federal
 
 
Operating Loss Carryforwards [Line Items]
 
 
Net operating loss carryforwards
19,100,000 
 
State
 
 
Operating Loss Carryforwards [Line Items]
 
 
Net operating loss carryforwards
$ 11,100,000 
 
Income Taxes - Valuation Allowance Activity (Details) (Valuation Allowance of Deferred Tax Assets, USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 26, 2016
Dec. 28, 2015
Dec. 29, 2014
Valuation Allowance of Deferred Tax Assets
 
 
 
Movement in Valuation Allowances and Reserves [Roll Forward]
 
 
 
Valuation allowance, beginning balance
$ 9,201 
$ 9,270 
$ 6,947 
Addition to valuation allowance
0 
0 
2,323 
Deductions
(370)
(69)
0 
Valuation allowance, ending balance
$ 8,831 
$ 9,201 
$ 9,270 
Leases - Narrative (Details) (USD $)
12 Months Ended
Dec. 26, 2016
building
Dec. 28, 2015
building
Dec. 29, 2014
Leases [Abstract]
 
 
 
Number of buildings, accounting owner, under landlord financing
44 
43 
 
Number of buildings under construction
6 
9 
 
Operating Leased Assets [Line Items]
 
 
 
Rent expense
$ 17,300,000 
$ 13,100,000 
$ 9,700,000 
Operating Leases, Rent Expense, Contingent Rentals
100,000 
100,000 
100,000 
Deemed landlord financing obligations
29,777,000 
28,415,000 
 
Pre-Opening Costs1
 
 
 
Operating Leased Assets [Line Items]
 
 
 
Rent expense
$ 300,000 
$ 200,000 
$ 600,000 
Leases - Operating Leases, Fiscal Year Maturity and Deemed Landlord Financing (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 26, 2016
Deemed Landlord Financing [Abstract]
 
2017
$ 4,531 
2018
4,782 
2019
4,880 
2020
4,937 
2021
5,026 
Thereafter
72,070 
Total
96,226 
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
 
2017
17,197 
2018
17,387 
2019
17,713 
2020
18,099 
2021
17,931 
Thereafter
230,344 
Total
$ 318,671 
Related Party Transactions - Narrative (Details) (USD $)
0 Months Ended 12 Months Ended
Aug. 19, 2014
Officer
Common Stock
Dec. 26, 2016
Affiliated Entity
Director
related_party_member
Dec. 26, 2016
Affiliated Entity
Corporate Development and Administrative Services Agreement
Dec. 28, 2015
Affiliated Entity
Corporate Development and Administrative Services Agreement
Dec. 29, 2014
Affiliated Entity
Corporate Development and Administrative Services Agreement
Related Party Transaction [Line Items]
 
 
 
 
 
Expenses related to performance of services agreement
 
 
$ 0 
$ 0 
$ 100,000 
Number of related party members serving on the board of directors
 
1 
 
 
 
Shares repurchased (in shares)
94,100 
 
 
 
 
Equity-based Compensation - Narrative (Details) (USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended
Dec. 26, 2016
Dec. 28, 2015
Dec. 29, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Options, exercises in period, intrinsic value
$ 1.5 
$ 2.0 
$ 0.3 
Options vested in period, fair value
1.4 
0.5 
1.2 
Granted (in shares)
139,531 
360,250 
 
Contractual term
8 years 0 months 26 days 
 
 
Unrecognized compensation costs
5.0 
 
 
Period of recognition
2 years 3 months 29 days 
 
 
Employee Stock Option
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Compensation expense
 
 
1.2 
Restricted Stock Units (RSUs)
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Compensation expense related to accelerated vesting
 
4.9 
 
Omnibus Incentive Plan 2014
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Number of shares authorized
1,905,799 
 
 
Omnibus Incentive Plan 2014 |
Restricted Stock Units (RSUs)
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Award vesting period
3 years 
 
 
Restricted stock forfeited (in shares)
(6,017)
0 
 
Omnibus Incentive Plan 2014 |
Immediate Vesting |
Employee Stock Option
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Granted (in shares)
 
 
250,000 
Omnibus Incentive Plan 2014 |
Four Year Vesting |
Employee Stock Option
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Award vesting period
4 years 
 
 
Contractual term
10 years 
 
 
General and Administrative Expense
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Compensation expense
$ 2.1 
$ 1.2 
$ 6.3 
Equity-based Compensation - Summary of Stock Option Activity (Details) (USD $)
12 Months Ended
Dec. 26, 2016
Dec. 28, 2015
Number of units
 
 
Outstanding, beginning balance (in shares)
712,165 
521,470 
Granted (in shares)
139,531 
360,250 
Exercised (in shares)
(70,190)
(91,177)
Forfeited (in shares)
(57,085)
(76,036)
Expired (in shares)
(13,824)
(2,342)
Outstanding, ending balance (in shares)
710,597 
712,165 
Weighted-average exercise price
 
 
Outstanding, beginning balance (USD per share)
$ 25.38 
$ 16.64 
Granted (USD per share)
$ 26.98 
$ 35.77 
Exercised (USD per share)
$ 29.43 
$ 15.05 
Forfeited (USD per share)
$ 15.42 
$ 26.75 
Expired (USD per share)
$ 29.17 
$ 35.01 
Outstanding, ending balance (USD per share)
$ 26.28 
$ 25.38 
Equity-based Compensation - Schedule of Stock Option, Vested and Expected to Vest, Outstanding and Exercisable (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
12 Months Ended
Dec. 26, 2016
Dec. 28, 2015
Dec. 29, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
 
 
 
Outstanding (in shares)
710,597 
712,165 
521,470 
Outstanding, weighted-average exercise price per share (USD per share)
$ 26.28 
$ 25.38 
$ 16.64 
Outstanding, weighted-average remaining years of contractual life
8 years 0 months 26 days 
 
 
Outstanding, aggregate intrinsic value
$ 2,568 
 
 
Vested and expected to vest (in shares)
662,898 
 
 
Vested and expected to vest, weighted-average exercise price per share (USD per share)
$ 26.02 
 
 
Vested and expected to vest, weighted-average remaining years of contractual life
8 years 0 months 15 days 
 
 
Vested and expected to vest, aggregate intrinsic value
2,508 
 
 
Exercisable (in shares)
265,691 
 
 
Exercisable, weighted-average exercise price per share (USD per share)
$ 21.71 
 
 
Exercisable, weighted-average remaining years of contractual life
7 years 7 months 6 days 
 
 
Exercisable, aggregate intrinsic value
$ 1,704 
 
 
Equity-based Compensation - Schedule of Weighted-Average Assumptions Used to Value Stock Options (Details)
12 Months Ended
Dec. 26, 2016
Dec. 28, 2015
Dec. 29, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
 
 
 
Expected volatility
31.83% 
35.78% 
34.98% 
Risk-free rate of return
1.35% 
1.65% 
1.78% 
Expected life (in years)
6 years 3 months 
6 years 3 months 
5 years 1 month 6 days 
Dividend yield
0.00% 
0.00% 
0.00% 
Fair value per share at date of grant (USD per share)
$ 9.14 
$ 13.53 
$ 5.74 
Equity-based Compensation - Schedule of Restricted Stock Unit Plan Activity (Details) (Omnibus Incentive Plan 2014, Restricted Stock Units (RSUs), USD $)
12 Months Ended
Dec. 26, 2016
Dec. 28, 2015
Omnibus Incentive Plan 2014 |
Restricted Stock Units (RSUs)
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
 
 
Restricted stock units non-vested (in shares)
11,679 
6,666 
Restricted stock units granted (in shares)
82,381 
7,235 
Restricted stock units vested (in shares)
4,632 
2,222 
Restricted stock forfeited (in shares)
(6,017)
0 
Restricted stock units non-vested (in shares)
83,411 
11,679 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
 
 
Weighted-average grant-date fair value, restricted stock units, non-vested (USD per share)
$ 27.12 
$ 15.00 
Weighted-average grant-date fair value, restricted stock units, granted (USD per share)
$ 28.05 
$ 34.56 
Weighted-average grant-date fair value, restricted stock units, vested (USD per share)
$ 25.18 
$ 15.00 
Weighted-average grant date fair value, restricted stock units, forfeited (USD per share)
$ 27.42 
$ 0.00 
Weighted-average grant-date fair value, restricted stock units, non-vested (USD per share)
$ 28.13 
$ 27.12 
Earnings per Share (Schedule of Net Loss Per Share, Basic and Diluted) (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 4 Months Ended 12 Months Ended
Dec. 26, 2016
Oct. 3, 2016
Jul. 11, 2016
Dec. 28, 2015
Oct. 5, 2015
Jul. 13, 2015
Apr. 18, 2016
Apr. 20, 2015
Dec. 26, 2016
Dec. 28, 2015
Dec. 29, 2014
Earnings Per Share [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
$ (501)
$ (293)
$ 1,201 
$ 2,568 
$ (2,256)
$ 120 
$ 1,396 
$ 692 
$ 1,803 
$ 1,124 
$ (10,017)
Shares:
 
 
 
 
 
 
 
 
 
 
 
Basic
19,460,467 
19,458,921 
19,436,315 
19,384,091 
19,379,907 
19,334,939 
19,396,815 
19,296,710 
19,434,622 
19,344,896 
17,409,673 
Diluted
19,460,467 
19,458,921 
19,631,272 
19,561,225 
19,379,907 
19,557,645 
19,568,815 
19,519,675 
19,586,447 
19,552,708 
17,409,673 
Earnings per share:
 
 
 
 
 
 
 
 
 
 
 
Basic and diluted
$ (0.03)
$ (0.02)
$ 0.06 
$ 0.13 
$ (0.12)
$ 0.01 
$ 0.07 
$ 0.04 
$ 0.09 
$ 0.06 
$ (0.58)
Earnings per Share (Narrative) (Details)
12 Months Ended 0 Months Ended
Dec. 26, 2016
Employee Stock Option
Dec. 28, 2015
Employee Stock Option
Dec. 29, 2014
Employee Stock Option
Dec. 26, 2016
Restricted Stock Units (RSUs)
Dec. 28, 2015
Restricted Stock Units (RSUs)
Dec. 29, 2014
Restricted Stock Units (RSUs)
Apr. 16, 2014
Common Stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
 
 
 
 
Stock split, conversion ratio
 
 
 
 
 
 
125,614.14 
Antidilutive securities excluded from computation of earnings per share
420,981 
292,561 
162,900 
4,750 
159 
2,718 
 
Quarterly Financial Data (Unaudited) (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 4 Months Ended 12 Months Ended
Dec. 26, 2016
Oct. 3, 2016
Jul. 11, 2016
Dec. 28, 2015
Oct. 5, 2015
Jul. 13, 2015
Apr. 18, 2016
Apr. 20, 2015
Dec. 26, 2016
Dec. 28, 2015
Dec. 29, 2014
Selected Quarterly Financial Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Total revenue
$ 61,983 
$ 67,296 
$ 66,273 
$ 52,691 
$ 56,384 
$ 54,474 
$ 80,411 
$ 63,008 
$ 275,963 
$ 226,557 
$ 171,733 
Income (loss) from operations
(1,270)
2,053 
2,806 
9 
1,585 
1,681 
2,836 
1,887 
6,425 
5,162 
(4,799)
Net income (loss)
$ (501)
$ (293)
$ 1,201 
$ 2,568 
$ (2,256)
$ 120 
$ 1,396 
$ 692 
$ 1,803 
$ 1,124 
$ (10,017)
Earnings per share basic and diluted
$ (0.03)
$ (0.02)
$ 0.06 
$ 0.13 
$ (0.12)
$ 0.01 
$ 0.07 
$ 0.04 
$ 0.09 
$ 0.06 
$ (0.58)
Weighted average shares outstanding, basic
19,460,467 
19,458,921 
19,436,315 
19,384,091 
19,379,907 
19,334,939 
19,396,815 
19,296,710 
19,434,622 
19,344,896 
17,409,673 
Weighted average shares outstanding, diluted (in shares)
19,460,467 
19,458,921 
19,631,272 
19,561,225 
19,379,907 
19,557,645 
19,568,815 
19,519,675 
19,586,447 
19,552,708 
17,409,673