FIESTA RESTAURANT GROUP, INC., 10-Q filed on 5/13/2021
Quarterly Report
v3.21.1
Document and Entity Information - shares
3 Months Ended
Apr. 04, 2021
May 07, 2021
Document And Entity Information [Abstract]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Apr. 04, 2021  
Document Transition Report false  
Entity File Number 001-35373  
Entity Registrant Name FIESTA RESTAURANT GROUP, INC.  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 90-0712224  
Entity Address, Address Line One 14800 Landmark Boulevard, Suite 500  
Entity Address, City or Town Dallas  
Entity Address, State or Province TX  
Entity Address, Postal Zip Code 75254  
City Area Code 972  
Local Phone Number 702-9300  
Title of 12(b) Security Common Stock, par value $0.01 per share  
Entity Trading Symbol FRGI  
Security Exchange Name NASDAQ  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Central Index Key 0001534992  
Current Fiscal Year End Date --01-02  
Document Fiscal Year Focus 2021  
Document Fiscal Period Focus Q1  
Amendment Flag false  
Entity Common Stock, Shares Outstanding   26,465,303
v3.21.1
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Apr. 04, 2021
Jan. 03, 2021
Current assets:    
Cash $ 59,016 $ 50,035
Restricted cash 3,837 3,584
Accounts receivable 8,883 8,884
Inventories 4,164 4,205
Prepaid rent 119 115
Income tax receivable 81 9,399
Prepaid expenses and other current assets 9,739 7,804
Total current assets 85,839 84,026
Property and equipment, net 153,066 161,081
Operating lease right-of-use assets 257,964 261,304
Goodwill 56,307 56,307
Other assets 7,787 6,025
Total assets 560,963 568,743
Current liabilities:    
Current portion of long-term debt 1,021 1,015
Accounts payable 13,256 13,339
Accrued payroll, related taxes and benefits 13,488 14,236
Accrued real estate taxes 2,977 6,600
Other current liabilities 31,456 29,719
Total current liabilities 62,198 64,909
Long-term debt, net of current portion 72,238 72,328
Operating lease liabilities 264,487 268,086
Deferred tax liabilities 3,744 4,109
Other non-current liabilities 11,441 11,530
Total liabilities 414,108 420,962
Commitments and contingencies
Stockholders' equity:    
Preferred stock, $0.01 par value; 20,000,000 shares authorized, no shares issued 0 0
Common stock, $0.01 par value; 100,000,000 shares authorized, 28,427,348 and 28,278,320 shares issued, respectively, and 25,402,677 and 25,293,149 shares outstanding, respectively 274 273
Additional paid-in capital 177,776 176,614
Retained earnings (accumulated deficit) (10,416) (8,327)
Treasury stock, at cost; 1,993,495 shares (20,779) (20,779)
Total stockholders' equity 146,855 147,781
Total liabilities and stockholders' equity $ 560,963 $ 568,743
v3.21.1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares
Apr. 04, 2021
Jan. 03, 2021
Statement of Financial Position [Abstract]    
Preferred stock, par value (usd per share) $ 0.01 $ 0.01
Preferred stock, shares authorized 20,000,000 20,000,000
Preferred stock, shares issued 0 0
Common stock, par value (usd per share) $ 0.01 $ 0.01
Common stock, shares authorized 100,000,000 100,000,000
Common stock, shares issued 28,427,348 28,278,320
Common stock, shares outstanding 25,402,677 25,293,149
Treasury Stock, Shares 1,993,495 1,993,495
v3.21.1
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
$ in Thousands
3 Months Ended
Apr. 04, 2021
Mar. 29, 2020
Revenues:    
Revenues $ 144,739 $ 146,699
Costs and expenses:    
Cost of sales 43,086 46,276
Restaurant wages and related expenses (including stock-based compensation expense of $42 and $36, respectively) 38,044 40,495
Restaurant rent expense 11,633 11,339
Other restaurant operating expenses 22,296 21,511
Advertising expense 3,988 5,783
General and administrative (including stock-based compensation expense of $1,121 and $776, respectively) 14,568 14,384
Depreciation and amortization 8,926 9,430
Pre-opening costs 0 69
Impairment and other lease charges (122) 4,233
Closed restaurant rent expense, net of sublease income 1,091 1,632
Other expense (income), net (38) 908
Total operating expenses 143,472 156,060
Income (loss) from operations 1,267 (9,361)
Interest expense 2,023 961
Loss before income taxes (756) (10,322)
Provision for (benefit from) income taxes 1,333 (3,005)
Net loss $ (2,089) $ (7,317)
Earnings (loss) per common share:    
Basic (usd per share) $ (0.08) $ (0.29)
Diluted (usd per share) $ (0.08) $ (0.29)
Weighted average common shares outstanding:    
Basic (in shares) 25,324,213 25,519,247
Diluted (in shares) 25,324,213 25,519,247
Restaurant sales    
Revenues:    
Revenues $ 144,164 $ 146,086
Franchise royalty revenues and fees    
Revenues:    
Revenues $ 575 $ 613
v3.21.1
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($)
$ in Thousands
3 Months Ended
Apr. 04, 2021
Mar. 29, 2020
Stock-based compensation $ 1,200 $ 800
Restaurant Wages And Related Expenses    
Stock-based compensation 42 36
General and Administrative Expense    
Stock-based compensation $ 1,121 $ 776
v3.21.1
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($)
$ in Thousands
Total
Common Stock
Additional Paid-In Capital
Retained Earnings (Accumulated Deficit)
Treasury Stock
Beginning shares at Dec. 29, 2019   25,612,597      
Beginning balance at Dec. 29, 2019 $ 158,236 $ 271 $ 173,132 $ 1,884 $ (17,051)
Increase (Decrease) in Stockholders' Equity          
Stock-based compensation 812   812    
Vesting of restricted shares (in shares)   73,998      
Vesting of restricted shares $ 0 $ 0 0    
Purchase of treasury stock (in shares) (500,000) (500,000)      
Purchase of treasury stock $ (3,728)       (3,728)
Net income (loss) (7,317)     (7,317)  
Ending shares at Mar. 29, 2020   25,186,595      
Ending balance at Mar. 29, 2020 $ 148,003 $ 271 173,944 (5,433) (20,779)
Beginning shares at Jan. 03, 2021 25,293,149 25,293,149      
Beginning balance at Jan. 03, 2021 $ 147,781 $ 273 176,614 (8,327) (20,779)
Increase (Decrease) in Stockholders' Equity          
Stock-based compensation 1,163   1,163    
Vesting of restricted shares (in shares)   109,528      
Vesting of restricted shares 0 $ 1 (1)    
Net income (loss) $ (2,089)     (2,089)  
Ending shares at Apr. 04, 2021 25,402,677 25,402,677      
Ending balance at Apr. 04, 2021 $ 146,855 $ 274 $ 177,776 $ (10,416) $ (20,779)
v3.21.1
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands
3 Months Ended
Apr. 04, 2021
Mar. 29, 2020
Operating activities:    
Net loss $ (2,089) $ (7,317)
Adjustments to reconcile net loss to net cash provided by operating activities:    
Gain on disposals of property and equipment, net (245) 0
Stock-based compensation 1,163 812
Impairment and other lease charges (122) 4,233
Depreciation and amortization 8,926 9,430
Amortization of deferred financing costs 200 68
Deferred income taxes (365) 4,212
Changes in other operating assets and liabilities 2,056 (6,974)
Net cash provided by operating activities 9,524 4,464
Capital expenditures:    
New restaurant development 0 (1,590)
Restaurant remodeling (662) (1,025)
Other restaurant capital expenditures (1,972) (2,536)
Corporate and restaurant information systems (462) (932)
Total capital expenditures (3,096) (6,083)
Proceeds from sale-leaseback transactions 3,083 0
Net cash used in investing activities (13) (6,083)
Financing activities:    
Borrowings on revolving credit facility 0 71,420
Repayments on revolving credit facility 0 (75,420)
Repayment of secured debt (188) 0
Principal payments on finance leases (82) (57)
Financing costs associated with debt (7) 0
Payments to purchase treasury stock 0 (3,728)
Net cash used in financing activities (277) (7,785)
Net change in cash and restricted cash 9,234 (9,404)
Cash and restricted cash, beginning of period 53,619 13,413
Cash and restricted cash, end of period $ 62,853 $ 4,009
v3.21.1
Basis of Presentation
3 Months Ended
Apr. 04, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Presentation Basis of Presentation
Business Description. Fiesta Restaurant Group, Inc. ("Fiesta Restaurant Group" or "Fiesta") owns, operates and franchises two restaurant brands through its wholly-owned subsidiaries Pollo Operations, Inc. and its subsidiaries, Pollo Franchise, Inc. (collectively "Pollo Tropical"), and Taco Cabana, Inc. and its subsidiaries (collectively "Taco Cabana"). Unless the context otherwise requires, Fiesta and its subsidiaries, Pollo Tropical and Taco Cabana, are collectively referred to as the "Company." At April 4, 2021, the Company owned and operated 138 Pollo Tropical® restaurants and 143 Taco Cabana® restaurants. All of the Pollo Tropical restaurants are located in Florida and all of the Taco Cabana restaurants are located in Texas. At April 4, 2021, the Company franchised a total of 29 Pollo Tropical restaurants and six Taco Cabana restaurants. The franchised Pollo Tropical restaurants include 17 in Puerto Rico, two in Panama, one in Guyana, two in Ecuador, one in the Bahamas, five on college campuses and one at a hospital in Florida. The franchised Taco Cabana restaurants include six in New Mexico.
Basis of Consolidation. The unaudited condensed consolidated financial statements presented herein reflect the consolidated financial position, results of operations and cash flows of Fiesta and its wholly-owned subsidiaries. All intercompany transactions have been eliminated in consolidation.
Fiscal Year. The Company uses a 52–53 week fiscal year ending on the Sunday closest to December 31. The fiscal year ended January 3, 2021 contained 53 weeks. The three months ended April 4, 2021 and March 29, 2020 each contained thirteen weeks. The fiscal year ending January 2, 2022 will contain 52 weeks.
Basis of Presentation. The accompanying unaudited condensed consolidated financial statements for the three months ended April 4, 2021 and March 29, 2020 have been prepared without an audit pursuant to the rules and regulations of the Securities and Exchange Commission and do not include certain information and footnotes required by U.S. Generally Accepted Accounting Principles ("GAAP") for complete financial statements. In the opinion of management, all normal and recurring adjustments considered necessary for a fair presentation of such financial statements have been included. The results of operations for the three months ended April 4, 2021 and March 29, 2020 are not necessarily indicative of the results to be expected for the full year.
These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended January 3, 2021 included in the Company's Annual Report on Form 10-K for the fiscal year ended January 3, 2021. The January 3, 2021 balance sheet data is derived from those audited financial statements.
During the three months ended April 4, 2021, the Company determined that tax depreciation on certain assets placed into service prior to the formation of Fiesta in 2011 was inadvertently calculated incorrectly in prior years as a result of the tax depreciation classification assigned to these assets, which resulted in an overstatement of the related deferred tax liability. The Company recorded a related out-of-period adjustment in the three months ended April 4, 2021, after performing a review to identify affected assets. This adjustment resulted in an increase to income tax expense and net loss of $1.5 million, an increase in other current liabilities of $1.5 million and a decrease in deferred tax liabilities of $1.0 million which was offset by a corresponding increase of $0.9 million in the deferred tax valuation allowance. The adjustment to income tax expense primarily relates to fiscal 2017 when the Company recorded an adjustment to deferred income taxes related to a change in the federal income tax rate and fiscal 2019 when the Company established a valuation allowance on its deferred income tax assets. Prior to these years, the impact primarily affected deferred income tax liabilities and other current liabilities. In fiscal 2020 and 2019, the impact would have increased net loss by $0.1 million and $0.9 million, respectively. The adjustment did not affect pre-tax consolidated financial results or Adjusted EBITDA for either of the Company's segments. The Company evaluated the effects of this out-of-period adjustment, both qualitatively and quantitatively, and concluded that this adjustment was not material to the Company's financial position or results of operations for the current or any prior periods.
Guidance Adopted in 2021. In December 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2019-12, Income Taxes (Topic 740) ("ASU No. 2019-12"), which is a part of the Simplification Initiative being undertaken by the FASB to reduce complexity of accounting standards. The amendments in this update simplify the accounting for income taxes by removing certain exceptions, the most notable for the Company being the exception to the general methodology for calculating income taxes in an interim period when the year-to-date loss exceeds the anticipated loss for the full year. The Company adopted this new accounting standard on January 4, 2021, and will apply it prospectively in each period after the date of adoption. The impact of the standard is largely dependent on interim and anticipated profit or loss in a given period, however the Company does not expect ASU No. 2019-12 to have a significant impact on its financial statements.
Revenue Recognition. Revenue is recognized upon transfer of promised products or services to customers in an amount that reflects the consideration the Company received in exchange for those products or services. Revenues from the Company's owned and operated restaurants are recognized when payment is tendered at the time of sale. Franchise royalty revenues are based on a percentage of gross sales and are recorded as income when earned. Initial franchise fees and area development fees associated with new franchise agreements are not distinct from the continuing rights and services offered by the Company during the term of the related franchise agreements and are recognized as income over the term of the related franchise agreements. A portion of the initial franchise fee is allocated to training services and is recognized as revenue when the Company completes the training services.
Fair Value of Financial Instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date under current market conditions. In determining fair value, the accounting standards establish a three-level hierarchy for inputs used in measuring fair value as follows: Level 1 inputs are quoted prices in active markets for identical assets or liabilities; Level 2 inputs are observable for the asset or liability, either directly or indirectly, including quoted prices in active markets for similar assets or liabilities; and Level 3 inputs are unobservable and reflect management's own assumptions. The following methods were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate the fair value:
Current Assets and Liabilities. The carrying values reported on the consolidated balance sheets of cash and restricted cash, accounts receivable and accounts payable approximate fair value because of the short maturity of those financial instruments.
Term Loan Borrowings. The fair value of outstanding term loan borrowings under the Company's new senior credit facility, which is considered Level 2, is based on current LIBOR rates. The fair value of the Company's senior credit facility was approximately $75.0 million at April 4, 2021 and $74.4 million at January 3, 2021, respectively. The carrying value of the Company's senior credit facility was $71.5 million at April 4, 2021 and $71.5 million at January 3, 2021, respectively.
Long-Lived Assets. The Company assesses the recoverability of property and equipment and definite-lived intangible assets, including right-of-use ("ROU") lease assets, by determining whether the carrying value of these assets can be recovered over their respective remaining lives through undiscounted future operating cash flows. Impairment is reviewed whenever events or changes in circumstances indicate that the carrying amounts of these assets may not be fully recoverable. See Note 3—Impairment of Long-Lived Assets and Other Lease Charges.
Leases. The Company assesses whether an agreement contains a lease at inception. All leases are reviewed for finance or operating classification once control is obtained. The majority of the Company's leases are operating leases. Operating leases are included within operating lease right-of-use assets, other current liabilities, and operating lease liabilities in the condensed consolidated balance sheets. Finance leases are included within property and equipment, net, current portion of long-term debt, and long-term debt, net of current portion in the condensed consolidated balance sheets.
ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The operating lease ROU asset also includes any lease payments made in advance and is reduced by lease incentives received. As most leases do not provide an implicit rate, the Company uses its incremental borrowing rate at commencement date in determining the present value of lease payments. Lease terms include options to extend the lease when it is reasonably certain that the Company will exercise that option. The Company assumes options are reasonably certain to be exercised when such options are required to achieve a minimum 20-year lease term for new restaurant properties and when it incurs significant leasehold improvement costs near the end of a lease term. The Company uses judgment and available data to allocate consideration in a contract when it leases land and a building. The Company also uses judgment in determining its incremental borrowing rate, which includes selecting a yield curve based on a synthetic credit rating determined using a valuation model. Lease expense for lease payments is recognized on a straight-line basis over the lease term unless the related ROU asset has been adjusted for an impairment charge. The Company has real estate lease agreements with lease and non-lease components, which are accounted for as a single lease component.
During the first quarter of 2021, the Company sold two restaurant properties for total proceeds of $3.1 million in sale-leaseback transactions that resulted in a total gain of $0.3 million, which is recognized in other expense (income), net in the condensed consolidated statements of operations.
Use of Estimates. The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements. Estimates also affect the reported amounts of expenses during the reporting periods. Significant items subject to such estimates and assumptions include: insurance liabilities, evaluation for impairment of goodwill and long-lived assets, lease accounting matters, and deferred income tax assets. Actual results could differ from those estimates. Due to the uncertainty associated with the unprecedented nature of the COVID-19 pandemic and the impact it will have on the Company's operations and future cash flows, it is reasonably possible that the estimates of future cash flows used in impairment assessments will change in the near term and the effect of the change could be material. The Company's current estimates assume that changes related to COVID-19 will continue to have an impact through the first half of 2021.
v3.21.1
Prepaid Expenses and Other Current Assets
3 Months Ended
Apr. 04, 2021
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]  
Prepaid Expenses and Other Current Assets Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist of the following:
April 4, 2021January 3, 2021
Prepaid contract expenses$4,762 $4,279 
Assets held for sale(1)
1,257 1,257 
Other3,720 2,268 
$9,739 $7,804 
(1)     As of April 4, 2021 and January 3, 2021, one closed Taco Cabana restaurant property owned by the Company was classified as held for sale.
v3.21.1
Impairment of Long-Lived Assets and Other Lease Charges
3 Months Ended
Apr. 04, 2021
Property, Plant and Equipment [Abstract]  
Impairment of Long-Lived Assets and Other Lease Charges Impairment of Long-Lived Assets and Other Lease Charges
The Company reviews its long-lived assets, principally property and equipment and lease ROU assets, for impairment at the restaurant level. The Company has elected to exclude operating lease payments and liabilities from future cash flows and carrying values, respectively, in its impairment review. In addition to considering management's plans, known regulatory or governmental actions and damage due to acts of God (hurricanes, tornadoes, etc.), the Company considers a triggering event to have occurred related to a specific restaurant if the restaurant's cash flows, exclusive of operating lease payments, for the last twelve months are less than a minimum threshold or if consistent levels of cash flows for the remaining lease period are less than the carrying value of the restaurant's assets. If an indicator of impairment exists for any of its assets, an estimate of undiscounted future cash flows, exclusive of operating lease payments, over the life of the primary asset for each restaurant is compared to that long-lived asset group's carrying value, excluding operating lease liabilities. If the carrying value is greater than the undiscounted cash flow, the Company then determines the fair value of the asset and if an asset is determined to be impaired, the loss is measured by the excess of the carrying amount of the asset over its fair value. There is uncertainty in the projected undiscounted future cash flows used in the Company's impairment review analysis. If actual performance does not achieve the projections, the Company may recognize impairment charges in future periods, and such charges could be material.
A summary of impairment of long-lived assets and other lease charges (recoveries) recorded by segment is as follows:
 Three Months Ended
 April 4, 2021March 29, 2020
Pollo Tropical$110 $3,696 
Taco Cabana(232)537 
$(122)$4,233 
Impairment and other lease charges for the three months ended April 4, 2021 for Pollo Tropical include impairment charges of $0.1 million related primarily to impairment of equipment from previously impaired and closed restaurants. Impairment and other lease charges for the three months ended April 4, 2021 for Taco Cabana include gains from lease terminations of $(0.2) million.
Impairment and other lease charges for the three months ended March 29, 2020 for Pollo Tropical include impairment charges of $3.7 million, related primarily to the impairment of assets from three underperforming Pollo Tropical restaurants, two of which were closed in the third quarter of 2020, for which continued sales declines coupled with the impact of expected sales declines resulted in a decrease in the estimated future cash flows. Impairment and other lease charges for the three months ended March 29, 2020 for Taco Cabana include impairment charges of $0.5 million, related primarily to the impairment of assets for two underperforming Taco Cabana restaurants for which continued sales declines coupled with the impact of expected sales declines resulted in a decrease in the estimated future cash flows.The Company determines the fair value of restaurant equipment, for those restaurants reviewed for impairment, based on current economic conditions, the Company's history of using these assets in the operation of its business and the Company's expectation of how a market participant would value the assets. In addition, for those restaurants reviewed for impairment where the Company owns the land and building, the Company utilizes third-party information such as a broker quoted value to determine the fair value of the property, when applicable. The Company also utilizes discounted future cash flows to determine the fair value of assets for certain leased restaurants with positive discounted projected future cash flows. The Company utilizes current market lease rent and discount rates to determine the fair value of right-of-use lease assets. These fair value asset measurements rely on significant unobservable inputs and are considered Level 3 in the fair value hierarchy. Impairment charges for the three months ended April 4, 2021 related primarily to impairment of equipment from previously impaired restaurants.
v3.21.1
Other Liabilities
3 Months Ended
Apr. 04, 2021
Other Liabilities Disclosure [Abstract]  
Other Liabilities Other Liabilities
Other current liabilities consist of the following:
April 4, 2021January 3, 2021
Operating lease liabilities$19,922 $19,803 
Accrued workers' compensation and general liability claims3,845 3,619 
Sales and property taxes1,664 2,347 
Accrued occupancy costs(1)
300 330 
Other5,725 3,620 
$31,456 $29,719 
(1)    Accrued occupancy costs primarily consisted of obligations pertaining to closed restaurant locations.

Other non-current liabilities consist of the following:
April 4, 2021January 3, 2021
Accrued workers' compensation and general liability claims$6,791 $6,791 
Accrued payroll taxes(1)
2,936 3,003 
Deferred compensation480 491 
Other1,234 1,245 
$11,441 $11,530 
(1)    Includes employer Social Security payroll tax deferred as a result of the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act")
The following table presents the activity in the closed restaurant reserve, which is included within other current liabilities on the condensed consolidated balance sheets at April 4, 2021 and January 3, 2021.
Three Months Ended April 4, 2021Year Ended January 3, 2021
Balance, beginning of period$218 $752 
Payments, net(12)(259)
Other adjustments(7)(275)
Balance, end of period$199 $218 
v3.21.1
Stockholders' Equity
3 Months Ended
Apr. 04, 2021
Equity [Abstract]  
Stockholders' Equity Stockholders' Equity
Purchase of Treasury Stock
In 2018, the Company's board of directors approved a share repurchase program for up to 1,500,000 shares of the Company's common stock. In 2019, the Company's board of directors approved increases to the share repurchase program of an additional 1,500,000 shares of the Company's common stock for an aggregate approval of 3,000,000 shares of the Company's common stock. Under the share repurchase program, shares may be repurchased from time to time in open market transactions at prevailing market prices, in privately negotiated transactions or by other means in accordance with federal securities laws, including Rule 10b-18 under the Securities Exchange Act of 1934, as amended. The share repurchase program has no time limit and may be modified, suspended, superseded or terminated at any time by the Company's board of directors. The Company repurchased 500,000 shares of common stock valued at approximately $3.7 million during the three months ended March 29, 2020. The shares repurchased in 2020 were purchased on or before March 12, 2020. The repurchased shares are held as treasury stock at cost. The Company's new senior credit facility prohibits share repurchases, and the Company currently does not intend to repurchase additional shares of its common stock for the foreseeable future.
Stock-Based Compensation
During the three months ended April 4, 2021, the Company granted certain employees a total of 153,998 non-vested restricted shares under the Fiesta Restaurant Group, Inc. 2012 Stock Incentive Plan (the "Fiesta Plan"). The shares granted to employees vest and become non-forfeitable over a four-year vesting period. The weighted average fair value at grant date for non-vested shares issued during the three months ended April 4, 2021 was $17.43 per share.
During the three months ended April 4, 2021, the Company also granted certain employees a total of 64,089 restricted stock units under the Fiesta Plan subject to performance conditions. The restricted stock units vest and become non-forfeitable at the end of a three-year vesting period. The number of shares into which these restricted stock units convert is based on the attainment of certain financial performance conditions and ranges from no shares, if the minimum performance condition is not met, to 128,178 shares if the maximum performance condition is met. The weighted average fair value at grant date for the restricted stock units granted in the three months ended April 4, 2021 was $17.43 per share.
Stock-based compensation expense for the three months ended April 4, 2021 and March 29, 2020 was $1.2 million and $0.8 million, respectively. At April 4, 2021, the total unrecognized stock-based compensation expense related to non-vested restricted shares and restricted stock units was approximately $10.4 million. At April 4, 2021, the remaining weighted average vesting period for non-vested restricted shares was 2.4 years and restricted stock units was 2.9 years.
A summary of all non-vested restricted shares and restricted stock units activity for the three months ended April 4, 2021 is as follows:
Non-Vested SharesRestricted Stock Units
SharesWeighted
Average
Grant Date
Fair Value
UnitsWeighted
Average
Grant Date
Fair Value
Outstanding at January 3, 2021991,676 $10.26 150,585 $9.49 
Granted153,998 17.43 64,089 17.43 
Vested and released(107,498)14.24 (2,030)20.75 
Forfeited(7,000)12.73 (148,469)9.32 
Outstanding at April 4, 20211,031,176 $10.90 64,175 $17.45 
The fair value of non-vested restricted shares and restricted stock units granted during the three months ended April 4, 2021, is based on the closing stock price on the date of grant.
v3.21.1
Business Segment Information
3 Months Ended
Apr. 04, 2021
Segment Reporting [Abstract]  
Business Segment Information Business Segment Information
The Company owns, operates and franchises two restaurant brands, Pollo Tropical® and Taco Cabana®, each of which is an operating segment. Pollo Tropical restaurants feature fire-grilled and crispy citrus marinated chicken and other freshly prepared menu items, while Taco Cabana restaurants specialize in Mexican-inspired food with most items made fresh.
Each segment's accounting policies are described in the summary of significant accounting policies in Note 1 to the Company's audited financial statements contained in the Company's Annual Report on Form 10-K for the fiscal year ended January 3, 2021. The primary measure of segment profit or loss used by the chief operating decision maker to assess performance and allocate resources is Adjusted EBITDA, which is defined as earnings attributable to the applicable operating segments before interest expense, income taxes, depreciation and amortization, impairment and other lease charges, goodwill impairment, closed restaurant rent expense, net of sublease income, stock-based compensation expense, other expense (income), net, and certain significant items for each segment that management believes are related to strategic changes and/or are not related to the ongoing operation of the Company's restaurants as set forth in the reconciliation table below.
The "Other" column includes corporate-related items not allocated to reportable segments and consists primarily of corporate-owned property and equipment, lease assets, miscellaneous prepaid costs, capitalized costs associated with the issuance of indebtedness, corporate cash accounts, and a current income tax receivable.
Three Months EndedPollo TropicalTaco CabanaOtherConsolidated
April 4, 2021:
Restaurant sales$87,840 $56,324 $— $144,164 
Franchise revenue375 200 — 575 
Cost of sales27,301 15,785 — 43,086 
Restaurant wages and related expenses(1)
20,339 17,705 — 38,044 
Restaurant rent expense5,877 5,756 — 11,633 
Other restaurant operating expenses13,184 9,112 — 22,296 
Advertising expense2,375 1,613 — 3,988 
General and administrative expense(2)
7,880 6,688 — 14,568 
Adjusted EBITDA12,192 670 — 12,862 
Depreciation and amortization4,938 3,988 — 8,926 
Capital expenditures709 2,031 356 3,096 
March 29, 2020:
Restaurant sales$85,721 $60,365 $— $146,086 
Franchise revenue404 209 — 613 
Cost of sales27,731 18,545 — 46,276 
Restaurant wages and related expenses(1)
21,037 19,458 — 40,495 
Restaurant rent expense5,640 5,699 — 11,339 
Other restaurant operating expenses12,386 9,125 — 21,511 
Advertising expense3,504 2,279 — 5,783 
General and administrative expense(2)
7,488 6,896 — 14,384 
Adjusted EBITDA8,780 (907)— 7,873 
Depreciation and amortization5,278 4,152 — 9,430 
Capital expenditures3,281 2,600 202 6,083 
Identifiable Assets:
April 4, 2021$307,079 $178,302 $75,582 $560,963 
January 3, 2021311,905 182,009 74,829 568,743 
(1) Includes stock-based compensation expense of $42 and $36 for the three months ended April 4, 2021 and March 29, 2020, respectively.
(2) Includes stock-based compensation expense of $1,121 and $776 for the three months ended April 4, 2021 and March 29, 2020, respectively.
A reconciliation of consolidated net loss to Adjusted EBITDA follows:
Three Months EndedPollo TropicalTaco CabanaConsolidated
April 4, 2021:
Net loss$(2,089)
Provision for income taxes1,333 
Income (loss) before taxes$4,935 $(5,691)$(756)
Add:
     Non-general and administrative expense adjustments:
          Depreciation and amortization4,938 3,988 8,926 
          Impairment and other lease charges110 (232)(122)
          Interest expense970 1,053 2,023 
          Closed restaurant rent expense, net of sublease income240 851 1,091 
          Other expense (income), net66 (104)(38)
          Stock-based compensation expense in restaurant wages16 26 42 
                Total non-general and administrative expense adjustments6,340 5,582 11,922 
     General and administrative expense adjustments:
          Stock-based compensation expense601 520 1,121 
          Digital and brand repositioning costs316 259 575 
               Total general and administrative expense adjustments917 779 1,696 
Adjusted EBITDA$12,192 $670 $12,862 
March 29, 2020:
Net loss$(7,317)
Benefit from income taxes(3,005)
Loss before taxes$(1,827)$(8,495)$(10,322)
Add:
     Non-general and administrative expense adjustments:
          Depreciation and amortization5,278 4,152 9,430 
          Impairment and other lease charges3,696 537 4,233 
          Interest expense483 478 961 
          Closed restaurant rent expense, net of sublease income602 1,030 1,632 
          Other expense (income), net107 801 908 
          Stock-based compensation expense in restaurant wages11 25 36 
                Total non-general and administrative expense adjustments10,177 7,023 17,200 
     General and administrative expense adjustments:
          Stock-based compensation expense310 466 776 
          Digital and brand repositioning costs120 99 219 
               Total general and administrative expense adjustments430 565 995 
Adjusted EBITDA$8,780 $(907)$7,873 
v3.21.1
Earnings (Loss) Per Share
3 Months Ended
Apr. 04, 2021
Earnings Per Share [Abstract]  
Earnings (Loss) Per Share Earnings (Loss) Per Share
Basic earnings (loss) per share ("EPS") is computed by dividing net income (loss) applicable to common shares by the weighted average number of common shares outstanding during each period. Non-vested restricted shares contain a non-forfeitable right to receive dividends on a one-to-one per share ratio to common shares and are thus considered participating securities. The impact of the participating securities is included in the computation of basic EPS pursuant to the two-class method. The two-class method of computing EPS is an earnings allocation formula that determines earnings attributable to common shares and participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. EPS is computed by dividing undistributed earnings allocated to common stockholders by the weighted average number of common shares outstanding for the period. In applying the two-class method, undistributed earnings are allocated to both common shares and non-vested restricted shares based on the weighted average shares outstanding during the period.
Diluted EPS reflects the potential dilution that could occur if the restricted stock units were to be converted into common shares. Restricted stock units with performance conditions are only included in the diluted EPS calculation to the extent that performance conditions have been met at the measurement date. Diluted EPS is computed by adjusting the basic weighted average number of common shares by the dilutive effect of the restricted stock units, determined using the treasury stock method.
For the three months ended April 4, 2021 and March 29, 2020, all shares of outstanding restricted stock units were excluded from the computation of diluted EPS because including these restricted stock units would have been antidilutive as a result of the net loss in the three months ended April 4, 2021 and March 29, 2020.
The computation of basic and diluted EPS is as follows:
Three Months Ended
April 4, 2021March 29, 2020
Basic and diluted EPS:
Net loss$(2,089)$(7,317)
Less: income allocated to participating securities— — 
Net loss available to common shareholders$(2,089)$(7,317)
Weighted average common shares—basic25,324,213 25,519,247 
Restricted stock units— — 
Weighted average common shares—diluted25,324,213 25,519,247 
Loss per common share—basic$(0.08)$(0.29)
Loss per common share—diluted(0.08)(0.29)
v3.21.1
Commitments and Contingencies
3 Months Ended
Apr. 04, 2021
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Commitments and Contingencies
Lease Assignments. Taco Cabana assigned one lease to a third party on a property where it no longer operates with a lease term expiring in 2029. Although the assignee is responsible for making the payments required by the lease, the Company remains secondarily liable as a surety with respect to the lease. Pollo Tropical assigned one lease to a third party on a property where it no longer operates with a lease term expiring in 2033. Although the assignee is responsible for making the payments required by the lease, the Company is a guarantor under the lease.
The maximum potential liability for future rental payments that the Company could be required to make under these leases at April 4, 2021 was $2.9 million. The Company could also be obligated to pay property taxes and other lease-related costs. The obligations under these leases will generally continue to decrease over time as the operating leases expire. The Company does not believe it is probable that it will be ultimately responsible for the obligations under these leases.
Legal Matters. The Company is a party to various litigation matters incidental to the conduct of business. The Company does not believe that the outcome of any of these matters will have a material effect on its condensed consolidated financial statements. The Company records accruals for outstanding legal matters when it believes it is probable that a loss will be
incurred and the amount can be reasonably estimated. The Company evaluates, on a quarterly basis, developments in legal matters that could affect the amount of any accrual and developments that would make a loss contingency both probable and reasonably estimable. If a loss contingency is not both probable and estimable, the Company does not establish an accrued liability.
v3.21.1
Income Taxes
3 Months Ended
Apr. 04, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes Tax Law Changes. On March 27, 2020, the CARES Act was signed into law. The CARES Act includes provisions that allow net operating losses in 2018, 2019, and 2020 to be carried back for up to five years and eliminates the 80% taxable income limitation on net operating loss deductions for 2018 through 2020. These changes allowed the Company to record an incremental benefit of $1.8 million during the first quarter of 2020, which represents the impact of carrying net operating losses from 2018 and 2019 back to years with a higher federal corporate income tax rate.
v3.21.1
Related Party Transactions
3 Months Ended
Apr. 04, 2021
Related Party Transactions [Abstract]  
Related Party Transactions Related Party TransactionsThe Company engaged Jefferies LLC ("Jefferies"), an affiliate of two of the members of Fiesta's board of directors, one of whom was not renominated in 2021, and a subsidiary of Jefferies Financial Group, Inc, a holder of more than 20 percent of the total outstanding shares of Fiesta, in the third quarter of 2020 in connection with a refinancing of the Company's former amended senior credit facility and other advisory services, as previously disclosed. The engagement of Jefferies and the corresponding engagement letter was approved by the Audit Committee in accordance with the Company's Related Party Transaction Policy as disclosed in its most recent proxy statement for the Annual Meeting of Stockholders. The Company paid fees of $1.7 million to Jefferies and reimbursed Jefferies for reasonable out of pocket and ancillary expenses of less than $0.1 million when the refinancing was completed in the fourth quarter of 2020. As of April 4, 2021 and January 3, 2021, there were no amounts due to the related party recognized on the condensed consolidated balance sheets.
v3.21.1
Supplemental Cash Flow Information
3 Months Ended
Apr. 04, 2021
Supplemental Cash Flow Elements [Abstract]  
Supplemental Cash Flow Information Supplemental Cash Flow Information
The following table details supplemental cash flow disclosures of non-cash investing and financing activities: 
Three Months Ended
April 4, 2021March 29, 2020
Supplemental cash flow disclosures:
Interest paid on long-term debt$1,723 $941 
Income tax payments (refunds), net(9,157)(1,073)
Supplemental cash flow disclosures of non-cash investing and financing activities:
Accruals for capital expenditures$2,116 $2,161 
Right-of-use assets obtained in exchange for lease liabilities:
Operating lease ROU assets4,493 11,193 
Finance lease ROU assets— 33 
Right-of-use assets and lease liabilities reduced for terminated leases:
Operating lease ROU assets1,864 — 
Operating lease liabilities2,268 — 
Cash and restricted cash reconciliation:
Beginning of period
Cash$50,035 $13,413 
Restricted cash3,584 — 
Cash and restricted cash, beginning of period$53,619 $13,413 
End of period
Cash$59,016 $4,009 
Restricted cash3,837 — 
Cash and restricted cash, end of period$62,853 $4,009 
v3.21.1
Recent Accounting Pronouncements
3 Months Ended
Apr. 04, 2021
Accounting Policies [Abstract]  
Recent Accounting Pronouncements Recent Accounting PronouncementsIn March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) ("ASU No. 2020-04"), which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this update are effective as of March 12, 2020 through December 31, 2022. As of April 4, 2021, the Company's only exposure to LIBOR rates was its new senior credit facility. Upon cessation of the LIBOR, the new senior credit facility will use a benchmark replacement rate. According to ASU No. 2020-04, modifications of contracts within the scope of Topic 470 Debt should be accounted for by prospectively adjusting the effective interest rate. The Company does not expect ASU No. 2020-04 to have a significant impact on its financial statements.
v3.21.1
Basis of Presentation (Policies)
3 Months Ended
Apr. 04, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Consolidation Basis of Consolidation. The unaudited condensed consolidated financial statements presented herein reflect the consolidated financial position, results of operations and cash flows of Fiesta and its wholly-owned subsidiaries. All intercompany transactions have been eliminated in consolidation.
Fiscal Year Fiscal Year. The Company uses a 52–53 week fiscal year ending on the Sunday closest to December 31. The fiscal year ended January 3, 2021 contained 53 weeks. The three months ended April 4, 2021 and March 29, 2020 each contained thirteen weeks. The fiscal year ending January 2, 2022 will contain 52 weeks.
Basis of Presentation
Basis of Presentation. The accompanying unaudited condensed consolidated financial statements for the three months ended April 4, 2021 and March 29, 2020 have been prepared without an audit pursuant to the rules and regulations of the Securities and Exchange Commission and do not include certain information and footnotes required by U.S. Generally Accepted Accounting Principles ("GAAP") for complete financial statements. In the opinion of management, all normal and recurring adjustments considered necessary for a fair presentation of such financial statements have been included. The results of operations for the three months ended April 4, 2021 and March 29, 2020 are not necessarily indicative of the results to be expected for the full year.
These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended January 3, 2021 included in the Company's Annual Report on Form 10-K for the fiscal year ended January 3, 2021. The January 3, 2021 balance sheet data is derived from those audited financial statements.
Guidance Adopted in 2021 and Recent Accounting Pronouncements Guidance Adopted in 2021. In December 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2019-12, Income Taxes (Topic 740) ("ASU No. 2019-12"), which is a part of the Simplification Initiative being undertaken by the FASB to reduce complexity of accounting standards. The amendments in this update simplify the accounting for income taxes by removing certain exceptions, the most notable for the Company being the exception to the general methodology for calculating income taxes in an interim period when the year-to-date loss exceeds the anticipated loss for the full year. The Company adopted this new accounting standard on January 4, 2021, and will apply it prospectively in each period after the date of adoption. The impact of the standard is largely dependent on interim and anticipated profit or loss in a given period, however the Company does not expect ASU No. 2019-12 to have a significant impact on its financial statements.Recent Accounting PronouncementsIn March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) ("ASU No. 2020-04"), which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this update are effective as of March 12, 2020 through December 31, 2022. As of April 4, 2021, the Company's only exposure to LIBOR rates was its new senior credit facility. Upon cessation of the LIBOR, the new senior credit facility will use a benchmark replacement rate. According to ASU No. 2020-04, modifications of contracts within the scope of Topic 470 Debt should be accounted for by prospectively adjusting the effective interest rate. The Company does not expect ASU No. 2020-04 to have a significant impact on its financial statements.
Revenue Recognition Revenue Recognition. Revenue is recognized upon transfer of promised products or services to customers in an amount that reflects the consideration the Company received in exchange for those products or services. Revenues from the Company's owned and operated restaurants are recognized when payment is tendered at the time of sale. Franchise royalty revenues are based on a percentage of gross sales and are recorded as income when earned. Initial franchise fees and area development fees associated with new franchise agreements are not distinct from the continuing rights and services offered by the Company during the term of the related franchise agreements and are recognized as income over the term of the related franchise agreements. A portion of the initial franchise fee is allocated to training services and is recognized as revenue when the Company completes the training services.
Fair Value of Financial Instruments
Fair Value of Financial Instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date under current market conditions. In determining fair value, the accounting standards establish a three-level hierarchy for inputs used in measuring fair value as follows: Level 1 inputs are quoted prices in active markets for identical assets or liabilities; Level 2 inputs are observable for the asset or liability, either directly or indirectly, including quoted prices in active markets for similar assets or liabilities; and Level 3 inputs are unobservable and reflect management's own assumptions. The following methods were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate the fair value:
Current Assets and Liabilities. The carrying values reported on the consolidated balance sheets of cash and restricted cash, accounts receivable and accounts payable approximate fair value because of the short maturity of those financial instruments.
Term Loan Borrowings. The fair value of outstanding term loan borrowings under the Company's new senior credit facility, which is considered Level 2, is based on current LIBOR rates.
Long-Lived Assets Long-Lived Assets. The Company assesses the recoverability of property and equipment and definite-lived intangible assets, including right-of-use ("ROU") lease assets, by determining whether the carrying value of these assets can be recovered over their respective remaining lives through undiscounted future operating cash flows. Impairment is reviewed whenever events or changes in circumstances indicate that the carrying amounts of these assets may not be fully recoverable.
Leases Leases. The Company assesses whether an agreement contains a lease at inception. All leases are reviewed for finance or operating classification once control is obtained. The majority of the Company's leases are operating leases. Operating leases are included within operating lease right-of-use assets, other current liabilities, and operating lease liabilities in the condensed consolidated balance sheets. Finance leases are included within property and equipment, net, current portion of long-term debt, and long-term debt, net of current portion in the condensed consolidated balance sheets. ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The operating lease ROU asset also includes any lease payments made in advance and is reduced by lease incentives received. As most leases do not provide an implicit rate, the Company uses its incremental borrowing rate at commencement date in determining the present value of lease payments. Lease terms include options to extend the lease when it is reasonably certain that the Company will exercise that option. The Company assumes options are reasonably certain to be exercised when such options are required to achieve a minimum 20-year lease term for new restaurant properties and when it incurs significant leasehold improvement costs near the end of a lease term. The Company uses judgment and available data to allocate consideration in a contract when it leases land and a building. The Company also uses judgment in determining its incremental borrowing rate, which includes selecting a yield curve based on a synthetic credit rating determined using a valuation model. Lease expense for lease payments is recognized on a straight-line basis over the lease term unless the related ROU asset has been adjusted for an impairment charge. The Company has real estate lease agreements with lease and non-lease components, which are accounted for as a single lease component.
Use of Estimates Use of Estimates. The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements. Estimates also affect the reported amounts of expenses during the reporting periods. Significant items subject to such estimates and assumptions include: insurance liabilities, evaluation for impairment of goodwill and long-lived assets, lease accounting matters, and deferred income tax assets. Actual results could differ from those estimates. Due to the uncertainty associated with the unprecedented nature of the COVID-19 pandemic and the impact it will have on the Company's operations and future cash flows, it is reasonably possible that the estimates of future cash flows used in impairment assessments will change in the near term and the effect of the change could be material. The Company's current estimates assume that changes related to COVID-19 will continue to have an impact through the first half of 2021.
Impairment of Long-Lived Assets The Company reviews its long-lived assets, principally property and equipment and lease ROU assets, for impairment at the restaurant level. The Company has elected to exclude operating lease payments and liabilities from future cash flows and carrying values, respectively, in its impairment review. In addition to considering management's plans, known regulatory or governmental actions and damage due to acts of God (hurricanes, tornadoes, etc.), the Company considers a triggering event to have occurred related to a specific restaurant if the restaurant's cash flows, exclusive of operating lease payments, for the last twelve months are less than a minimum threshold or if consistent levels of cash flows for the remaining lease period are less than the carrying value of the restaurant's assets. If an indicator of impairment exists for any of its assets, an estimate of undiscounted future cash flows, exclusive of operating lease payments, over the life of the primary asset for each restaurant is compared to that long-lived asset group's carrying value, excluding operating lease liabilities. If the carrying value is greater than the undiscounted cash flow, the Company then determines the fair value of the asset and if an asset is determined to be impaired, the loss is measured by the excess of the carrying amount of the asset over its fair value. There is uncertainty in the projected undiscounted future cash flows used in the Company's impairment review analysis. If actual performance does not achieve the projections, the Company may recognize impairment charges in future periods, and such charges could be material.
Purchase of Treasury Stock
Purchase of Treasury Stock
In 2018, the Company's board of directors approved a share repurchase program for up to 1,500,000 shares of the Company's common stock. In 2019, the Company's board of directors approved increases to the share repurchase program of an additional 1,500,000 shares of the Company's common stock for an aggregate approval of 3,000,000 shares of the Company's common stock. Under the share repurchase program, shares may be repurchased from time to time in open market transactions at prevailing market prices, in privately negotiated transactions or by other means in accordance with federal securities laws, including Rule 10b-18 under the Securities Exchange Act of 1934, as amended. The share repurchase program has no time limit and may be modified, suspended, superseded or terminated at any time by the Company's board of directors. The Company repurchased 500,000 shares of common stock valued at approximately $3.7 million during the three months ended March 29, 2020. The shares repurchased in 2020 were purchased on or before March 12, 2020. The repurchased shares are held as treasury stock at cost. The Company's new senior credit facility prohibits share repurchases, and the Company currently does not intend to repurchase additional shares of its common stock for the foreseeable future.
Segment Reporting The primary measure of segment profit or loss used by the chief operating decision maker to assess performance and allocate resources is Adjusted EBITDA, which is defined as earnings attributable to the applicable operating segments before interest expense, income taxes, depreciation and amortization, impairment and other lease charges, goodwill impairment, closed restaurant rent expense, net of sublease income, stock-based compensation expense, other expense (income), net, and certain significant items for each segment that management believes are related to strategic changes and/or are not related to the ongoing operation of the Company's restaurants
Earnings per Share Basic earnings (loss) per share ("EPS") is computed by dividing net income (loss) applicable to common shares by the weighted average number of common shares outstanding during each period. Non-vested restricted shares contain a non-forfeitable right to receive dividends on a one-to-one per share ratio to common shares and are thus considered participating securities. The impact of the participating securities is included in the computation of basic EPS pursuant to the two-class method. The two-class method of computing EPS is an earnings allocation formula that determines earnings attributable to common shares and participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. EPS is computed by dividing undistributed earnings allocated to common stockholders by the weighted average number of common shares outstanding for the period. In applying the two-class method, undistributed earnings are allocated to both common shares and non-vested restricted shares based on the weighted average shares outstanding during the period.Diluted EPS reflects the potential dilution that could occur if the restricted stock units were to be converted into common shares. Restricted stock units with performance conditions are only included in the diluted EPS calculation to the extent that performance conditions have been met at the measurement date. Diluted EPS is computed by adjusting the basic weighted average number of common shares by the dilutive effect of the restricted stock units, determined using the treasury stock method.
v3.21.1
Prepaid Expenses and Other Current Assets (Tables)
3 Months Ended
Apr. 04, 2021
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]  
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist of the following:
April 4, 2021January 3, 2021
Prepaid contract expenses$4,762 $4,279 
Assets held for sale(1)
1,257 1,257 
Other3,720 2,268 
$9,739 $7,804 
(1)     As of April 4, 2021 and January 3, 2021, one closed Taco Cabana restaurant property owned by the Company was classified as held for sale.
v3.21.1
Impairment of Long-Lived Assets and Other Lease Charges (Tables)
3 Months Ended
Apr. 04, 2021
Property, Plant and Equipment [Abstract]  
Summary of Impairment on Long-Lived Assets by Segment
A summary of impairment of long-lived assets and other lease charges (recoveries) recorded by segment is as follows:
 Three Months Ended
 April 4, 2021March 29, 2020
Pollo Tropical$110 $3,696 
Taco Cabana(232)537 
$(122)$4,233 
Other Lease Charges (Recoveries) by Segment
A summary of impairment of long-lived assets and other lease charges (recoveries) recorded by segment is as follows:
 Three Months Ended
 April 4, 2021March 29, 2020
Pollo Tropical$110 $3,696 
Taco Cabana(232)537 
$(122)$4,233 
v3.21.1
Other Liabilities (Tables)
3 Months Ended
Apr. 04, 2021
Other Liabilities Disclosure [Abstract]  
Other Liabilities, Current
Other current liabilities consist of the following:
April 4, 2021January 3, 2021
Operating lease liabilities$19,922 $19,803 
Accrued workers' compensation and general liability claims3,845 3,619 
Sales and property taxes1,664 2,347 
Accrued occupancy costs(1)
300 330 
Other5,725 3,620 
$31,456 $29,719 
(1)    Accrued occupancy costs primarily consisted of obligations pertaining to closed restaurant locations.
Other Liabilities, Non-current
Other non-current liabilities consist of the following:
April 4, 2021January 3, 2021
Accrued workers' compensation and general liability claims$6,791 $6,791 
Accrued payroll taxes(1)
2,936 3,003 
Deferred compensation480 491 
Other1,234 1,245 
$11,441 $11,530 
(1)    Includes employer Social Security payroll tax deferred as a result of the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act")
Activity in the Closed-Restaurant Reserve
The following table presents the activity in the closed restaurant reserve, which is included within other current liabilities on the condensed consolidated balance sheets at April 4, 2021 and January 3, 2021.
Three Months Ended April 4, 2021Year Ended January 3, 2021
Balance, beginning of period$218 $752 
Payments, net(12)(259)
Other adjustments(7)(275)
Balance, end of period$199 $218 
v3.21.1
Stockholders' Equity (Tables)
3 Months Ended
Apr. 04, 2021
Equity [Abstract]  
Schedule of Non-vested Restricted Shares and Restricted Stock Units Activity
A summary of all non-vested restricted shares and restricted stock units activity for the three months ended April 4, 2021 is as follows:
Non-Vested SharesRestricted Stock Units
SharesWeighted
Average
Grant Date
Fair Value
UnitsWeighted
Average
Grant Date
Fair Value
Outstanding at January 3, 2021991,676 $10.26 150,585 $9.49 
Granted153,998 17.43 64,089 17.43 
Vested and released(107,498)14.24 (2,030)20.75 
Forfeited(7,000)12.73 (148,469)9.32 
Outstanding at April 4, 20211,031,176 $10.90 64,175 $17.45 
The fair value of non-vested restricted shares and restricted stock units granted during the three months ended April 4, 2021, is based on the closing stock price on the date of grant.
v3.21.1
Business Segment Information (Tables)
3 Months Ended
Apr. 04, 2021
Segment Reporting [Abstract]  
Schedule of Segment Reporting Information, by Segment
Three Months EndedPollo TropicalTaco CabanaOtherConsolidated
April 4, 2021:
Restaurant sales$87,840 $56,324 $— $144,164 
Franchise revenue375 200 — 575 
Cost of sales27,301 15,785 — 43,086 
Restaurant wages and related expenses(1)
20,339 17,705 — 38,044 
Restaurant rent expense5,877 5,756 — 11,633 
Other restaurant operating expenses13,184 9,112 — 22,296 
Advertising expense2,375 1,613 — 3,988 
General and administrative expense(2)
7,880 6,688 — 14,568 
Adjusted EBITDA12,192 670 — 12,862 
Depreciation and amortization4,938 3,988 — 8,926 
Capital expenditures709 2,031 356 3,096 
March 29, 2020:
Restaurant sales$85,721 $60,365 $— $146,086 
Franchise revenue404 209 — 613 
Cost of sales27,731 18,545 — 46,276 
Restaurant wages and related expenses(1)
21,037 19,458 — 40,495 
Restaurant rent expense5,640 5,699 — 11,339 
Other restaurant operating expenses12,386 9,125 — 21,511 
Advertising expense3,504 2,279 — 5,783 
General and administrative expense(2)
7,488 6,896 — 14,384 
Adjusted EBITDA8,780 (907)— 7,873 
Depreciation and amortization5,278 4,152 — 9,430 
Capital expenditures3,281 2,600 202 6,083 
Identifiable Assets:
April 4, 2021$307,079 $178,302 $75,582 $560,963 
January 3, 2021311,905 182,009 74,829 568,743 
(1) Includes stock-based compensation expense of $42 and $36 for the three months ended April 4, 2021 and March 29, 2020, respectively.
(2) Includes stock-based compensation expense of $1,121 and $776 for the three months ended April 4, 2021 and March 29, 2020, respectively.
Reconciliation of Consolidated Net Income (Loss) to Adjusted EBITDA
A reconciliation of consolidated net loss to Adjusted EBITDA follows:
Three Months EndedPollo TropicalTaco CabanaConsolidated
April 4, 2021:
Net loss$(2,089)
Provision for income taxes1,333 
Income (loss) before taxes$4,935 $(5,691)$(756)
Add:
     Non-general and administrative expense adjustments:
          Depreciation and amortization4,938 3,988 8,926 
          Impairment and other lease charges110 (232)(122)
          Interest expense970 1,053 2,023 
          Closed restaurant rent expense, net of sublease income240 851 1,091 
          Other expense (income), net66 (104)(38)
          Stock-based compensation expense in restaurant wages16 26 42 
                Total non-general and administrative expense adjustments6,340 5,582 11,922 
     General and administrative expense adjustments:
          Stock-based compensation expense601 520 1,121 
          Digital and brand repositioning costs316 259 575 
               Total general and administrative expense adjustments917 779 1,696 
Adjusted EBITDA$12,192 $670 $12,862 
March 29, 2020:
Net loss$(7,317)
Benefit from income taxes(3,005)
Loss before taxes$(1,827)$(8,495)$(10,322)
Add:
     Non-general and administrative expense adjustments:
          Depreciation and amortization5,278 4,152 9,430 
          Impairment and other lease charges3,696 537 4,233 
          Interest expense483 478 961 
          Closed restaurant rent expense, net of sublease income602 1,030 1,632 
          Other expense (income), net107 801 908 
          Stock-based compensation expense in restaurant wages11 25 36 
                Total non-general and administrative expense adjustments10,177 7,023 17,200 
     General and administrative expense adjustments:
          Stock-based compensation expense310 466 776 
          Digital and brand repositioning costs120 99 219 
               Total general and administrative expense adjustments430 565 995 
Adjusted EBITDA$8,780 $(907)$7,873 
v3.21.1
Earnings (Loss) Per Share (Tables)
3 Months Ended
Apr. 04, 2021
Earnings Per Share [Abstract]  
Computation of Basic and Diluted EPS
The computation of basic and diluted EPS is as follows:
Three Months Ended
April 4, 2021March 29, 2020
Basic and diluted EPS:
Net loss$(2,089)$(7,317)
Less: income allocated to participating securities— — 
Net loss available to common shareholders$(2,089)$(7,317)
Weighted average common shares—basic25,324,213 25,519,247 
Restricted stock units— — 
Weighted average common shares—diluted25,324,213 25,519,247 
Loss per common share—basic$(0.08)$(0.29)
Loss per common share—diluted(0.08)(0.29)
v3.21.1
Supplemental Cash Flow Information (Tables)
3 Months Ended
Apr. 04, 2021
Supplemental Cash Flow Elements [Abstract]  
Supplemental Cash Flow Disclosures of Non-Cash Investing and Financing Activities
The following table details supplemental cash flow disclosures of non-cash investing and financing activities: 
Three Months Ended
April 4, 2021March 29, 2020
Supplemental cash flow disclosures:
Interest paid on long-term debt$1,723 $941 
Income tax payments (refunds), net(9,157)(1,073)
Supplemental cash flow disclosures of non-cash investing and financing activities:
Accruals for capital expenditures$2,116 $2,161 
Right-of-use assets obtained in exchange for lease liabilities:
Operating lease ROU assets4,493 11,193 
Finance lease ROU assets— 33 
Right-of-use assets and lease liabilities reduced for terminated leases:
Operating lease ROU assets1,864 — 
Operating lease liabilities2,268 — 
Cash and restricted cash reconciliation:
Beginning of period
Cash$50,035 $13,413 
Restricted cash3,584 — 
Cash and restricted cash, beginning of period$53,619 $13,413 
End of period
Cash$59,016 $4,009 
Restricted cash3,837 — 
Cash and restricted cash, end of period$62,853 $4,009 
v3.21.1
Basis of Presentation - Narrative (Details)
$ in Thousands
3 Months Ended 12 Months Ended
Apr. 04, 2021
USD ($)
segment
restaurant
Mar. 29, 2020
USD ($)
Jan. 03, 2021
USD ($)
Dec. 29, 2019
USD ($)
Entity Information [Line Items]        
Number of operating segments | segment 2      
Number of restaurants sold in sale-leaseback transactions 2      
Proceeds from sale-leaseback transactions | $ $ 3,083 $ 0    
Gain from sale-leaseback transactions | $ 300      
Other Current Liabilities        
Entity Information [Line Items]        
Out of period adjustment | $ (1,500)      
Deferred Tax Liabilities        
Entity Information [Line Items]        
Out of period adjustment | $ 1,000      
Valuation Allowance        
Entity Information [Line Items]        
Out of period adjustment | $ (900)      
Income Tax Expense        
Entity Information [Line Items]        
Out of period adjustment | $ $ 1,500   $ 100 $ 900
Minimum        
Entity Information [Line Items]        
Lease term 20 years      
Entity Operated Units | Pollo Tropical        
Entity Information [Line Items]        
Number of restaurants 138      
Entity Operated Units | Taco Cabana        
Entity Information [Line Items]        
Number of restaurants 143      
Franchised Units | Pollo Tropical        
Entity Information [Line Items]        
Number of restaurants 29      
Franchised Units | Pollo Tropical | Puerto Rico        
Entity Information [Line Items]        
Number of restaurants 17      
Franchised Units | Pollo Tropical | Panama        
Entity Information [Line Items]        
Number of restaurants 2      
Franchised Units | Pollo Tropical | Guyana        
Entity Information [Line Items]        
Number of restaurants 1      
Franchised Units | Pollo Tropical | Ecuador        
Entity Information [Line Items]