Document and Entity Information - shares |
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Apr. 01, 2018 |
May 01, 2018 |
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Document And Entity Information [Abstract] | ||
Entity Registrant Name | FIESTA RESTAURANT GROUP, INC. | |
Entity Central Index Key | 0001534992 | |
Current Fiscal Year End Date | --12-30 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Apr. 01, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 27,252,222 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Apr. 01, 2018 |
Dec. 31, 2017 |
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Statement of Financial Position [Abstract] | ||
Common stock, par value (usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 27,253,103 | 27,086,958 |
Common stock, shares outstanding | 26,905,630 | 26,847,458 |
Treasury stock, shares | 18,406 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($) $ in Thousands |
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Apr. 02, 2017 |
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Stock-based compensation | $ 900 | $ 600 |
Restaurant Wages And Related Expenses | ||
Stock-based compensation | 17 | 109 |
General and Administrative Expense | ||
Stock-based compensation | $ 872 | $ 537 |
Basis of Presentation |
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Apr. 01, 2018 | |||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||
Basis of Presentation | Basis of Presentation Business Description. Fiesta Restaurant Group, Inc. ("Fiesta Restaurant Group" or "Fiesta") owns, operates and franchises two fast-casual restaurant brands through its wholly-owned subsidiaries Pollo Operations, Inc. and its subsidiaries, Pollo Franchise, Inc. (collectively “Pollo Tropical”) and Taco Cabana, Inc. and its subsidiaries (collectively “Taco Cabana”). Unless the context otherwise requires, Fiesta and its subsidiaries, Pollo Tropical and Taco Cabana, are collectively referred to as the “Company”. At April 1, 2018, the Company owned and operated 146 Pollo Tropical® restaurants and 166 Taco Cabana® restaurants. The Pollo Tropical restaurants included 137 located in Florida and 9 located in Georgia. All of the Taco Cabana restaurants are located in Texas. At April 1, 2018, the Company franchised a total of 31 Pollo Tropical restaurants and seven Taco Cabana restaurants. The franchised Pollo Tropical restaurants included 17 in Puerto Rico, four in Panama, two in Guyana, one in the Bahamas, one in Venezuela, and six on college campuses and at a hospital in Florida. The franchised Taco Cabana restaurants included five in New Mexico and two on college campuses in Texas. Basis of Consolidation. The unaudited condensed consolidated financial statements presented herein reflect the consolidated financial position, results of operations and cash flows of Fiesta and its wholly-owned subsidiaries. All intercompany transactions have been eliminated in consolidation. Fiscal Year. The Company uses a 52-53 week fiscal year ending on the Sunday closest to December 31. The fiscal year ended December 31, 2017 contained 52 weeks. The three months ended April 1, 2018 and April 2, 2017 each contained thirteen weeks. The fiscal year ending December 30, 2018 will contain 52 weeks. Basis of Presentation. The accompanying unaudited condensed consolidated financial statements for the three months ended April 1, 2018 and April 2, 2017 have been prepared without an audit pursuant to the rules and regulations of the Securities and Exchange Commission and do not include certain information and footnotes required by U.S. Generally Accepted Accounting Principles ("GAAP") for complete financial statements. In the opinion of management, all normal and recurring adjustments considered necessary for a fair presentation of such financial statements have been included. The results of operations for the three months ended April 1, 2018 and April 2, 2017 are not necessarily indicative of the results to be expected for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2017 included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2017. The December 31, 2017 balance sheet data is derived from those audited financial statements. Reclassification. Write-offs of site development costs were reclassified from general and administrative expense to other expense (income), net in the condensed consolidated statement of operations to conform with the current year presentation. Guidance Adopted in 2018. In May 2014, and in subsequent updates, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the guidance in former Topic 605, Revenue Recognition, and requires entities to recognize revenue when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The Company adopted this new accounting standard and all the related amendments as of January 1, 2018 using the modified retrospective method, and recognized a total cumulative effect adjustment to increase retained earnings by less than $0.1 million, which consisted of a $0.3 million increase related to gift card breakage and a $0.3 million decrease related to initial franchise and area development fees, as a result of adopting the standard. The new standard did not impact the Company’s recognition of revenue from Company-owned and operated restaurants or its recognition of sale-based royalties from restaurants operated by franchisees. The comparative period information has not been restated and continues to be reported under the accounting standard in effect for those periods. When compared to the previous accounting policies, the impact of adopting the new standard was immaterial to current and long-term other liabilities and retained earnings at January 1, 2018 and to net income for the three months ended April 1, 2018. The adoption of the new standard had no impact on our consolidated statements of cash flows. Revenue Recognition. Revenue is recognized upon transfer of promised products or services to customers in an amount that reflects the consideration the Company received in exchange for those products or services. Revenues from the Company's owned and operated restaurants are recognized when payment is tendered at the time of sale. Franchise royalty revenues are based on a percent of gross sales and are recorded as income when earned. Initial franchise fees and area development fees associated with new franchise agreements are not distinct from the continuing rights and services offered by the Company during the term of the related franchise agreements and are recognized as income over the term of the related franchise agreements. A portion of the initial franchise fee is allocated to training services and is recognized as revenue when the Company completes the training services. Prior to adopting Topic 606, the Company recognized initial franchise fees as revenue in the period that a franchised location opened for business. See Note 6 - Business Segment Information. Gift cards. The Company sells gift cards to its customers in its restaurants and through select third parties. The Company recognizes revenue from gift cards upon redemption by the customer. For unredeemed gift cards that the Company expects to be entitled to breakage, the Company recognizes expected breakage as revenue in proportion to the pattern of redemption by the customers. The gift cards have no stated expiration dates. Revenues from unredeemed gift cards and gift card liabilities, which are recorded in other current liabilities, are not material to the Company's financial statements. Prior to adopting Topic 606, the Company did not recognize breakage on its gift cards. Fair Value of Financial Instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. In determining fair value, the accounting standards establish a three level hierarchy for inputs used in measuring fair value as follows: Level 1 inputs are quoted prices in active markets for identical assets or liabilities; Level 2 inputs are observable for the asset or liability, either directly or indirectly, including quoted prices in active markets for similar assets or liabilities; and Level 3 inputs are unobservable and reflect our own assumptions. The following methods were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate the fair value:
Long-Lived Assets. The Company assesses the recoverability of property and equipment and definite-lived intangible assets by determining whether the carrying value of these assets can be recovered over their respective remaining lives through undiscounted future operating cash flows. Impairment is reviewed when events or changes in circumstances indicate that the carrying amounts of these assets may not be fully recoverable. See Note 3 - Impairment of Long-Lived Assets. Use of Estimates. The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements. Estimates also affect the reported amounts of expenses during the reporting periods. Significant items subject to such estimates and assumptions include: accrued occupancy costs, insurance liabilities, evaluation for impairment of goodwill and long-lived assets and lease accounting matters. Actual results could differ from those estimates.
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Prepaid Expenses and Other Current Assets |
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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:
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Impairment of Long-Lived Assets and Other Lease Charges |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impairment of Long-Lived Assets and Other Lease Charges | Impairment of Long-Lived Assets and Other Lease Charges The Company reviews its long-lived assets, principally property and equipment, for impairment at the restaurant level. In addition to considering management’s plans, known regulatory or governmental actions and damage due to acts of God (hurricanes, tornadoes, etc.), the Company considers a triggering event to have occurred related to a specific restaurant if the restaurant’s cash flows for the last twelve months are less than a minimum threshold or if consistent levels of cash flows for the remaining lease period are less than the carrying value of the restaurant’s assets. If an indicator of impairment exists for any of its assets, an estimate of undiscounted future cash flows over the life of the primary asset for each restaurant is compared to that long-lived asset’s carrying value. If the carrying value is greater than the undiscounted cash flow, the Company then determines the fair value of the asset and if an asset is determined to be impaired, the loss is measured by the excess of the carrying amount of the asset over its fair value. There is uncertainty in the projected undiscounted future cash flows used in the Company's impairment review analysis. If actual performance does not achieve the projections, the Company may recognize impairment charges in future periods, and such charges could be material. For closed restaurant locations, the Company reviews the future minimum lease payments and related ancillary costs from the date of the restaurant closure to the end of the remaining lease term and records a lease charge for the lease liabilities to be incurred, net of any estimated sublease recoveries. There is uncertainty in the estimates of future lease costs and sublease recoveries. Actual costs and sublease recoveries could vary significantly from the estimated amounts and result in additional lease charges or recoveries, and such amounts could be material. A summary of impairment on long-lived assets and other lease charges (recoveries) recorded by segment is as follows:
Impairment and other lease charges for the three months ended April 1, 2018 primarily consist of a $(0.6) million and a $(0.1) million net benefit related to lease charge recoveries for Pollo Tropical and Taco Cabana, respectively, due primarily to a lease termination, a lease assignment, subleases and other adjustments to estimates of future lease costs. In conjunction with the Strategic Renewal Plan to drive long-term shareholder value creation, the Company recognized impairment charges of $32.0 million in the first quarter of 2017 primarily related to 30 Pollo Tropical restaurants that were subsequently closed during the second quarter of 2017, seven of which were initially impaired in 2016. In the first quarter of 2017, the Company also recognized impairment charges of $0.3 million with respect to three underperforming Taco Cabana restaurants. The Company determined the fair value of restaurant equipment, for those restaurants reviewed for impairment, based on current economic conditions, the Company’s history of using these assets in the operation of its business and the Company's expectation of how a market participant would value the assets. In addition, for those restaurants reviewed for impairment where the Company owns the land and building, the Company utilized third-party information such as a broker quoted value to determine the fair value of the property. These fair value asset measurements rely on significant unobservable inputs and are considered Level 3 in the fair value hierarchy. The Level 3 assets measured at fair value associated with impairment charges recorded during the three months ended April 2, 2017 totaled $15.2 million, which primarily consisted of leasehold improvements related to Pollo Tropical restaurants that will be rebranded as Taco Cabana restaurants and the estimated fair value of owned properties.
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Other Liabilities |
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Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Liabilities | Other Liabilities Other liabilities, current, consist of the following:
Other liabilities, long-term, consist of the following:
Accrued occupancy costs include obligations pertaining to closed restaurant locations and accruals to expense operating lease rental payments on a straight-line basis over the lease term. The following table presents the activity in the closed-restaurant reserve, of which $3.2 million and $5.3 million are included in long-term accrued occupancy costs at April 1, 2018 and December 31, 2017, respectively, with the remainder in current accrued occupancy costs.
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Stockholder's Equity |
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Stockholder's Equity | Stockholders' Equity Purchase of treasury stock On February 26, 2018, the Company announced that its board of directors approved a share repurchase program for up to 1.5 million shares of the Company's common stock. Under the share repurchase program, shares may be repurchased from time to time in open market transactions at prevailing market prices, in privately negotiated transactions or by other means in accordance with federal securities laws, including Rule 10b-18 under the Securities Exchange Act of 1934, as amended. The share repurchase program has no time limit and may be modified, suspended, superseded or terminated at any time by the Company's board of directors. The Company repurchased 18,406 shares of its common stock under the program in open market transactions during the three months ended April 1, 2018 for $0.3 million. The repurchased shares are held as treasury stock at cost. Stock-based Compensation During the three months ended April 1, 2018, the Company granted certain employees a total of 153,769 non-vested restricted shares under the Fiesta Restaurant Group, Inc. 2012 Stock Incentive Plan (the "Fiesta Plan"). The shares granted generally vest and become non-forfeitable over a four year vesting period. The weighted average fair value at grant date for these non-vested shares issued during the three months ended April 1, 2018 was $18.70. In addition, the Company granted a non-employee food and beverage consultant 8,022 non-vested restricted shares under the Plan. These shares vest and become non-forfeitable over a three year vesting period. During the three months ended April 2, 2017, the Company granted certain employees and a non-employee director a total of 187,342 non-vested restricted shares under the Fiesta Plan. The shares granted generally vest and become non-forfeitable over a four year vesting period, or for the grant to the non-employee director, over a five year vesting period. The weighted average fair value at grant date for these non-vested shares issued during the three months ended April 2, 2017 was $20.75. During the three months ended April 1, 2018, the Company granted certain executives a total of 112,169 restricted stock units under the Fiesta Plan, which vest in three tranches over a three year vesting period subject to continued service and attainment of specified share prices of the Company's common stock during 20 consecutive trading days at any point during each year. Each tranche vests by the end of a one year period if the specified target stock price condition for that year is met. If the specified target stock price condition for any tranche is not met for the year, the cumulative unearned units will be rolled over to subsequent tranches on a pro rata basis. The number of shares into which these restricted stock units convert ranges from no shares, if the service and market performance conditions are not met, to 112,169 shares, if the service and market performance conditions are met in the third year. The weighted average fair value at grant date for these restricted stock units was 6.96. During the three months ended April 2, 2017, the Company granted certain employees a total of 11,745 restricted stock units under the Fiesta Plan. The restricted stock units granted during the three months ended April 2, 2017 vest and become non-forfeitable at the end of a four year vesting period. The weighted average fair value at grant date for these restricted stock units issued to employees during the three months ended April 2, 2017 was $20.75. Stock-based compensation expense for the three months ended April 1, 2018 and April 2, 2017 was $0.9 million and $0.6 million, respectively. At April 1, 2018, the total unrecognized stock-based compensation expense related to non-vested restricted shares and restricted stock units was approximately $7.6 million. At April 1, 2018, the remaining weighted average vesting period for non-vested restricted shares was 3.1 years and restricted stock units was 1.8 years. A summary of all employee (and non-employee director) non-vested restricted shares and restricted stock units activity for the three months ended April 1, 2018 is as follows:
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Business Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Segment Information | Business Segment Information The Company owns, operates and franchises two restaurant brands, Pollo Tropical® and Taco Cabana®, each of which is an operating segment. Pollo Tropical restaurants feature citrus marinated chicken and other freshly prepared tropical inspired menu items, while Taco Cabana restaurants specialize in Mexican inspired food. Each segment's accounting policies are described in the summary of significant accounting policies in Note 1 to the Company's audited financial statements contained in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2017. The primary measure of segment profit or loss used by the chief operating decision maker to assess performance and allocate resources is Adjusted EBITDA, which is defined as earnings attributable to the applicable operating segments before interest expense, income taxes, depreciation and amortization, impairment and other lease charges, stock-compensation expense, other expense (income), net, and certain significant items for each segment that management believes are related to strategic changes and/or are not related to the ongoing operation of the Company's restaurants as set forth in the reconciliation table below. The “Other” column includes corporate-related items not allocated to reportable segments and consists primarily of corporate-owned property and equipment, miscellaneous prepaid costs, capitalized costs associated with the issuance of indebtedness, corporate cash accounts and a current income tax receivable.
(1) Includes stock-based compensation expense of $17 and $109 for the three months ended April 1, 2018 and April 2, 2017, respectively. (2) Includes stock-based compensation expense of $872 and $537 for the three months ended April 1, 2018 and April 2, 2017, respectively. A reconciliation of consolidated net income (loss) to Adjusted EBITDA follows:
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Net Income (Loss) per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income (Loss) per Share | Net Income (Loss) per Share The Company computes basic net income (loss) per share by dividing net income (loss) applicable to common shares by the weighted average number of common shares outstanding during each period. Our non-vested restricted shares contain a non-forfeitable right to receive dividends on a one-to-one per share ratio to common shares and are thus considered participating securities. The impact of the participating securities is included in the computation of basic net income per share pursuant to the two-class method. The two-class method of computing earnings per share is an earnings allocation formula that determines earnings attributable to common shares and participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. Net income per common share is computed by dividing undistributed earnings allocated to common stockholders by the weighted average number of common shares outstanding for the period. In applying the two-class method, undistributed earnings are allocated to both common shares and non-vested restricted shares based on the weighted average shares outstanding during the period. Diluted earnings per share reflects the potential dilution that could occur if our restricted stock units were to be converted into common shares. Restricted stock units with performance conditions are only included in the diluted earnings per share calculation to the extent that performance conditions have been met at the measurement date. We compute diluted earnings per share by adjusting the basic weighted average number of common shares by the dilutive effect of the restricted stock units, determined using the treasury stock method. Weighted average outstanding restricted stock units totaling 1,061 shares were not included in the computation of diluted earnings per share for the three months ended April 1, 2018 because including them would have been antidilutive. For the three months ended April 2, 2017, all restricted stock units outstanding were excluded from the computation of diluted earnings per share because including them would have been antidilutive as a result of the net loss in this period. The computation of basic and diluted net income (loss) per share is as follows:
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Commitments and Contingencies |
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Apr. 01, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Lease Assignments. Taco Cabana has assigned three leases to various parties on properties where it no longer operates restaurants with lease terms expiring on various dates through 2029. The assignees are responsible for making the payments required by the leases. The Company is a guarantor under one of the leases, and it remains secondarily liable as a surety with respect to two of the leases. Pollo Tropical assigned one lease to a third party on a property where it no longer operates with a lease term expiring in 2033. The assignee is responsible for making the payments required by the lease. The Company is a guarantor under the lease. The maximum potential liability for future rental payments that the Company could be required to make under these leases at April 1, 2018 was $3.9 million. The Company could also be obligated to pay property taxes and other lease related costs. The obligations under these leases will generally continue to decrease over time as the operating leases expire. The Company does not believe it is probable that it will be ultimately responsible for the obligations under these leases. Legal Matters. On November 24, 2015, Pollo Tropical received a legal demand letter alleging that assistant managers were misclassified as exempt from overtime wages under the Fair Labor Standards Act. On September 30, 2016, prior to any suit being filed, Pollo Tropical reached a settlement with seven named individuals and a proposed collective action class that will allow current and former assistant managers to receive notice and opt-in to the settlement. Pollo Tropical denies any liability or unlawful conduct. The settlement was approved by a Florida state judge on December 27, 2017 which resulted in dismissal with prejudice for the named individuals and all individuals that opt-in to the settlement. The deadline to respond to a notice and opt-in to the settlement was May 1, 2018. After that date, the class administrator will calculate the total amount due by Pollo Tropical. The Company has reserved $0.8 million to cover the estimated costs related to the settlement and does not expect the total settlement costs to exceed this amount. The Company is also a party to various other litigation matters incidental to the conduct of business. The Company does not believe that the outcome of any of these matters will have a material effect on its consolidated financial statements. |
Income Taxes |
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Apr. 01, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Tax Law Changes. On December 22, 2017, the Tax Cuts and Jobs Act (the "Act"), which includes a provision that reduces the federal corporate income tax rate from 35.0% to 21.0% effective January 1, 2018, was signed into law. In accordance with generally accepted accounting principles, the enactment of this new tax legislation required the Company to revalue its net deferred income tax assets at the new corporate statutory rate of 21.0% as of the enactment date, which resulted in a one-time adjustment to its deferred income taxes of $9.0 million with a corresponding increase to the provision for income taxes as a discrete item during the fourth quarter of 2017. On December 22, 2017, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 118 (SAB 118), which provides guidance on accounting for the impact of the Act, that, in effect, allows entities to use a methodology similar to the measurement period in a business combination. Pursuant to the disclosure provisions of SAB 118, the Company continues to evaluate the impact of the Act on various matters. The actual impact of the Act on the Company may differ from the provisional amounts recognized based on its reasonable estimates due to, among other things, changes in assumptions made in the Company's interpretation of the Act, guidance related to application of the Act that may be issued in the future, and actions that the Company may take as a result of the expected impact of the Act. The Company will adjust the amounts recognized related to the Act if more information becomes available. The Company did not make any measurement period adjustments related to the Act in the first quarter of 2018 and expects to complete its analysis with the filing of its 2017 income tax returns in 2018.
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Recent Accounting Pronouncements |
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Apr. 01, 2018 | |
Accounting Policies [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which requires lessee recognition of lease assets and lease liabilities on the balance sheet and disclosure of key information about leasing arrangements. For the Company, the new standard is effective for interim and annual periods beginning after December 15, 2018, and early adoption is permitted. A modified retrospective approach is required with an option to use certain practical expedients. The new guidance is required to be applied at the beginning of the earliest comparative period presented. The Company is currently evaluating the impact on its financial statements. Although the impact is not currently estimable, the Company expects to recognize lease assets and lease liabilities for most of the leases it currently accounts for as operating leases. In addition, the Company will be required to record an initial adjustment to retained earnings associated with previously deferred gains on sale-leaseback transactions, and for any future sale-leaseback transactions, the gain, adjusted for any off-market terms, will be recorded immediately. Currently the Company amortizes sale-leaseback gains over the lease term. The Company is continuing its assessment and may identify other impacts. In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment, which eliminates the requirement to calculate the implied fair value of goodwill if the fair value of a reporting unit is less than the carrying amount of the reporting unit. Instead, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss will be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. The guidance will be effective for interim and annual periods beginning after December 15, 2019. Early adoption is permitted for any goodwill impairment tests after January 1, 2017. This standard may have an impact on the Company's financial statements if goodwill impairment is recognized in future periods.
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Basis of Presentation (Policies) |
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Apr. 01, 2018 | |||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||
Basis of Consolidation | Basis of Consolidation. The unaudited condensed consolidated financial statements presented herein reflect the consolidated financial position, results of operations and cash flows of Fiesta and its wholly-owned subsidiaries. All intercompany transactions have been eliminated in consolidation. | ||||
Fiscal Year | Fiscal Year. The Company uses a 52-53 week fiscal year ending on the Sunday closest to December 31. The fiscal year ended December 31, 2017 contained 52 weeks. The three months ended April 1, 2018 and April 2, 2017 each contained thirteen weeks. The fiscal year ending December 30, 2018 will contain 52 weeks. | ||||
Basis of Presentation | Basis of Presentation. The accompanying unaudited condensed consolidated financial statements for the three months ended April 1, 2018 and April 2, 2017 have been prepared without an audit pursuant to the rules and regulations of the Securities and Exchange Commission and do not include certain information and footnotes required by U.S. Generally Accepted Accounting Principles ("GAAP") for complete financial statements. In the opinion of management, all normal and recurring adjustments considered necessary for a fair presentation of such financial statements have been included. The results of operations for the three months ended April 1, 2018 and April 2, 2017 are not necessarily indicative of the results to be expected for the full year.These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2017 included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2017. The December 31, 2017 balance sheet data is derived from those audited financial statements. | ||||
Reclassification | Reclassification. Write-offs of site development costs were reclassified from general and administrative expense to other expense (income), net in the condensed consolidated statement of operations to conform with the current year presentation. | ||||
Revenue Recognition | Revenue Recognition. Revenue is recognized upon transfer of promised products or services to customers in an amount that reflects the consideration the Company received in exchange for those products or services. Revenues from the Company's owned and operated restaurants are recognized when payment is tendered at the time of sale. Franchise royalty revenues are based on a percent of gross sales and are recorded as income when earned. Initial franchise fees and area development fees associated with new franchise agreements are not distinct from the continuing rights and services offered by the Company during the term of the related franchise agreements and are recognized as income over the term of the related franchise agreements. A portion of the initial franchise fee is allocated to training services and is recognized as revenue when the Company completes the training services. Prior to adopting Topic 606, the Company recognized initial franchise fees as revenue in the period that a franchised location opened for business. See Note 6 - Business Segment Information. Gift cards. The Company sells gift cards to its customers in its restaurants and through select third parties. The Company recognizes revenue from gift cards upon redemption by the customer. For unredeemed gift cards that the Company expects to be entitled to breakage, the Company recognizes expected breakage as revenue in proportion to the pattern of redemption by the customers. The gift cards have no stated expiration dates. Revenues from unredeemed gift cards and gift card liabilities, which are recorded in other current liabilities, are not material to the Company's financial statements. Prior to adopting Topic 606, the Company did not recognize breakage on its gift cards.
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Fair Value of Financial Instruments | Fair Value of Financial Instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. In determining fair value, the accounting standards establish a three level hierarchy for inputs used in measuring fair value as follows: Level 1 inputs are quoted prices in active markets for identical assets or liabilities; Level 2 inputs are observable for the asset or liability, either directly or indirectly, including quoted prices in active markets for similar assets or liabilities; and Level 3 inputs are unobservable and reflect our own assumptions. The following methods were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate the fair value:
• Revolving Credit Borrowings. The fair value of outstanding revolving credit borrowings under the Company's senior credit facility, which is considered Level 2, is based on current LIBOR rates.
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Long-Lived Assets | Long-Lived Assets. The Company assesses the recoverability of property and equipment and definite-lived intangible assets by determining whether the carrying value of these assets can be recovered over their respective remaining lives through undiscounted future operating cash flows. Impairment is reviewed when events or changes in circumstances indicate that the carrying amounts of these assets may not be fully recoverable. See Note 3 - Impairment of Long-Lived Assets. | ||||
Use of Estimates | Use of Estimates. The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements. Estimates also affect the reported amounts of expenses during the reporting periods. Significant items subject to such estimates and assumptions include: accrued occupancy costs, insurance liabilities, evaluation for impairment of goodwill and long-lived assets and lease accounting matters. Actual results could differ from those estimates. | ||||
Impairment of Long-Lived Assets | The Company reviews its long-lived assets, principally property and equipment, for impairment at the restaurant level. In addition to considering management’s plans, known regulatory or governmental actions and damage due to acts of God (hurricanes, tornadoes, etc.), the Company considers a triggering event to have occurred related to a specific restaurant if the restaurant’s cash flows for the last twelve months are less than a minimum threshold or if consistent levels of cash flows for the remaining lease period are less than the carrying value of the restaurant’s assets. If an indicator of impairment exists for any of its assets, an estimate of undiscounted future cash flows over the life of the primary asset for each restaurant is compared to that long-lived asset’s carrying value. If the carrying value is greater than the undiscounted cash flow, the Company then determines the fair value of the asset and if an asset is determined to be impaired, the loss is measured by the excess of the carrying amount of the asset over its fair value. There is uncertainty in the projected undiscounted future cash flows used in the Company's impairment review analysis. If actual performance does not achieve the projections, the Company may recognize impairment charges in future periods, and such charges could be material. For closed restaurant locations, the Company reviews the future minimum lease payments and related ancillary costs from the date of the restaurant closure to the end of the remaining lease term and records a lease charge for the lease liabilities to be incurred, net of any estimated sublease recoveries. There is uncertainty in the estimates of future lease costs and sublease recoveries. Actual costs and sublease recoveries could vary significantly from the estimated amounts and result in additional lease charges or recoveries, and such amounts could be material. | ||||
Purchase of Treasury Stock | Purchase of treasury stock |
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Segment Reporting | Each segment's accounting policies are described in the summary of significant accounting policies in Note 1 to the Company's audited financial statements contained in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2017. The primary measure of segment profit or loss used by the chief operating decision maker to assess performance and allocate resources is Adjusted EBITDA, which is defined as earnings attributable to the applicable operating segments before interest expense, income taxes, depreciation and amortization, impairment and other lease charges, stock-compensation expense, other expense (income), net, and certain significant items for each segment that management believes are related to strategic changes and/or are not related to the ongoing operation of the Company's restaurants | ||||
Net Income per Share | The Company computes basic net income (loss) per share by dividing net income (loss) applicable to common shares by the weighted average number of common shares outstanding during each period. Our non-vested restricted shares contain a non-forfeitable right to receive dividends on a one-to-one per share ratio to common shares and are thus considered participating securities. The impact of the participating securities is included in the computation of basic net income per share pursuant to the two-class method. The two-class method of computing earnings per share is an earnings allocation formula that determines earnings attributable to common shares and participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. Net income per common share is computed by dividing undistributed earnings allocated to common stockholders by the weighted average number of common shares outstanding for the period. In applying the two-class method, undistributed earnings are allocated to both common shares and non-vested restricted shares based on the weighted average shares outstanding during the period.Diluted earnings per share reflects the potential dilution that could occur if our restricted stock units were to be converted into common shares. Restricted stock units with performance conditions are only included in the diluted earnings per share calculation to the extent that performance conditions have been met at the measurement date. We compute diluted earnings per share by adjusting the basic weighted average number of common shares by the dilutive effect of the restricted stock units, determined using the treasury stock method. | ||||
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which requires lessee recognition of lease assets and lease liabilities on the balance sheet and disclosure of key information about leasing arrangements. For the Company, the new standard is effective for interim and annual periods beginning after December 15, 2018, and early adoption is permitted. A modified retrospective approach is required with an option to use certain practical expedients. The new guidance is required to be applied at the beginning of the earliest comparative period presented. The Company is currently evaluating the impact on its financial statements. Although the impact is not currently estimable, the Company expects to recognize lease assets and lease liabilities for most of the leases it currently accounts for as operating leases. In addition, the Company will be required to record an initial adjustment to retained earnings associated with previously deferred gains on sale-leaseback transactions, and for any future sale-leaseback transactions, the gain, adjusted for any off-market terms, will be recorded immediately. Currently the Company amortizes sale-leaseback gains over the lease term. The Company is continuing its assessment and may identify other impacts. In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment, which eliminates the requirement to calculate the implied fair value of goodwill if the fair value of a reporting unit is less than the carrying amount of the reporting unit. Instead, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss will be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. The guidance will be effective for interim and annual periods beginning after December 15, 2019. Early adoption is permitted for any goodwill impairment tests after January 1, 2017. This standard may have an impact on the Company's financial statements if goodwill impairment is recognized in future periods.
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Prepaid Expenses and Other Current Assets (Tables) |
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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:
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Impairment of Long-Lived Assets and Other Lease Charges (Tables) |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Impairment on Long-Lived Assets and Other Lease Charges by Segment | A summary of impairment on long-lived assets and other lease charges (recoveries) recorded by segment is as follows:
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Other Liabilities (Tables) |
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Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Liabilities, Current | Other liabilities, current, consist of the following:
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Other Liabilities, Long-term | Other liabilities, long-term, consist of the following:
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Activity in the Closed-Store Reserve | The following table presents the activity in the closed-restaurant reserve, of which $3.2 million and $5.3 million are included in long-term accrued occupancy costs at April 1, 2018 and December 31, 2017, respectively, with the remainder in current accrued occupancy costs.
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Stockholder's Equity (Tables) |
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Schedule of Non-vested Restricted Shares Activity | A summary of all employee (and non-employee director) non-vested restricted shares and restricted stock units activity for the three months ended April 1, 2018 is as follows:
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Schedule of Restricted Stock Units Activity | A summary of all employee (and non-employee director) non-vested restricted shares and restricted stock units activity for the three months ended April 1, 2018 is as follows:
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Business Segment Information (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment |
(1) Includes stock-based compensation expense of $17 and $109 for the three months ended April 1, 2018 and April 2, 2017, respectively. (2) Includes stock-based compensation expense of $872 and $537 for the three months ended April 1, 2018 and April 2, 2017, respectively.
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Reconciliation of Consolidated Net Income (Loss) to Adjusted EBITDA | A reconciliation of consolidated net income (loss) to Adjusted EBITDA follows:
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Net Income (Loss) per Share (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Apr. 01, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share | The computation of basic and diluted net income (loss) per share is as follows:
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Basis of Presentation - Fair Value Disclosures (Details) - USD ($) $ in Millions |
Apr. 01, 2018 |
Dec. 31, 2017 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Carrying value of senior credit facility | $ 80.0 | $ 75.0 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of senior credit facility | $ 79.7 | $ 75.0 |
Prepaid Expenses and Other Current Assets (Details) $ in Thousands |
1 Months Ended | 3 Months Ended | ||
---|---|---|---|---|
Jan. 31, 2018
USD ($)
restaurant
|
Apr. 01, 2018
USD ($)
|
Apr. 02, 2017
USD ($)
|
Dec. 31, 2017
USD ($)
|
|
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||||
Prepaid contract expenses | $ 3,851 | $ 3,681 | ||
Assets held for sale | 1,005 | 2,705 | ||
Other | 3,745 | 3,719 | ||
Prepaid expenses and other current assets | 8,601 | $ 10,105 | ||
Property, Plant and Equipment [Line Items] | ||||
Proceeds from sale of restaurant property | $ 1,800 | $ 1,813 | $ 0 | |
Pollo Tropical | ||||
Property, Plant and Equipment [Line Items] | ||||
Number restaurant property sold | restaurant | 1 |
Impairment of Long-Lived Assets and Other Lease Charges - Summary by Segment (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Apr. 01, 2018 |
Apr. 02, 2017 |
|
Impairment and Other Lease Charges [Line Items] | ||
Impairment and other lease charges | $ (662) | $ 32,414 |
Pollo Tropical | ||
Impairment and Other Lease Charges [Line Items] | ||
Impairment and other lease charges | (541) | 32,071 |
Taco Cabana | ||
Impairment and Other Lease Charges [Line Items] | ||
Impairment and other lease charges | $ (121) | $ 343 |
Impairment of Long-Lived Assets and Other Lease Charges - Narrative (Details) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Apr. 01, 2018
USD ($)
|
Apr. 02, 2017
USD ($)
restaurant
|
Jan. 01, 2017
restaurant
|
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Level 3 | |||
Impairment and Other Lease Charges [Line Items] | |||
Assets measured at fair value associated with impairment charges | $ 15.2 | ||
Pollo Tropical | |||
Impairment and Other Lease Charges [Line Items] | |||
Net benefit related to lease charge recoveries | $ (0.6) | ||
Asset impairment charges | $ 32.0 | ||
Pollo Tropical | Restaurants, Impaired | |||
Impairment and Other Lease Charges [Line Items] | |||
Number of restaurants | restaurant | 30 | 7 | |
Taco Cabana | |||
Impairment and Other Lease Charges [Line Items] | |||
Net benefit related to lease charge recoveries | $ (0.1) | ||
Asset impairment charges | $ 0.3 | ||
Taco Cabana | Restaurants, Impaired | |||
Impairment and Other Lease Charges [Line Items] | |||
Number of restaurants | restaurant | 3 |
Other Liabilities - Current (Details) - USD ($) $ in Thousands |
Apr. 01, 2018 |
Dec. 31, 2017 |
---|---|---|
Other Liabilities Disclosure [Abstract] | ||
Accrued workers' compensation and general liability claims | $ 5,425 | $ 5,083 |
Sales and property taxes | 1,617 | 2,279 |
Accrued occupancy costs | 6,896 | 7,813 |
Other | 5,681 | 6,642 |
Other liabilities, current | $ 19,619 | $ 21,817 |
Other Liabilities - Long-term (Details) - USD ($) $ in Thousands |
Apr. 01, 2018 |
Dec. 31, 2017 |
---|---|---|
Other Liabilities Disclosure [Abstract] | ||
Accrued occupancy costs | $ 19,218 | $ 20,985 |
Deferred compensation | 794 | 1,029 |
Accrued workers’ compensation and general liability claims | 6,102 | 6,102 |
Other | 4,000 | 3,946 |
Other liabilities, long-term | $ 30,114 | $ 32,062 |
Other Liabilities - Narrative (Details) - Closed Stores - USD ($) $ in Thousands |
Apr. 01, 2018 |
Dec. 31, 2017 |
Jan. 01, 2017 |
---|---|---|---|
Restructuring Cost and Reserve [Line Items] | |||
Closed-store reserve | $ 10,007 | $ 12,994 | $ 4,912 |
Other Liabilities, Long-Term | |||
Restructuring Cost and Reserve [Line Items] | |||
Closed-store reserve | $ 3,200 | $ 5,300 |
Other Liabilities - Restructuring Reserve (Details) - Closed Stores - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended |
---|---|---|
Apr. 01, 2018 |
Dec. 31, 2017 |
|
Activity in the Closed-Store Reserve | ||
Balance, beginning of period | $ 12,994 | $ 4,912 |
Provisions for restaurant closures | 0 | 8,767 |
Additional lease charges (recoveries), net | (720) | (1,301) |
Payments, net | (2,456) | (5,528) |
Other adjustments | 189 | 6,144 |
Balance, end of period | $ 10,007 | $ 12,994 |
Stockholder's Equity - Purchase of Treasury Stock (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Apr. 01, 2018 |
Feb. 26, 2018 |
|
Equity [Abstract] | ||
Number of shares authorized to be repurchased | 1,500,000 | |
Treasury stock purchases (in shares) | 18,406 | |
Treasury stock purchases | $ 349 |
Net Income (Loss) per Share - Narrative (Details) |
3 Months Ended |
---|---|
Apr. 01, 2018
shares
| |
Earnings Per Share [Abstract] | |
Nonvested restricted shares right to receive dividends, per share ratio to common shares | 1 |
Restricted Stock Units | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Weighted average antidilutive securities excluded from computation of diluted earnings per share (in shares) | 1,061 |
Net Income (Loss) per Share - Computation of Basic and Diluted Net Income per Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
---|---|---|
Apr. 01, 2018 |
Apr. 02, 2017 |
|
Earnings Per Share [Abstract] | ||
Net income (loss) | $ 4,184 | $ (15,060) |
Less: income allocated to participating securities | 40 | 0 |
Net income (loss) available to common shareholders | $ 4,144 | $ (15,060) |
Weighted average common shares, basic | 26,874,016 | 26,774,103 |
Restricted stock units (in shares) | 5,815 | 0 |
Weighted average common shares, diluted | 26,879,831 | 26,774,103 |
Basic net income (loss) per share (usd per share) | $ 0.15 | $ (0.56) |
Diluted net income (loss) per share (usd per share) | $ 0.15 | $ (0.56) |
Commitments and Contingencies - Lease Assignments (Details) $ in Millions |
Apr. 01, 2018
USD ($)
restaurant
|
---|---|
Loss Contingencies [Line Items] | |
Maximum potential liability for future rental payments | $ | $ 3.9 |
Taco Cabana | |
Loss Contingencies [Line Items] | |
Number of leases assigned | 3 |
Pollo Tropical | |
Loss Contingencies [Line Items] | |
Number of leases assigned | 1 |
Commitments and Contingencies - Legal Matters (Details) - Fair Labor Standards Act Legal Demand Letter $ in Millions |
Sep. 30, 2016
USD ($)
plaintiff
|
---|---|
Loss Contingencies [Line Items] | |
Number of named individuals related to settlement | plaintiff | 7 |
Recorded charge to cover estimated costs related to settlement | $ | $ 0.8 |
Commitments and Contingencies - Contingency Related to Insurance Recoveries (Details) - Expected Insurance Proceeds $ in Millions |
Dec. 31, 2017
USD ($)
|
---|---|
Pollo Tropical | |
Loss Contingencies [Line Items] | |
Recorded expected insurance proceeds | $ 0.7 |
Taco Cabana | |
Loss Contingencies [Line Items] | |
Recorded expected insurance proceeds | $ 0.4 |
Income Taxes (Details) $ in Millions |
3 Months Ended |
---|---|
Dec. 31, 2017
USD ($)
| |
Income Tax Disclosure [Abstract] | |
One-time adjustment to deferred income taxes due to change in enacted rate | $ 9.0 |