Related Party Transactions

12 Months Ended

Jan. 03, 2023

14. Related Party Transactions

Jacmar Companies

James Dal Pozzo, the former Chairman of the Board and Chief Executive Officer of the Jacmar Companies (“Jacmar”), is a member of our Board of Directors. Jacmar, through its affiliation with Distribution Market Advantage (“DMA”), a consortium of large, regional food distributors located throughout the United States, was our largest distributor of food, beverage, paper products and supplies from 2006 through June 30, 2020, when our contract with DMA expired. Effective June 1, 2020, after conducting an extensive request for proposal process and evaluation, we entered into an agreement with US Foods, replacing DMA. The new agreement expires in July 2023.

Through June 30, 2020, Jacmar serviced our restaurants in California and Nevada, while other DMA distributors serviced our restaurants in all other states. Under the terms of our agreement with DMA, Jacmar was required to sell products to us at the same prices as the other DMA distributors. Jacmar did not provide us with any produce, liquor, wine or beer products, all of which were provided by other third-party vendors and included in “Cost of sales” on the Consolidated Statements of Operations. Effective July 1, 2020, with the expiration of our DMA agreement, Jacmar is no longer considered a related party.

The cost of food, beverage, paper products and supplies provided by Jacmar included within restaurant operating costs consisted of the following (in thousands):


	Fiscal Year
	2022				2021				2020
Cost of sales:
Third-party suppliers	$	349,645	100.0	%	$	288,110	100.0	%	$	167,503	85.6	%
Jacmar		—	—			—	0.0			28,070	14.4
Cost of sales	$	349,645	100.0	%	$	288,110	100.0	%	$	195,573	100.0	%

Occupancy and operating:
Third-party suppliers	$	306,150	100.0	%	$	267,888	100.0	%	$	216,831	98.2	%
Jacmar		—	0.0			—	0.0			4,058	1.8
Occupancy and operating	$	306,150	100.0	%	$	267,888	100.0	%	$	220,889	100.0	%

BJ's Act III, LLC

On January 17, 2022, we entered into a consulting agreement for defined services with Act III Management, LLC, an affiliate of BJ’s Act III, LLC, for $100,000, with a possible additional phase for $45,000. During fiscal 2022, we moved forward with the additional phase, and in October we signed an extension to the agreement for a second additional phase for $50,000, bringing the total agreement to $195,000. All phases were completed and the agreement expired on December 31, 2022.

Equity Method Investment

In fiscal 2022, we contributed internally developed software valued at $5.0 million to a company, which our retired Chief Executive Officer and board of directors member is an investor. We have recorded this non-cash contribution, in exchange for a 20% ownership of the purchasing company, as an investment under “Equity method investment” on our Consolidated

Balance Sheets, and the related gain of $4.9 million under “Loss on disposal and impairment of assets, net” on our Consolidated Statements of Operations.