UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
⌧QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2019
or
◻TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-21625
FAMOUS DAVE’S of AMERICA, INC.
(Exact Name of Registrant as Specified in its Charter)
Minnesota | 41-1782300 | |
State or Other Jurisdiction of Incorporation or Organization | I.R.S. Employer Identification No. | |
12701 Whitewater Drive, Suite 290 Minnetonka, MN | 55343 | |
Address of Principal Executive Offices | Zip Code |
Registrant’s Telephone Number, Including Area Code (952) 294-1300
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common Stock, $0.01 par value | DAVE | The Nasdaq Global Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ◻ | Accelerated filer ◻ |
Non-accelerated filer ◻ | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ◻ No ⌧
As of May 9, 2019,
FAMOUS DAVE’S OF AMERICA, INC.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2019 AND DECEMBER 30, 2018
(in thousands, except per share data)
(Unaudited)
ASSETS | ||||||
Current assets: |
| March 31, 2019 |
| December 30, 2018 | ||
Cash and cash equivalents | $ | | $ | | ||
Restricted cash |
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Accounts receivable, net of allowance for doubtful accounts of $ |
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Inventories |
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Prepaid income taxes and income taxes receivable | | | ||||
Prepaid expenses and other current assets |
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Total current assets |
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Property, equipment and leasehold improvements, net |
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Other assets: |
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Operating lease right-of-use assets | | — | ||||
Goodwill | | | ||||
Intangible assets, net |
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Deferred tax asset, net |
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Other assets |
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$ | | $ | | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable | $ | | $ | | ||
Current portion of lease liabilities | | — | ||||
Current portion of long-term debt and financing lease obligations | | | ||||
Accrued compensation and benefits |
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Other current liabilities |
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Total current liabilities |
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Long-term liabilities: |
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Lease liabilities, less current portion | | — | ||||
Long-term debt, less current portion |
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Other liabilities |
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Total liabilities |
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Shareholders’ equity: |
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Common stock, $ |
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Additional paid-in capital | | | ||||
Retained earnings |
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Total shareholders’ equity |
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$ | | $ | |
See accompanying notes to consolidated financial statements.
- 3 -
CONSOLIDATED STATEMENTS OF OPERATIONS
MARCH 31, 2019 AND APRIL 1, 2018
(in thousands, except per share data)
(Unaudited)
Three Months Ended | |||||||
March 31, 2019 |
| April 1, 2018 | |||||
Revenue: |
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Restaurant sales, net | $ | | $ | | |||
Franchise royalty and fee revenue |
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Franchisee national advertising fund contributions |
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Licensing and other revenue |
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Total revenue |
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Costs and expenses: |
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Food and beverage costs |
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Labor and benefits costs |
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Operating expenses |
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Depreciation and amortization expenses |
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General and administrative expenses |
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National advertising fund expenses | | | |||||
Asset impairment, estimated lease termination charges and other closing costs, net |
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| ( | |||
Net loss on disposal of property |
| ( |
| ( | |||
Total costs and expenses |
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Income from operations |
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Other income (expense): |
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Interest expense |
| ( |
| ( | |||
Interest income |
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Total other expense |
| ( |
| ( | |||
Income before income taxes |
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Income tax expense |
| ( |
| ( | |||
Net income | $ | | $ | | |||
Basic net income per share | $ | | $ | | |||
Diluted net income per share | $ | | $ | | |||
Weighted average shares outstanding - basic |
| |
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Weighted average shares outstanding - diluted |
| |
| |
See accompanying notes to consolidated financial statements.
- 4 -
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
MARCH 31, 2019
(in thousands)
(Unaudited)
Additional |
| |||||||||||||
Common Stock | Paid-in | Retained |
| |||||||||||
| Shares |
| Amount |
| Capital |
| Earnings |
| Total | |||||
Balance - December 30, 2018 |
| | $ | | $ | | $ | | $ | | ||||
Cumulative effect of change in accounting principle | — | — | — | ( | ( | |||||||||
Stock-based compensation |
| |
| |
| |
| — |
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Net income |
| — |
| — |
| — |
| |
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Balance - March 31, 2019 |
| | $ | | $ | | $ | | $ | |
See accompanying notes to consolidated financial statements
- 5 -
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
MARCH 31, 2019 AND APRIL 1, 2018
(in thousands)
(Unaudited)
Three Months Ended | ||||||
| March 31, 2019 |
| April 1, 2018 | |||
Cash flows from operating activities: |
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Net income | $ | | $ | | ||
Adjustments to reconcile net income to cash flows provided by operations: |
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Depreciation and amortization |
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Stock-based compensation |
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Net gain on disposal of property |
| ( |
| ( | ||
Asset impairment and estimated lease termination charges (gain) | | ( | ||||
Bad debts expense (recovery) | | ( | ||||
Other non-cash items | | ( | ||||
Changes in operating assets and liabilities: |
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Accounts receivable, net |
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Other assets | | | ||||
Accounts payable |
| ( |
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Accrued and other liabilities |
| ( |
| ( | ||
Cash flows provided by operating activities |
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Cash flows from investing activities: |
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Proceeds from the sale of assets | | | ||||
Purchases of property, equipment and leasehold improvements |
| ( |
| ( | ||
Payments for acquired restaurants | ( | — | ||||
Advances on notes receivable |
| ( |
| ( | ||
Cash flows used for investing activities |
| ( |
| ( | ||
Cash flows from financing activities: |
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Payments for debt issuance costs |
| ( |
| — | ||
Payments on long-term debt and financing lease obligations |
| ( |
| ( | ||
Proceeds from exercise of stock options |
| — |
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Cash flows (used for) provided by financing activities |
| ( |
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Decrease in cash, cash equivalents and restricted cash |
| ( |
| ( | ||
Cash, cash equivalents and restricted cash, beginning of period |
| |
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Cash, cash equivalents and restricted cash, end of period | $ | | $ | |
Supplemental Disclosures | ||||||
Cash paid for interest | $ | | $ | | ||
Non-cash investing and financing activities: | ||||||
Increase (decrease) in accrued property and equipment purchases | ( | — |
See accompanying notes to consolidated financial statements.
- 6 -
(1) Basis of Presentation
Basis of Presentation
Famous Dave’s of America, Inc. (“Famous Dave’s” or the “Company”) was incorporated in Minnesota on March 14, 1994. The Company develops, owns, operates and franchises restaurants under the name "Famous Dave’s." As of March 31, 2019, there were
These consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and Securities and Exchange Commission (“SEC”) Rules and Regulations. These unaudited consolidated financial statements represent the consolidated financial statements of the Company and its subsidiaries as of March 31, 2019 and December 30, 2018, and for the three months ended March 31, 2019 and April 1, 2018. The information furnished in these consolidated financial statements includes normal recurring adjustments and reflects all adjustments, which are, in the opinion of management, necessary for a fair presentation. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2018 as filed with the SEC on March 4, 2019.
Due to the seasonality of the Company’s business, revenue and operating results for the three months ended March 31, 2019 are not necessarily indicative of the results to be expected for the full fiscal year or any other interim period.
Reclassifications
Certain prior period amounts have been reclassified to conform to the current period’s presentation. These reclassifications did not have an impact on the reported net income for any of the periods presented.
Income Taxes
The Company maintains a federal deferred tax asset (“DTA”) in the amount of $5.8 million for each of the periods ended March 31, 2019 and December 30, 2018. The Company evaluates the DTA on a quarterly basis to determine whether current facts and circumstances indicate that the DTA may not be fully realizable. As of March 31, 2019, the Company concluded that the DTA is fully realizable and that a valuation allowance was not considered necessary; however, the Company will continue to evaluate the asset on a quarterly basis until the DTA has been fully utilized.
The following table presents the Company’s effective tax rates for the periods presented:
Three Months Ended | |||||||
| March 31, 2019 |
| April 1, 2018 | ||||
Effective tax rate | | % | | % |
The Company provides for income taxes based on its estimate of federal and state income tax liabilities. These estimates include, among other items, effective rates for state and local income taxes, allowable tax credits for items such as taxes paid on reported tip income, estimates related to depreciation and amortization expense allowable for tax purposes, and the tax deductibility of certain other items. The Company’s estimates are based on the information available at the time that the Company prepares the income tax provision. The Company generally files its annual income tax returns several months after its fiscal year-end. Income tax returns are subject to audit by federal, state, and local governments, generally years after the tax returns are filed. These returns could be subject to material adjustments or differing interpretations of the tax laws.
Restricted cash and marketing fund
The Company has a system-wide marketing development fund, to which Company-owned restaurants, in addition to the majority of franchise-operated restaurants, contribute a percentage of net sales for use in public relations and marketing development efforts. The assets held by this fund are considered to be restricted. Accordingly, the Company reflects the cash related to this fund within restricted cash and reflects the liability within accounts payable on the Company’s consolidated balance sheets. The Company had approximately $
- 7 -
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In conjunction with the Company’s credit agreements, the Company has deposited amounts for undrawn letters of credit in cash collateral accounts. The Company had approximately $
Concentrations of Credit Risk
As of March 31, 2019, the Company had outstanding balances from
Recently Adopted Accounting Pronouncements
In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation (Topic 718), which expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. Under the updated standard, an entity is required to apply the requirements of Topic 718 to nonemployee awards, except for specific guidance on inputs to an option-pricing model and the attribution of cost. The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in the grantor’s own operations by issuing share-based payment awards. The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling or goods or services as part of a contract accounted for under Topic 606, Revenue from Contracts with Customers. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018 and interim periods within that fiscal year. Early adoption was permitted, but no earlier than an entity’s adoption date of Topic 606. The Company adopted this new standard as of the effective date. Adoption of the new standard did not have a material impact on the Company’s consolidated financial statements.
Beginning in fiscal 2019, the Company adopted Topic 842, Leases, which had a material impact on the Company’s consolidated financial statements. See Note 7 – Leases.
(2) Intangible Assets, net
The Company has intangible assets that consist of liquor licenses, lease interest assets and reacquired franchise rights, net. The liquor licenses are indefinite-lived assets and are not subject to amortization. The lease interest assets are amortized to occupancy costs on a straight-line basis over the remaining term of each respective lease. Reacquired franchise rights are amortized to depreciation and amortization expense on a straight-line basis over the remaining life of the reacquired franchise agreement.
A reconciliation of the Company’s intangible assets as of March 31, 2019 and December 30, 2018, respectively, are presented in the table below:
(in thousands) | March 31, 2019 |
| December 30, 2018 | |||||
Lease interest assets, gross carrying amount | $ | | $ | | ||||
Lease interest assets, accumulated amortization | ( | ( | ||||||
Lease interest assets, net carrying amount | | | ||||||
Reacquired franchise rights, net | | | ||||||
Liquor licenses | | | ||||||
Intangible assets, net | $ | | $ | |
The following table provides the projected future amortization of reacquired franchise rights, net and lease interest assets for the next five years, as of March 31, 2019:
(in thousands) | Reacquired Franchise Rights, net | Lease Interest Assets | |||
Fiscal 2019 | $ | | $ | | |
Fiscal 2020 | | | |||
Fiscal 2021 | | | |||
Fiscal 2022 | | | |||
Fiscal 2023 | | | |||
Thereafter | | | |||
$ | | $ | |
- 8 -
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(3) Long-Term Debt and Financing Lease Obligations
Long-term debt
Long-term debt consisted of the following at:
| ||||||
(in thousands) |
| March 31, 2019 | December 30, 2018 | |||
Real Estate Loan | $ | |
| $ | | |
Less: deferred financing costs |
| ( |
|
| ( | |
Less: current portion of long-term debt |
| ( |
|
| ( | |
Long-term debt, less current portion | $ | |
| $ | |
The weighted-average interest rate of long-term debt outstanding as of March 31, 2019 and December 30, 2018 was
The Company is subject to various financial and non-financial covenants on its long-term debt, including a debt-service coverage ratio. As of March 31, 2019, the Company was compliant with all of its covenants.
Financing Lease Obligation
The Company repaid its financing lease obligation during the three months ended March 31, 2019.
(4) Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following at:
(in thousands) |
| March 31, 2019 |
| December 30, 2018 | ||
Prepaid expenses and deferred costs |
| $ | |
| $ | |
Prepaid insurance | | | ||||
| $ | |
| $ | |
(5) Other Current Liabilities
Other current liabilities consisted of the following at:
(in thousands) |
| March 31, 2019 | December 30, 2018 | |||
Gift cards payable | $ | | $ | | ||
Accrued expenses |
| |
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Asset retirement obligations and lease reserves | | | ||||
Sales tax payable |
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State income tax payable | | | ||||
Deferred franchise fees |
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Accrued property and equipment purchases |
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Other current liabilities | $ | | $ | |
- 9 -
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(6) Other Liabilities
Other liabilities consisted of the following at:
(in thousands) |
| March 31, 2019 | December 30, 2018 | |||
Deferred rent | $ | — | $ | | ||
Deferred franchise fees | | | ||||
Miscellaneous other liabilities |
| |
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Asset retirement obligations |
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Accrual for uncertain tax position | | | ||||
Long-term lease reserve |
| — |
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Long-term deferred compensation |
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Other liabilities | $ | | $ | |
(7) Leases
The Company leases the property for its corporate headquarters, most of its Company-owned stores, and certain office and restaurant equipment. The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of use (“ROU”) assets, current portion of operating lease liabilities, and operating lease liabilities in its consolidated balance sheets. The Company had
ROU assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term at the commencement date. Because most of the Company's leases do not provide an implicit rate of return, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Operating lease ROU assets also exclude lease incentives received. Where the Company is the lessee, at initial adoption, the Company has elected to account for non-lease components associated with its leases (e.g., common area maintenance costs) and lease components separately for substantially all of its asset classes. Subsequent to adoption, the Company will combine lease and non-lease components.
Lease terms for Company-owned stores generally range from
Lease expense for lease payments is recognized on a straight-line basis over the lease term. The components of lease expense for the period presented is as follows:
Three Months Ended | |||
(in thousands) | March 31, 2019 | ||
Operating lease cost | $ | | |
Short-term lease cost | | ||
Variable lease cost | | ||
Sublease income | ( | ||
Total lease cost | $ | |
- 10 -
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Supplemental cash flow information related to leases for the period presented is as follows:
Three Months Ended | ||||
(in thousands) | March 31, 2019 | |||
Cash paid for amounts included in the measurement of lease liabilities: | ||||
Operating cash flows from operating leases | $ | | ||
Right-of-use assets obtained in exchange for new operating lease liabilities | | |||
Weighted-average remaining lease term of operating leases (in years) | ||||
Weighted-average discount rate of operating leases | % |
The maturities of the Company’s lease liabilities as of March 31, 2019 is as follows (in thousands):
2019 | $ | | ||
2020 | | |||
2021 | | |||
2022 | | |||
2023 | | |||
Thereafter | | |||
Total future minimum payments | | |||
Less imputed interest | ( | |||
Total lease liability | $ | |
As of December 31, 2018, the Company had
(8) Revenue Recognition
The Company recognizes franchise fee revenue on a straight-line basis over the life of the related franchise agreements and any exercised renewal periods. Cash payments are due upon the opening of a new restaurant or upon the execution of a renewal of the related franchise agreement. The Company’s performance obligation with respect to franchise fee revenues consists of a license to utilize the Company’s brand for a specified period of time, which is satisfied equally over the life of each franchise agreement.
Area development fees are deferred until a new restaurant is opened pursuant to the area development agreement, at which time revenue is recognized on a straight-line basis over the life of the franchise agreement. Cash payments for area development agreements are typically due when an area development agreement has been executed. Gift card breakage revenue is recognized proportionately as gift cards are redeemed utilizing an estimated breakage rate based on the Company’s historical experience. Gift card breakage revenue is reported within the licensing and other revenue line item of the consolidated statements of operations.
The Company defers revenue associated with the estimated selling price of reward points, which we refer to as Bones, earned pursuant to the Company’s loyalty program and establishes a corresponding liability. This deferral is based on the estimated value of the product for which the reward is expected to be redeemed, net of estimated unredeemed Bones. When a Guest redeems an earned reward, the Company recognizes revenue for the redeemed product and reduces the deferred revenue. Deferred revenue associated with the Company’s loyalty program was not material as of March 31, 2019 and December 30, 2018.
The Company’s revenue is generally disaggregated within the consolidated statements of operations. Gift card breakage revenue was not material to the Company’s consolidated financial statements. The Company recognized revenue related to gift cards of approximately $
- 11 -
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table illustrates estimated revenues expected to be recognized in the future related to unsatisfied performance obligations as of March 31, 2019:
(in thousands) |
|
| |
Fiscal Year |
|
| |
2019 | $ | | |
2020 |
| | |
2021 |
| | |
2022 |
| | |
2023 |
| | |
Thereafter |
| | |
Total | $ | |
Contract liabilities consist of deferred revenue resulting from franchise fees paid by franchisees. We classify these liabilities within other current liabilities and other liabilities within our consolidated balance sheets based on the expected timing of revenue recognition associated with these liabilities. The following table reflects the change in contract liabilities between December 30, 2018 and March 31, 2019:
(in thousands) | |||
Balance, December 30, 2018 | $ | | |
Revenue recognized | ( | ||
Balance, March 31, 2019 | $ | |
(
(9) Stock-based Compensation
Effective May 5, 2015, the Company adopted the 2015 Equity Incentive Plan (the “2015 Plan”), pursuant to which the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance stock units and other stock and cash awards to eligible participants. The Company also maintains an Amended and Restated 2005 Stock Incentive Plan (the “2005 Plan”). Together, the 2015 Plan and 2005 Plan are referred to herein as the “Plans.” The 2005 Plan prohibits the granting of incentives after May 12, 2015, the tenth anniversary of the date the 2005 Plan was approved by the Company’s shareholders. Nonetheless, the 2005 Plan will remain in effect until all outstanding incentives granted thereunder have either been satisfied or terminated. As of March 31, 2019, there were
Stock options granted to employees and directors generally vest over two to
The Company utilizes the Black-Scholes option pricing model when determining the compensation cost associated with stock options issued using the following significant assumptions:
● | Stock price – Published trading market values of the Company’s common stock as of the date of grant. |
● | Exercise price – The stated exercise price of the stock option. |
● | Expected life – The simplified method as outlined in ASC 718. |
● | Expected dividend – The rate of dividends that the Company expects to pay over the term of the stock option. |
● | Volatility – Actual volatility over the most recent historical period equivalent to the expected life of the option. |
● | Risk-free interest rate – The daily United States Treasury yield curve rate. |
- 12 -
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company recognized stock-based compensation expense in its consolidated statements of operations for the three months ended March 31, 2019 and April 1, 2018, respectively, as follows:
Three Months Ended | |||||||
(in thousands) |
| March 31, 2019 |
| April 1, 2018 | |||
Stock options | $ | | $ | | |||
Restricted stock |
| |
| — | |||
$ | | $ | |
Information regarding the Company’s stock options is summarized below:
|
| Weighted | |||||
Average | |||||||
Remaining | |||||||
Number of | Weighted Average | Contractual | |||||
(number of options in thousands) |
| Options |
| Exercise Price |
| Life in Years | |
Options outstanding at December 30, 2018 |
| | $ | | |||
Granted |
| |
| | |||
Forfeited or expired | ( | | |||||
Options outstanding at March 31, 2019 |
| | $ | |
Information regarding the Company’s restricted stock is summarized below:
|
| Weighted | |||||
Average | |||||||
Remaining | |||||||
Number of | Weighted Average | Contractual | |||||
(number of awards in thousands) |
| Awards |
| Award Date Fair Value |
| Life in Years | |
Unvested at December 30, 2018 |
| — | $ | — | |||
Granted |
| |
| | |||
Vested | ( | | |||||
Unvested at March 31, 2019 |
| | $ | |
Three Months Ended | |||||||
| March 31, 2019 | April 1, 2018 | |||||
Weighted-average fair value of options granted during the period | $ | | $ | | |||
Expected life (in years) |
|
| |||||
Expected dividend | $ | | $ | | |||
Expected stock volatility |
| | % |
| | % | |
Risk-free interest rate |
| | % |
| | % |
(10) Asset Impairment, Estimated Lease Termination and Other Closing Costs
The following is a summary of asset impairment, estimated lease termination and other closing costs for the three months ended March 31, 2019 and April 1, 2018. These costs are included in asset impairment, estimated lease termination and other closing costs in the consolidated statements of operations.
Three Months Ended | ||||||
(dollars in thousands) |
| March 31, 2019 |
| April 1, 2018 | ||
Asset impairments, net | $ | | $ | | ||
Lease termination charges (income) and related costs | | ( | ||||
Restaurant closure expenses | | | ||||
Asset impairment, estimated lease termination charges and other closing costs | $ | | $ | ( |
- 13 -
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(11) Fair Value Measurements
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. The fair value measurement framework establishes a three-tier hierarchy. The three levels, in order of priority, are as follows:
Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date. Level 1 measurements are determined by observable inputs which include data sources and market prices available and visible outside of the entity.
Level 2: Observable inputs other than quoted prices included within Level 1 for the asset or liability, either directly or indirectly.
Level 3: Inputs that are used to estimate the fair value of the asset or liability. Level 3 measurements are determined by unobservable inputs, which include data and analysis developed within the entity to assess the fair value.
For assets and liabilities falling within Level 3 of the fair value hierarchy, a change in the input assumptions used could result in a change in the estimated fair value of the asset or liability. Transfers in and out of levels will be based on the Company’s judgment of the availability of unadjusted quoted prices in active markets, other observable inputs, and non-observable inputs.
The carrying amounts of cash and cash equivalents reported in the consolidated balance sheets approximates fair value based on current interest rates and short-term maturities. The carrying amount of accounts receivable approximates fair value due to the short-term nature of accounts receivable. The Company believes that the carrying amount of long-term debt approximates fair value due to the minimal difference between market interest rates and the fixed interest rate on a portion of the Company’s long-term debt, as well as that there has been no significant change in the credit risk or credit markets since origination.
The Company had
(12) Restaurant Acquisition
On March 4, 2019, the Company completed the acquisition of the assets and operations of
The acquisition was accounted for using the purchase method of accounting in accordance with ASC 805 “Business Combinations” and, accordingly, the consolidated statements of operations include the results of these operations from the date of acquisition. The assets acquired and the liabilities assumed were recorded at estimated fair values based on information available.
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FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table presents the provisional allocation of assets acquired and liabilities assumed during the three months ended March 31, 2019:
(in thousands) | |||
Assets acquired: | |||
Cash and cash equivalents | $ | | |
Inventory | | ||
Property, plant, equipment and leasehold improvements, net | | ||
Identifiable intangible assets, net | | ||
Total identifiable assets acquired | | ||
Liabilities assumed: | |||
Gift card liability | ( | ||
Net assets acquired | | ||
Goodwill | | ||
Total consideration transferred | $ | |
The Company expects goodwill to be deductible for tax purposes, subject to amortization.
Unaudited pro forma results of operations for the three month periods ended March 31, 2019 and April 1, 2018, as if the Company had acquired majority ownership of all operations on January 1, 2018 is as follows. The pro forma results include estimates and assumptions which management believes are reasonable. However, pro forma results are not necessarily indicative of the results that would have occurred if the business combination had been in effect on the dates indicated, or which may result in the future.
Three Months Ended | |||||||
March 31, 2019 | April 1, 2018 | ||||||
(in thousands) | |||||||
Pro forma revenues | $ | | $ | | |||
Pro forma net income (loss) | $ | | $ | | |||
Basic pro forma net income (loss) per share | $ | | $ | | |||
Diluted pro forma net income (loss) per share | $ | | $ | |
(13) Variable Interest Entities
A variable interest holder is considered to be the primary beneficiary of a variable interest entity (“VIE”) if it has the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and has the obligation to absorb losses of, or the right to receive benefits from, the entity that could potentially be significant to the VIE. Once an entity is determined to be a VIE, the primary beneficiary is required to consolidate the entity. The Company has an installment agreement with one of its franchisees as the result of refranchising its Lincoln, Nebraska restaurant. This franchisee is a VIE; however, the owners of the franchise operations are the primary beneficiaries of the entities, not the Company. Therefore, the franchise operations are not required to be consolidated in the Company’s consolidated financial statements.
On November 1, 2017, the Company sold its Frederick, Maryland restaurant. Pursuant to the terms of the Frederick Agreement, the Company remained the primary obligor of the lease. As of March 31, 2019, the amount of future lease payments for which the Company would be liable in the event of a default are approximately $
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FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
On July 18, 2018, the Company and Clark Championship Products LLC (“Clark”), an entity owned by Travis Clark, became members of Mercury BBQ LLC (“Mercury”) for the purposes of building out and operating the inaugural Clark Crew BBQ restaurant in Oklahoma City, Oklahoma (the “Restaurant”). Clark will own
Because the Company will provide more than half of the subordinated financial support of Mercury and controls Mercury via its representation on the board of managers, the Company has concluded that Mercury is a VIE, of which the Company is the primary beneficiary and must consolidate Mercury. There has been no material revenue or expenses related to Mercury during the three months ended March 31, 2019.
(14) Litigation
In the normal course of business, the Company is involved in a number of litigation matters that are incidental to the operation of the business. These matters generally include, among other things, matters with regard to employment and general business-related issues. The Company currently believes that the resolution of any of these pending matters will not have a material adverse effect on its financial position or liquidity, but an adverse decision in more than one of the matters could be material to its consolidated results of operations.
(15) Related Party Transactions
Anand D. Gala is a franchisee of the Company and currently serves as a director of the Company. Mr. Gala is the Founder, President and Chief Executive Officer of Gala Holdings International, a diversified holding company that conducts consulting, restaurant development and management operations.
Charles Davidson is a franchisee of the Company and is the beneficial owner of approximately
The following table outlines amounts received from related parties during the three months ended March 31, 2019, and April 1, 2018:
Three Months Ended | |||||
(in thousands) | March 31, 2019 |
| April 1, 2018 | ||
Revenues and NAF contributions - Anand Gala | $ | | $ | | |
Revenues and NAF contributions - Charles Davidson | | |
The following table outlines accounts receivable from related parties as of March 31, 2019 and December 30, 2018:
(in thousands) | March 31, 2019 |
| December 30, 2018 | |||
Accounts receivable, net - Anand Gala | $ | | $ | | ||
Accounts receivable, net - Charles Davidson | | |
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FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(16) Subsequent Events
The Company has evaluated for the occurrence of subsequent events through the issuance date of the Company’s consolidated financial statements. No other recognized or non-recognized subsequent events occurred that require recognition or disclosure in the consolidated financial statements, except as noted below.
On April 29, 2019, Famous Dave’s Ribs, Inc. (“Ribs”), a wholly-owned subsidiary of the Company completed the acquisition of
Also on April 29, 2019, Ribs completed the acquisition of
On May 13, 2019, Ribs completed the acquisition of two Famous Dave’s restaurants in Wisconsin (along with the Grandville Restaurant, the “Team R n’ B Wisconsin Purchased Restaurants”). The seller of the Team R n’ B Wisconsin Purchased Restaurants was Team R n’ B Wisconsin, LLC, which was a franchisee of the Company. Pursuant to the asset purchase agreement by and between Ribs and Team R n’ B Wisconsin, LLC, signed March 12, 2019, the contract purchase price for the Team R n’ B Wisconsin Purchased Restaurants was approximately $69,000, exclusive of closing costs, plus an amount equal to the book value of the restaurant inventory, plus the assumption of the gift card liability associated with the Team R n’ B Wisconsin Purchased Restaurants.
The Company funded the purchase price with cash on hand. As of the date that these financial statements were available to be issued, the Company was still reviewing the financial information of the acquired restaurants. As such, it was impractical to include in these consolidated financial statements the pro forma effect of the acquisitions.
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FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
Item 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Overview
Famous Dave’s of America, Inc. was incorporated as a Minnesota corporation in March 1994 and opened its first restaurant in Minneapolis in June 1995. The following table summarizes the changes in the number of Company-owned and franchise-operated restaurants for the periods presented:
Three Months Ended | Three Months Ended | |||||
March 31, 2019 | April 1, 2018 | |||||
Company-owned restaurants: | ||||||
Beginning of period | 17 | 16 | ||||
New | — | — | ||||
Repurchased by the Company | 4 | — | ||||
Closed | — | — | ||||
End of period | 21 | 16 | ||||
% of system | 15 | % | 11 | % | ||
Franchise-operated restaurants: | ||||||
Beginning of period | 127 | 134 | ||||
New | 1 | 2 | ||||
(Repurchased) by the Company | (4) | — | ||||
Closed | (7) | — | ||||
End of period | 117 | 136 | ||||
% of system | 85 | % | 89 | % | ||
System end of period total | 138 | 152 |
During the three months ended March 31, 2019, we opened one franchise-operated restaurants in Dubai, United Arab Emirates. We also repurchased four stores in the Colorado market as detailed in Note 12 “Restaurant Acquisition.”
Fiscal Year
Our fiscal year ends on the Sunday closest to December 31st. Our fiscal year is generally 52 weeks; however, it periodically consists of 53 weeks. The fiscal years ending December 29, 2019 (fiscal 2019) and December 30, 2018 (fiscal 2018) are both 52 week fiscal years.
Revenue
Our revenue consists of restaurant sales, franchise-related revenue, and licensing and other revenue. Our franchise-related revenue is comprised of three separate and distinct earnings processes: area development fees, initial franchise fees, and continuing royalty payments. Currently, our domestic area development fee consists of a one-time, non-refundable payment of approximately $10,000 per restaurant in consideration for the services we perform in preparation of executing each area development agreement. For our foreign area development agreements, the one time, non-refundable payment is negotiated on a per development basis and is determined based on the costs incurred to arrange for the sale of that development area. Currently, our initial, non-refundable, franchise fee for domestic growth is $45,000 per restaurant. Finally, franchisees are also required to pay us a monthly royalty equal to a percentage of their net sales. Licensing revenue includes royalties from a retail line of business, including sauces, rubs, marinades and seasonings. Other revenue includes opening assistance and training we provide to our franchise partners.
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FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
Costs and Expenses
Restaurant costs and expenses include food and beverage costs; labor and benefits costs; operating expenses, which include occupancy costs, repair and maintenance costs, supplies, advertising and promotion. Certain of these costs and expenses are variable and will increase or decrease with sales volume. The primary fixed costs are restaurant management, operations, and catering support salaries and occupancy costs.
General and Administrative Expenses
General and administrative expenses include all corporate and administrative functions to support future growth. Salaries and benefits, legal fees, accounting fees, professional consulting fees, travel, rent and general insurance are major items in this category. We also provide franchise services for which the revenue is included in other revenue and the expenses are included in general and administrative expenses.
Results of Operations – the three months ended March 31, 2019 compared to the three months ended April 1, 2018.
The following discussion and analysis of financial condition and results of operations should be read in conjunction with the accompanying unaudited consolidated financial statements and notes, and the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended December 30, 2018.
The following table presents items in our unaudited consolidated statements of operations as a percentage of net restaurant sales or total revenue, as indicated, for the periods presented:
Three Months Ended | |||||
March 31, 2019 |
| April 1, 2018 |
|
| |
Food and beverage costs(1) | 32.6 | % | 31.2 | % |
|
Labor and benefits costs(1) | 38.4 | % | 36.7 | % |
|
Operating expenses(1) | 30.7 | % | 32.6 | % |
|
Restaurant level operating margin(1)(3) | (1.7) | % | (0.5) | % |
|
Depreciation and amortization expenses(2) | 1.9 | % | 3.1 | % |
|
General and administrative expenses(2) | 17.7 | % | 14.6 | % |
|
Net income(2) | 0.8 | % | 11.4 | % |
|
(1) | As a percentage of restaurant sales, net |
(2) | As a percentage of total revenue |
(3) | Restaurant level margins are equal to restaurant sales, net, less restaurant level food and beverage costs, labor and benefit costs, and operating expenses. |
Same Store Net Sales
It is our policy to include in our same store net sales base, restaurants that are open year round and have been open at least 24 months. Reacquired and refranchised restaurants are removed from the same store net sales base until the new ownership has been in place for at least 12 months. Same store net sales for Company-owned restaurants for the three months ended March 31, 2019 increased 1.3% compared to the three months ended April 1, 2018. As of March 31, 2019 and April 1, 2018, there were 15 and 16 restaurants in the same store sales base, respectively.
Same store net sales for franchise-operated restaurants for the three months ended March 31, 2019 declined 1.1% compared to the three months ended April 1, 2018.
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FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
Total Revenue
Our components of and changes in revenue consisted of the following for the three months ended March 31, 2019 and April 1, 2018:
Three Months Ended | ||||||||||||||
(dollars in thousands) | March 31, 2019 | April 1, 2018 |
| $ Change |
| % Change | ||||||||
Revenue: |
|
|
|
|
|
| ||||||||
Restaurant sales, net | $ | 10,314 | $ | 8,713 | $ | 1,601 | 18.4 | % | ||||||
Franchise royalty and fee revenue |
| 3,204 |
| 3,408 |
| (204) |
| (6.0) | % | |||||
Franchisee national advertising fund contributions | 409 | 469 | (60) | (12.8) | % | |||||||||
Licensing and other revenue |
| 266 |
| 254 |
| 12 |
| 4.7 | % | |||||
Total revenue | $ | 14,193 | $ | 12,844 | $ | 1,349 |
| 10.5 | % |
Restaurant Sales, net
The increase in year-over-year restaurant sales, net for the three months ended March 31, 2019 was primarily a result of the acquisition of restaurants in the Colorado market as well as an increase in same-store sales.
On a weighted basis, Dine-In sales decreased by 3.2%, while To-Go and Catering sales increased by 3.6% and 0.9%, respectively, for the three months ended March 31, 2019 driven by third-party delivery sales, increased marketing efforts, and initiatives aimed at increasing catering sales.
Line of Business Summary
The following table summarizes the first quarter summary of Company-owned restaurants by line of business:
Dine In | To Go | Catering | TOTAL | ||
% of sales | 53% | 39% | 8% | 100% | |
Comparable sales % | -5.6% | 10.2% | 12.6% | 1.3% | |
Comparable sales "contribution" | -3.2% | 3.6% | 0.9% | 1.3% | |
Average party size | 1.9 | 2.2 | 37.0 | 2.2 | |
Per person average | $ 17.06 | $ 13.18 | $ 11.08 | $ 14.76 | |
Average check size | $ 32.88 | $ 28.37 | $ 410.51 | $ 33.19 |
Franchise-Related Revenue, including national advertising fund contributions
The declines in franchise-related revenue for the three months ended March 31, 2019 was primarily related to a decline in franchise-operated same store sales of 1.1%, and the net closure of 13 franchise restaurants since April 1, 2018.
In fiscal 2018, we rolled out several initiatives, aimed at driving traffic and improving sales, to our Company-owned stores that are in various stages of implementation throughout our franchise system. Additionally, we continue to focus our resources on innovations to provide new avenues for our franchisees to improve their net sales and operating performance.
Licensing and Other Revenue
For three months ended March 31, 2019, licensing and other revenue was approximately $266,000 compared to approximately $254,000 for the comparable period of fiscal 2018, an increase of approximately 4.7%.
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FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
Average Weekly Net Sales and Operating Weeks
The following table shows Company-owned and franchise-operated average weekly net sales and Company-owned and franchise-operated operating weeks for the periods presented:
Three Months Ended | ||||||
| March 31, 2019 |
| April 1, 2018 | |||
Average Weekly Net Sales (AWS): |
|
| ||||
Franchise-Operated(1) | $ | 46,043 | $ | 45,445 | ||
Company-Owned | 43,623 | 41,888 | ||||
Full-Service | 46,054 | 44,898 | ||||
Counter-Service | 37,214 | 35,267 | ||||
Operating Weeks: | ||||||
Franchise-Operated | 1,573 | 1,755 | ||||
Company-Owned | 236 | 208 |
(1) | AWS for franchise-operated restaurants are not our revenues and are not included in our consolidated financial statements. We believe that disclosure of comparable restaurant net sales for franchise-operated restaurants provides useful information to investors because historical performance and trends of Famous Dave’s franchisees relate directly to trends in franchise royalty revenues that we receive from such franchisees and have an impact on the perceived success and value of the Famous Dave’s brand. It also provides a comparison against which management and investors can analyze the extent to which Company-owned restaurants are realizing their revenue potential. |
Food and Beverage Costs
Our food and beverage costs consisted of the following for the three months ended March 31, 2019 and April 1, 2018:
Three Months Ended | ||||||||||||||
(dollars in thousands) | March 31, 2019 | April 1, 2018 |
| $ Change |
| % Change | ||||||||
Food and beverage costs | $ | 3,360 | $ | 2,717 | $ | 643 | 23.7 | % |
Food and beverage costs for the three months ended March 31, 2019 and April 1, 2018 represented approximately 32.6% and 31.2% of net restaurant sales, respectively. This year-over-year increase, as a percentage of net restaurant sales, was primarily driven by commodity costs related to brisket, certain of our pork products, and cooking oil. Additionally the menu refresh in October 2018 resulted in elevated food waste. We expect food costs to improve with further training and operational efficiency around the new menu in the remainder of 2019.
Labor and Benefits Costs
Our labor and benefits costs consisted of the following for the three months ended March 31, 2019 and April 1, 2018:
Three Months Ended | ||||||||||||||
(dollars in thousands) | March 31, 2019 | April 1, 2018 |
| $ Change |
| % Change | ||||||||
Labor and benefits costs | $ | 3,957 | $ | 3,196 | $ | 761 | 23.8 | % |
Labor and benefits costs for the three months ended March 31, 2019 and April 1, 2018 represented approximately 38.4% and 36.7% of net restaurant sales, respectively. The year-over-year increase during the three months ended March 31, 2019, as a percentage of net restaurant sales, was primarily driven by positions added to supplement catering and third-party delivery sales and wage-rate inflation. We expect future increases to labor and benefits costs, as a percentage of net restaurant sales, due to the national trend to increase minimum wages.
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FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
Operating Expenses
Our operating expenses consisted of the following for the three months ended March 31, 2019 and April 1, 2018:
Three Months Ended | ||||||||||||||
(dollars in thousands) | March 31, 2019 | April 1, 2018 |
| $ Change |
| % Change | ||||||||
Operating expenses | $ | 3,169 | $ | 2,841 | $ | 328 | 11.5 | % |
Operating expenses for the three months ended March 31, 2019 and April 1, 2018 represented approximately 30.7% and 32.6% of net restaurant sales, respectively. The primary drivers of the decrease, as a percentage of net restaurant sales, were decreased utilities, entertainment and other direct operating costs.
Depreciation and Amortization
Depreciation and amortization expense for the three months ended March 31, 2019 and April 1, 2018 represented approximately 1.9% and 3.1% of total revenues, respectively.
General and Administrative Expenses
Our general and administrative expenses consisted of the following for the three months ended March 31, 2019 and April 1, 2018:
Three Months Ended | ||||||||||||||
(dollars in thousands) | March 31, 2019 | April 1, 2018 |
| $ Change |
| % Change | ||||||||
General and administrative expenses | $ | 2,517 | $ | 1,874 | $ | 643 | 34.3 | % |
General and administrative expenses for the three months ended March 31, 2019 and April 1, 2018 represented approximately 17.7% and 14.6% of total revenues, respectively. The increase to general and administrative expenses primarily related to one-time savings in the prior year that did not recur during the three months ended March 31, 2019 and acquisition costs.
Asset Impairment, Estimated Lease Termination and Other Closing Costs
The following is a summary of the asset impairment, estimated lease termination and other closings costs we incurred for the periods presented:
Three Months Ended | ||||||
(dollars in thousands) |
| March 31, 2019 |
| April 1, 2018 | ||
Asset impairments, net | $ | 348 | $ | 150 | ||
Lease termination charges (income) and related costs | 20 | (433) | ||||
Restaurant closure expenses | 39 | 179 | ||||
Asset impairment, estimated lease termination charges and other closing costs | $ | 407 | $ | (104) |
During the three months ended March 31, 2019, we recognized an impairment charge on the lease right-of-use asset for a restaurant that was closed subsequent to the end of the first quarter of approximately $344,000. Asset impairments, net are expenses incurred for other charges related to closing restaurants, as well as ongoing expenses incurred after a restaurant is fully closed.
Income Tax Expense
Income tax expense for the three months ended March 31, 2019 was approximately $17,000, or 17.2% of our pretax income. Income tax expense for the three months ended April 1, 2018 was approximately $321,000, or 24.3% of our pretax income.
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FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
Basic and Diluted Net Income (Loss) per Common Share
Net income for the three months ended March 31, 2019 was approximately $82,000, or $0.01 per basic and diluted share. The basic and diluted weighted-average number of common shares outstanding for the three months ended March 31, 2019 was approximately 9,085,000 and 9,189,000, respectively. Net income for the three months ended April 1, 2018 was approximately $998,000, or $0.13 per basic and diluted share. There were approximately 7,407,000 basic and diluted weighted-average shares outstanding for the three months ended April 1, 2018.
Financial Condition, Liquidity and Capital Resources
Our balance of unrestricted cash and cash equivalents was approximately $8.9 million and $11.6 million as of March 31, 2019 and December 30, 2018, respectively. We used cash to purchase four stores in Colorado. We expect to utilize cash on hand to reinvest into our brand, including refreshing current corporate stores, repurchasing select franchise-operated stores, and the development of a new concept. In 2018, we entered into agreements with Clark Championship Products LLC to develop the Clark Crew BBQ restaurant concept, which we also have the exclusive licensing rights to the Clark Crew BBQ brand. Pursuant to that agreement, we will provide financing in the amount of $1.4 million for the build out of the inaugural Clark Crew BBQ restaurant.
Our current ratio, which measures our immediate short-term liquidity, was 1.50 as of March 31, 2019, compared to 2.15 as of December 30, 2018. The current ratio is computed by dividing total current assets by total current liabilities. The decrease in our current ratio was primarily due to increases in our current liabilities related to the current portion of lease liabilities, as well as decreases in our accounts receivable due to collection efforts and cash paid for the acquisition in the Colorado market.
Net cash provided by operating activities for the three months ended March 31, 2019 was approximately $1.6 million, which reflects net income of approximately $82,000 increased by non-cash charges of approximately $785,000. Changes in operating assets and liabilities for the three months ended March 31, 2019 primarily included cash inflows for accounts receivable of $743,000 and other assets of $53,000. These cash inflows were partially offset by cash outflows related to a decrease in accounts payable of $9,000 and a decrease in accrued and other liabilities of $24,000.
Net cash provided by operating activities for the three months ended April 1, 2018 was approximately $176,000, reflecting net income of approximately $998,000 decreased by non-cash charges of approximately $42,000. Changes in operating assets and liabilities included cash outflows from an increase in other assets of $6,000 and a decrease in accrued and other liabilities of $879,000. These cash outflows were partially offset by a decrease in accounts receivable of $61,000 and an increase in accounts payable of $32,000.
Net cash used for investing activities was approximately $4.2 million for the three months ended March 31, 2019, related to payments for acquired restaurants of $3.8 million, advances on notes receivable of $150,000 and the purchase of property, equipment and leasehold improvements of $221,000, partially offset by proceeds from the sale of fixed assets of $6,000. Net cash used for investing activities was $498,000 for the three months ended April 1, 2018, related to the purchases of property and equipment of $41,000 and advances on notes receivable of $458,000.
Net cash used for financing activities for the three months ended March 31, 2019 of $152,000, primarily related to the debt repayments of $137,000 and payments for debt issuance costs of $15,000. Net cash provided by financing activities for the three months ended April 1, 2018 of $69,000, primarily related to the proceeds from exercise of stock options of $389,000, partially offset by debt repayments of $320,000.
We are subject to various financial and non-financial covenants on our long-term debt, including a debt-service coverage ratio. As of March 31, 2019, we were in compliance with all of our covenants.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that either have, or are reasonably likely to have, a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
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FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
Critical Accounting Policies
Our significant accounting policies are described in Note 1 “Nature of Business and Significant Accounting Policies” to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 30, 2018. Except as disclosed in Note 1 “Basis of Presentation” to the accompanying notes to the consolidated financial statements, there have been no updates to our critical accounting policies.
Forward-Looking Information
Famous Dave’s makes written and oral statements from time to time, including statements contained in this Quarterly Report on Form 10-Q regarding its business and prospects, such as projections of future performance, statements of management’s plans and objectives, forecasts of market trends and other matters that are forward-looking statements within the meaning of Sections 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934. Statements containing the words or phrases “will likely result”, “anticipates”, “are expected to”, “will continue”, “is anticipated”, “estimates”, “projects”, “believes”, “expects”, “intends”, “target”, “goal”, “plans”, “objective”, “should” or similar expressions identify forward-looking statements which may appear in documents, reports, filings with the SEC, news releases, written or oral presentations made by our officers or other representatives to analysts, shareholders, investors, news organizations, and others, and discussions with our management and other Company representatives. For such statements, including those contained in this report, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
Our future results, including results related to forward-looking statements, involve a number of risks and uncertainties that are difficult to predict, including but not limited to those identified herein under Part II, Item 1A. “Risk Factors” and under Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 30, 2018. No assurance can be given that the results reflected in any forward-looking statements will be achieved. Any forward-looking statements made by us or on our behalf speak only as of the date on which such statement is made. Our forward-looking statements are based upon assumptions that are sometimes based upon estimates, data, communications and other information from suppliers, government agencies and other sources that may be subject to revision. We do not undertake any obligation to update or keep current either (i) any forward-looking statements to reflect events or circumstances arising after the date of such statement, or (ii) the important factors that could cause our future results to differ materially from historical results or trends, results anticipated or planned by us, or which are reflected from time to time in any forward-looking statement which may be made by us or on our behalf.
Additional Information on Famous Dave’s
We are currently subject to the informational requirements of the Securities Exchange Act of 1934, as amended. As a result, we are required to file periodic reports and other information with the SEC, such as annual, quarterly and current reports, proxy and information statements. You are advised to read this Quarterly Report on Form 10-Q in conjunction with the other reports, proxy statements and other documents we file from time to time with the SEC. If you would like more information regarding Famous Dave’s, our SEC filings are also available to the public free of charge at the SEC’s website. The address of this website is http://www.sec.gov. Our most current SEC filings, such as our annual, quarterly and current reports, proxy statements and press releases are available to the public free of charge on our website.
The address of our website is http://www.famousdaves.com. Our website is not intended to be, and is not, a part of this Quarterly Report on Form 10-Q. We will provide electronic or paper copies of our SEC filings (excluding exhibits) to any Famous Dave’s shareholder free of charge upon receipt of a written request for any such filing. All requests for our SEC filings should be sent to the attention of Investor Relations at Famous Dave’s of America, Inc., 12701 Whitewater Drive, Suite 190, Minnetonka, MN 55343.
Item 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable to smaller reporting companies.
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FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
Item 4.CONTROLS AND PROCEDURES
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective.
There has been no change in our internal control over financial reporting during the quarterly period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting, except for the following.
Effective December 31, 2018, we implemented ASU 2016-02 Leases (Topic 842). We implemented changes to our controls related to leases, including the initial application of Topic 842. These changes included the development of new policies based on the new lease classification requirements, enhanced contract review requirements, and other ongoing monitoring activities. These controls were designed to provide assurance at a reasonable level of the fair presentation of our financial statements and related disclosures.
PART II. OTHER INFORMATION
Item 1.LEGAL PROCEEDINGS.
The information contained in Note 14 “Litigation” of the notes to the accompanying consolidated financial statements included in this Quarterly Report on Form 10-Q is incorporated by reference into this Item 1. Except as set forth therein, as of the end of the period covered by this Quarterly Report on Form 10-Q, we are not a party to any material pending legal proceedings.
Item 1A.RISK FACTORS.
The most significant risk factors applicable to the Company are described in Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 30, 2018, filed with the SEC on March 4, 2019, as updated by this Part II, Item 1A “Risk Factors” and our subsequent filings with the Securities and Exchange Commission. There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K.
Item 5.OTHER INFORMATION
On May 7, 2019, Geovannie Concepcion informed the Company of his intention to resign from his position as Chief Operating Officer effective May 9, 2019, to accept an external role.
- 25 -
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
Item 6.EXHIBITS
Exhibit |
| Description |
31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
32.1 | ||
101.INS | XBRL Instance Document | |
101.SCH | XBRL Schema Document | |
101.CAL | XBRL Calculation Linkbase Document | |
101.LAB | XBRL Label Linkbase Document | |
101.PRE | XBRL Presentation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |
- 26 -
FAMOUS DAVE’S OF AMERICA, INC. AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
FAMOUS DAVE’S OF AMERICA, INC.
(“Registrant”)
Dated: May 13, 2019 | By: | /s/ Jeffery Crivello |
Jeffery Crivello | ||
Chief Executive Officer and Director | ||
(Principal Executive Officer) | ||
Dated: May 13, 2019 | /s/ Paul M. Malazita | |
Paul M. Malazita | ||
Chief Financial Officer and Secretary | ||
(Principal Financial Officer and Principal Accounting Officer) |
- 27 -
Exhibit 31.1
CERTIFICATIONS
I, Jeffery Crivello, certify that:
1. |
I have reviewed this Quarterly Report on Form 10-Q of Famous Dave’s of America, Inc.; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. |
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. |
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Dated: May 13, 2019 |
By: |
/s/ Jeffery Crivello |
|
|
Jeffery Crivello |
|
|
Chief Executive Officer and Director |
Exhibit 31.2
CERTIFICATIONS
I, Paul M. Malazita, certify that:
1. |
I have reviewed this Quarterly Report on Form 10-Q of Famous Dave’s of America, Inc.; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. |
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. |
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Dated: May 13, 2019 |
By: |
/s/ Paul M. Malazita |
|
|
Paul M. Malazita |
|
|
Chief Financial Officer and Secretary |
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. 1350
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of Famous Dave’s of America, Inc. does hereby certify that:
a) |
The Quarterly Report on Form 10-Q of Famous Dave’s of America, Inc. for the quarter ended March 31, 2019 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
b) |
Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Famous Dave’s of America, Inc. |
Dated: May 13, 2019 |
By: |
/s/ Jeffery Crivello |
|
Jeffery Crivello |
|
|
Chief Executive Officer and Director |
|
|
(Principal Executive Officer) |
Dated: May 13, 2019 |
By: |
/s/ Paul M. Malazita |
|
Paul M. Malazita |
|
|
Chief Financial Officer and Secretary |
|
|
(Principal Financial Officer and Principal Accounting Officer) |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
May 09, 2019 |
|
Document and entity information [Abstract] | ||
Document type | 10-Q | |
Document period end date | Mar. 31, 2019 | |
Document Period Focus | Q1 | |
Amendment flag | false | |
Document Fiscal Year Focus | 2019 | |
Entity registrant name | FAMOUS DAVES OF AMERICA INC | |
Entity central index key | 0001021270 | |
Entity current reporting status | Yes | |
Current fiscal year end date | --12-29 | |
Entity filer category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity common stock shares outstanding | 9,273,905 | |
Trading Symbol | DAVE |
Consolidated Balance Sheets (Parentheticals) - USD ($) shares in Thousands, $ in Thousands |
Mar. 31, 2019 |
Dec. 30, 2018 |
---|---|---|
Common Stock, Number of Shares, Par Value and Other Disclosures [Abstract] | ||
Allowance for Doubtful Accounts Receivable, Current | $ 202 | $ 192 |
Common Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Common Stock, Shares Authorized | 100,000 | 100,000 |
Common stock issued (in shares) | 9,274 | 9,085 |
Common Stock, Shares, Outstanding | 9,274 | 9,085 |
Consolidated Statements of Shareholders' Equity - 3 months ended Mar. 31, 2019 - USD ($) shares in Thousands, $ in Thousands |
Common Stock [Member] |
Additional Paid-in Capital [Member] |
Retained Earnings [Member] |
Total |
---|---|---|---|---|
Balance (in Shares) at Dec. 30, 2018 | 9,085 | |||
Balance at Dec. 30, 2018 | $ 91 | $ 7,375 | $ 15,075 | $ 22,541 |
Stock-based compensation (in Shares) | 189 | |||
Stock-based compensation | $ 2 | 81 | 83 | |
Net income | 82 | 82 | ||
Balance (in Shares) at Mar. 31, 2019 | 9,274 | |||
Balance at Mar. 31, 2019 | $ 93 | $ 7,456 | 15,133 | 22,682 |
Cumulative effect of change in accounting principle | $ (24) | $ (24) |
BASIS OF PRESENTATION |
3 Months Ended | ||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||
Nature Of Business And Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||
Nature Of Business And Significant Accounting Policies [Text Block] | (1) Basis of Presentation Basis of Presentation Famous Dave’s of America, Inc. (“Famous Dave’s” or the “Company”) was incorporated in Minnesota on March 14, 1994. The Company develops, owns, operates and franchises restaurants under the name "Famous Dave’s." As of March 31, 2019, there were 138 Famous Dave’s restaurants operating in 33 states, the Commonwealth of Puerto Rico, Canada, and the United Arab Emirates, including 21 Company-owned restaurants and 117 franchise-operated restaurants. These consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and Securities and Exchange Commission (“SEC”) Rules and Regulations. These unaudited consolidated financial statements represent the consolidated financial statements of the Company and its subsidiaries as of March 31, 2019 and December 30, 2018, and for the three months ended March 31, 2019 and April 1, 2018. The information furnished in these consolidated financial statements includes normal recurring adjustments and reflects all adjustments, which are, in the opinion of management, necessary for a fair presentation. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2018 as filed with the SEC on March 4, 2019. Due to the seasonality of the Company’s business, revenue and operating results for the three months ended March 31, 2019 are not necessarily indicative of the results to be expected for the full fiscal year or any other interim period. Reclassifications Certain prior period amounts have been reclassified to conform to the current period’s presentation. These reclassifications did not have an impact on the reported net income for any of the periods presented. Income Taxes The Company maintains a federal deferred tax asset (“DTA”) in the amount of $5.8 million for each of the periods ended March 31, 2019 and December 30, 2018. The Company evaluates the DTA on a quarterly basis to determine whether current facts and circumstances indicate that the DTA may not be fully realizable. As of March 31, 2019, the Company concluded that the DTA is fully realizable and that a valuation allowance was not considered necessary; however, the Company will continue to evaluate the asset on a quarterly basis until the DTA has been fully utilized. The following table presents the Company’s effective tax rates for the periods presented:
The Company provides for income taxes based on its estimate of federal and state income tax liabilities. These estimates include, among other items, effective rates for state and local income taxes, allowable tax credits for items such as taxes paid on reported tip income, estimates related to depreciation and amortization expense allowable for tax purposes, and the tax deductibility of certain other items. The Company’s estimates are based on the information available at the time that the Company prepares the income tax provision. The Company generally files its annual income tax returns several months after its fiscal year-end. Income tax returns are subject to audit by federal, state, and local governments, generally years after the tax returns are filed. These returns could be subject to material adjustments or differing interpretations of the tax laws. Restricted cash and marketing fund The Company has a system-wide marketing development fund, to which Company-owned restaurants, in addition to the majority of franchise-operated restaurants, contribute a percentage of net sales for use in public relations and marketing development efforts. The assets held by this fund are considered to be restricted. Accordingly, the Company reflects the cash related to this fund within restricted cash and reflects the liability within accounts payable on the Company’s consolidated balance sheets. The Company had approximately $697,000 and $700,000 in this fund as of March 31, 2019 and December 30, 2018, respectively. In conjunction with the Company’s credit agreements, the Company has deposited amounts for undrawn letters of credit in cash collateral accounts. The Company had approximately $143,000 and $143,000 in restricted cash as of March 31, 2019 and December 30, 2018, respectively, related to these undrawn letters of credit. Concentrations of Credit Risk As of March 31, 2019, the Company had outstanding balances from two franchisees of approximately $704,000 and $386,000, respectively. Recently Adopted Accounting Pronouncements In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation (Topic 718), which expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. Under the updated standard, an entity is required to apply the requirements of Topic 718 to nonemployee awards, except for specific guidance on inputs to an option-pricing model and the attribution of cost. The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in the grantor’s own operations by issuing share-based payment awards. The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling or goods or services as part of a contract accounted for under Topic 606, Revenue from Contracts with Customers. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018 and interim periods within that fiscal year. Early adoption was permitted, but no earlier than an entity’s adoption date of Topic 606. The Company adopted this new standard as of the effective date. Adoption of the new standard did not have a material impact on the Company’s consolidated financial statements. Beginning in fiscal 2019, the Company adopted Topic 842, Leases, which had a material impact on the Company’s consolidated financial statements. See Note 7 – Leases. |
INTANGIBLE ASSETS, NET |
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Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets Disclosure [Text Block] | (2) Intangible Assets, net The Company has intangible assets that consist of liquor licenses, lease interest assets and reacquired franchise rights, net. The liquor licenses are indefinite-lived assets and are not subject to amortization. The lease interest assets are amortized to occupancy costs on a straight-line basis over the remaining term of each respective lease. Reacquired franchise rights are amortized to depreciation and amortization expense on a straight-line basis over the remaining life of the reacquired franchise agreement. A reconciliation of the Company’s intangible assets as of March 31, 2019 and December 30, 2018, respectively, are presented in the table below:
The following table provides the projected future amortization of reacquired franchise rights, net and lease interest assets for the next five years, as of March 31, 2019:
|
LONG-TERM DEBT AND FINANCING LEASE OBLIGATIONS |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term Debt and Financing Lease Obligations [Text Block] | (3) Long-Term Debt and Financing Lease Obligations Long-term debt Long-term debt consisted of the following at:
The weighted-average interest rate of long-term debt outstanding as of March 31, 2019 and December 30, 2018 was 4.19% and 4.41%, respectively. The Company is subject to various financial and non-financial covenants on its long-term debt, including a debt-service coverage ratio. As of March 31, 2019, the Company was compliant with all of its covenants. Financing Lease Obligation The Company repaid its financing lease obligation during the three months ended March 31, 2019. |
PREPAID EXPENSES AND OTHER CURRENT ASSETS |
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Mar. 31, 2019 | ||||||||||||||||||||||||||||||||||||
Deferred Costs, Capitalized, Prepaid, And Other Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||
Prepaid Expenses and Other Current Assets [Text Block] | (4) Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted of the following at:
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OTHER CURRENT LIABILITIES |
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Accrued Liabilities, Current [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Current Liabilities Disclosure [Text Block] | (5) Other Current Liabilities Other current liabilities consisted of the following at:
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OTHER LIABILITIES |
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Other Liabilities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Liabilities Disclosure [Text Block] | (6) Other Liabilities Other liabilities consisted of the following at:
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LEASES |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lessee Operating And Finance Leases [Text Block] | (7) Leases The Company leases the property for its corporate headquarters, most of its Company-owned stores, and certain office and restaurant equipment. The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of use (“ROU”) assets, current portion of operating lease liabilities, and operating lease liabilities in its consolidated balance sheets. The Company had two finance leases as of December 31, 2018, which expired during the three months ended March 31, 2019. ROU assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term at the commencement date. Because most of the Company's leases do not provide an implicit rate of return, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Operating lease ROU assets also exclude lease incentives received. Where the Company is the lessee, at initial adoption, the Company has elected to account for non-lease components associated with its leases (e.g., common area maintenance costs) and lease components separately for substantially all of its asset classes. Subsequent to adoption, the Company will combine lease and non-lease components. Lease terms for Company-owned stores generally range from 5-20 years with one or more five-year renewal options and generally require the Company to pay a proportionate share of real estate taxes, insurance, common area, and other operating costs in addition to a base or fixed rent. The Company has elected the short term lease exemption for certain qualifying leases with lease terms of twelve months or less and, accordingly, did not record right-of-use assets and lease liabilities. These leases with initial terms of less than 12 months are recorded directly to occupancy expense on a straight-line basis over the term of the lease. Additionally, the Company has decided to utilize the package of practical expedients and the practical expedient to not reassess certain land easements. The Company has decided not to utilize the practical expedient to use hindsight. Certain of the Company’s leases also provide for variable lease payments in the form of percentage rent, in which additional rent is calculated as a percentage of sales in excess of a base amount, and not included in the calculation of the operating lease liability or ROU asset. The Company's leases have remaining lease terms of 0.25 to 21 years. For purposes of calculating operating lease liabilities, lease terms may be deemed to include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Economic performance of a store is the primary factor used to estimate whether an option to extend a lease term will be exercised or not. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The components of lease expense for the period presented is as follows:
Supplemental cash flow information related to leases for the period presented is as follows:
The maturities of the Company’s lease liabilities as of March 31, 2019 is as follows (in thousands):
As of December 31, 2018, the Company had one operating lease that had not commenced for a new restaurant site in Oklahoma City, Oklahoma. The lease has a 15-year term with two five-year renewal options. |
REVENUE RECOGNITION |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Text Block] | (8) Revenue Recognition The Company recognizes franchise fee revenue on a straight-line basis over the life of the related franchise agreements and any exercised renewal periods. Cash payments are due upon the opening of a new restaurant or upon the execution of a renewal of the related franchise agreement. The Company’s performance obligation with respect to franchise fee revenues consists of a license to utilize the Company’s brand for a specified period of time, which is satisfied equally over the life of each franchise agreement. Area development fees are deferred until a new restaurant is opened pursuant to the area development agreement, at which time revenue is recognized on a straight-line basis over the life of the franchise agreement. Cash payments for area development agreements are typically due when an area development agreement has been executed. Gift card breakage revenue is recognized proportionately as gift cards are redeemed utilizing an estimated breakage rate based on the Company’s historical experience. Gift card breakage revenue is reported within the licensing and other revenue line item of the consolidated statements of operations. The Company defers revenue associated with the estimated selling price of reward points, which we refer to as Bones, earned pursuant to the Company’s loyalty program and establishes a corresponding liability. This deferral is based on the estimated value of the product for which the reward is expected to be redeemed, net of estimated unredeemed Bones. When a Guest redeems an earned reward, the Company recognizes revenue for the redeemed product and reduces the deferred revenue. Deferred revenue associated with the Company’s loyalty program was not material as of March 31, 2019 and December 30, 2018. The Company’s revenue is generally disaggregated within the consolidated statements of operations. Gift card breakage revenue was not material to the Company’s consolidated financial statements. The Company recognized revenue related to gift cards of approximately $133,000 during the three months ended March 31, 2019, which is reflected in the restaurant sales, net, line item of its consolidated statements of operations. Gift cards payable of approximately $1.1 million is expected to be recognized as revenue over the next 12 months. The following table illustrates estimated revenues expected to be recognized in the future related to unsatisfied performance obligations as of March 31, 2019:
Contract liabilities consist of deferred revenue resulting from franchise fees paid by franchisees. We classify these liabilities within other current liabilities and other liabilities within our consolidated balance sheets based on the expected timing of revenue recognition associated with these liabilities. The following table reflects the change in contract liabilities between December 30, 2018 and March 31, 2019:
|
STOCK-BASED COMPENSATION |
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Performance Shares Stock Options Other Forms Of Compensation And Common Share Repurchases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance Shares, Stock Options, Other Forms of Compensation and Common Share Repurchases [Text Block] | (9) Stock-based Compensation Effective May 5, 2015, the Company adopted the 2015 Equity Incentive Plan (the “2015 Plan”), pursuant to which the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance stock units and other stock and cash awards to eligible participants. The Company also maintains an Amended and Restated 2005 Stock Incentive Plan (the “2005 Plan”). Together, the 2015 Plan and 2005 Plan are referred to herein as the “Plans.” The 2005 Plan prohibits the granting of incentives after May 12, 2015, the tenth anniversary of the date the 2005 Plan was approved by the Company’s shareholders. Nonetheless, the 2005 Plan will remain in effect until all outstanding incentives granted thereunder have either been satisfied or terminated. As of March 31, 2019, there were 229,477 shares available for grant pursuant to the 2015 Plan. For purposes of net income per share, there were approximately 179,000 and 430,000 stock options outstanding as of March 31, 2019 and April 1, 2018, respectively that were not included in the computation of diluted net income per share because their impact was antidilutive. As of March 31, 2019, the total compensation cost related to unvested stock option awards was approximately $1.4 million which is expected to be recognized over a period of approximately 3.43 years. Stock options granted to employees and directors generally vest over two to five years, in monthly or annual installments, as outlined in each agreement. Options generally expire ten years from the date of grant. Compensation expense equal to the grant date fair value of the options is recognized in general and administrative expense over the applicable service period. The Company utilizes the Black-Scholes option pricing model when determining the compensation cost associated with stock options issued using the following significant assumptions:
The Company recognized stock-based compensation expense in its consolidated statements of operations for the three months ended March 31, 2019 and April 1, 2018, respectively, as follows:
Information regarding the Company’s stock options is summarized below:
Information regarding the Company’s restricted stock is summarized below:
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ASSET IMPAIRMENT AND ESTIMATED LEASE TERMINATION AND OTHER CLOSING COSTS |
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Asset Impairment, Estimated Lease Termination and Other Closing Costs [Text Block] | (10) Asset Impairment, Estimated Lease Termination and Other Closing Costs The following is a summary of asset impairment, estimated lease termination and other closing costs for the three months ended March 31, 2019 and April 1, 2018. These costs are included in asset impairment, estimated lease termination and other closing costs in the consolidated statements of operations.
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FAIR VALUE MEASUREMENTS |
3 Months Ended |
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Mar. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Disclosures [Text Block] | (11) Fair Value Measurements 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. The fair value measurement framework establishes a three-tier hierarchy. The three levels, in order of priority, are as follows: Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date. Level 1 measurements are determined by observable inputs which include data sources and market prices available and visible outside of the entity. Level 2: Observable inputs other than quoted prices included within Level 1 for the asset or liability, either directly or indirectly. Level 3: Inputs that are used to estimate the fair value of the asset or liability. Level 3 measurements are determined by unobservable inputs, which include data and analysis developed within the entity to assess the fair value. For assets and liabilities falling within Level 3 of the fair value hierarchy, a change in the input assumptions used could result in a change in the estimated fair value of the asset or liability. Transfers in and out of levels will be based on the Company’s judgment of the availability of unadjusted quoted prices in active markets, other observable inputs, and non-observable inputs. The carrying amounts of cash and cash equivalents reported in the consolidated balance sheets approximates fair value based on current interest rates and short-term maturities. The carrying amount of accounts receivable approximates fair value due to the short-term nature of accounts receivable. The Company believes that the carrying amount of long-term debt approximates fair value due to the minimal difference between market interest rates and the fixed interest rate on a portion of the Company’s long-term debt, as well as that there has been no significant change in the credit risk or credit markets since origination. The Company had no assets measured at fair value in its consolidated balance sheets as of March 31, 2019 and December 30, 2018. |
RESTAURANT ACQUISITIONS |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restaurant Acquisition [Text Block] | (12) Restaurant Acquisition On March 4, 2019, the Company completed the acquisition of the assets and operations of four Famous Dave's restaurants in Colorado (the “Colorado Restaurants”). The sellers of the Colorado Restaurants were Quebec Square BBQ, Inc., Cornerstar BBQ, Inc., Razorback BBQ, Inc., and Larkridge BBQ, Inc. The contract purchase price of the restaurants was approximately $4.1 million, exclusive of acquisition costs of approximately $157,000, which are reflected in general and administrative expenses, plus the assumption of the gift card liability associated with the Colorado Restaurants. The Company also purchased inventory on hand as of the acquisition date. Effective as of the same date of the acquisition, the franchise agreements for each restaurant were terminated. The acquisition was accounted for using the purchase method of accounting in accordance with ASC 805 “Business Combinations” and, accordingly, the consolidated statements of operations include the results of these operations from the date of acquisition. The assets acquired and the liabilities assumed were recorded at estimated fair values based on information available. The following table presents the provisional allocation of assets acquired and liabilities assumed during the three months ended March 31, 2019:
The Company expects goodwill to be deductible for tax purposes, subject to amortization. Unaudited pro forma results of operations for the three month periods ended March 31, 2019 and April 1, 2018, as if the Company had acquired majority ownership of all operations on January 1, 2018 is as follows. The pro forma results include estimates and assumptions which management believes are reasonable. However, pro forma results are not necessarily indicative of the results that would have occurred if the business combination had been in effect on the dates indicated, or which may result in the future.
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VARIABLE INTEREST ENTITIES |
3 Months Ended |
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Mar. 31, 2019 | |
Variable interest entity not primary beneficiary abstract | |
Variable interest entity disclosure [Text Block] | (13) Variable Interest Entities A variable interest holder is considered to be the primary beneficiary of a variable interest entity (“VIE”) if it has the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and has the obligation to absorb losses of, or the right to receive benefits from, the entity that could potentially be significant to the VIE. Once an entity is determined to be a VIE, the primary beneficiary is required to consolidate the entity. The Company has an installment agreement with one of its franchisees as the result of refranchising its Lincoln, Nebraska restaurant. This franchisee is a VIE; however, the owners of the franchise operations are the primary beneficiaries of the entities, not the Company. Therefore, the franchise operations are not required to be consolidated in the Company’s consolidated financial statements. On November 1, 2017, the Company sold its Frederick, Maryland restaurant. Pursuant to the terms of the Frederick Agreement, the Company remained the primary obligor of the lease. As of March 31, 2019, the amount of future lease payments for which the Company would be liable in the event of a default are approximately $529,000. An accrual related to the future lease obligation was not considered necessary as of March 31, 2019. On July 18, 2018, the Company and Clark Championship Products LLC (“Clark”), an entity owned by Travis Clark, became members of Mercury BBQ LLC (“Mercury”) for the purposes of building out and operating the inaugural Clark Crew BBQ restaurant in Oklahoma City, Oklahoma (the “Restaurant”). Clark will own 80% of the units outstanding of Mercury and the Company will own 20% of the units outstanding of Mercury. Mercury shall be governed by three managers, two of which will be appointed by the Company and one of which will be appointed by Clark. Also on July 18, 2018, the Company entered into a secured promissory note in the amount of $1.4 million (the “Loan”) with Mercury, the proceeds of which are required to be used for the build out of the Restaurant. The Loan bears interest at a rate of 10% per annum and requires payments of 100% of the excess monthly cash flows until the Loan and all interest accrued thereon is repaid. The Loan requires a balloon payment of unpaid principal and accrued interest on July 15, 2023 and may be prepaid at any time. Also on July 18, 2018, the Company and Clark entered into an intellectual property license agreement (the “License Agreement”) pursuant to which Clark granted to the Company an exclusive license to use and sublicense the patents, trademarks, trade names, service marks, logos and designs related to Clark Crew BBQ restaurants and products. The term of the License Agreement is indefinite and may only be terminated by mutual written consent, unless the Company breaches the License Agreement. Because the Company will provide more than half of the subordinated financial support of Mercury and controls Mercury via its representation on the board of managers, the Company has concluded that Mercury is a VIE, of which the Company is the primary beneficiary and must consolidate Mercury. There has been no material revenue or expenses related to Mercury during the three months ended March 31, 2019. |
LITIGATION |
3 Months Ended |
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Mar. 31, 2019 | |
Litigation [Abstract] | |
Litigation Disclosure [Text Block] | (14) Litigation In the normal course of business, the Company is involved in a number of litigation matters that are incidental to the operation of the business. These matters generally include, among other things, matters with regard to employment and general business-related issues. The Company currently believes that the resolution of any of these pending matters will not have a material adverse effect on its financial position or liquidity, but an adverse decision in more than one of the matters could be material to its consolidated results of operations. |
RELATED PARTY TRANSACTIONS |
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Related Party Transactions Disclosure [Text Block] | (15) Related Party Transactions Anand D. Gala is a franchisee of the Company and currently serves as a director of the Company. Mr. Gala is the Founder, President and Chief Executive Officer of Gala Holdings International, a diversified holding company that conducts consulting, restaurant development and management operations. Charles Davidson is a franchisee of the Company and is the beneficial owner of approximately 18.2% of the Company’s common stock as of the date that these financial statements were available to be issued, by virtue of his ownership interest in Wexford Capital. The following table outlines amounts received from related parties during the three months ended March 31, 2019, and April 1, 2018:
The following table outlines accounts receivable from related parties as of March 31, 2019 and December 30, 2018:
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SUBSEQUENT EVENTS |
3 Months Ended |
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Mar. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events Disclosure [Text Block] | (16) Subsequent Events The Company has evaluated for the occurrence of subsequent events through the issuance date of the Company’s consolidated financial statements. No other recognized or non-recognized subsequent events occurred that require recognition or disclosure in the consolidated financial statements, except as noted below. On April 29, 2019, Famous Dave’s Ribs, Inc. (“Ribs”), a wholly-owned subsidiary of the Company completed the acquisition of three Famous Dave’s restaurants in Michigan and Ohio (the “Big Ten Ribs Purchased Restaurants”). The seller of the Big Ten Ribs Purchased Restaurants was Big Ten Ribs, Inc. which was a franchisee of the Company. Pursuant to the asset purchase agreement by and between Ribs and Big Ten Ribs, Inc., signed March 12, 2019, the contract purchase price for the Big Ten Ribs Purchased Restaurants was approximately $69,000, exclusive of closing costs, plus an amount equal to the book value of the restaurant inventory, plus the assumption of the gift card liability associated with the Big Ten Ribs Purchased Restaurants. Also on April 29, 2019, Ribs completed the acquisition of one Famous Dave’s restaurant in Grandville, Michigan (the “Grandville Restaurant”). On May 13, 2019, Ribs completed the acquisition of two Famous Dave’s restaurants in Wisconsin (along with the Grandville Restaurant, the “Team R n’ B Wisconsin Purchased Restaurants”). The seller of the Team R n’ B Wisconsin Purchased Restaurants was Team R n’ B Wisconsin, LLC, which was a franchisee of the Company. Pursuant to the asset purchase agreement by and between Ribs and Team R n’ B Wisconsin, LLC, signed March 12, 2019, the contract purchase price for the Team R n’ B Wisconsin Purchased Restaurants was approximately $69,000, exclusive of closing costs, plus an amount equal to the book value of the restaurant inventory, plus the assumption of the gift card liability associated with the Team R n’ B Wisconsin Purchased Restaurants. The Company funded the purchase price with cash on hand. As of the date that these financial statements were available to be issued, the Company was still reviewing the financial information of the acquired restaurants. As such, it was impractical to include in these consolidated financial statements the pro forma effect of the acquisitions. |
BASIS OF PRESENTATION (Tables) |
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Nature Of Business And Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||
Schedule Of Effective Income Tax Rate Reconciliation [Table Text Block] |
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INTANGIBLE ASSETS (Tables) |
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Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Intangible Assets [Table Text Block] |
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Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block] |
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LONG-TERM DEBT AND FINANCING LEASE OBLIGATIONS (Tables) |
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Schedule Of Debt [Table Text Block] |
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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 [Table Text Block] |
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OTHER CURRENT LIABILITIES (Tables) |
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Accrued Liabilities, Current [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Current Liabilities [Table Text Block] |
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OTHER LIABILITIES (Tables) |
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Other Liabilities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Other Liabilities [Table Text Block] |
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LEASES (Tables) |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
Lease, Cost [Table Text Block] |
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Lessee Supplemental Cash Flow Information Of Leases [Table Text Block] |
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Lessee, Operating Lease, Liability, Maturity [Table Text Block] | The maturities of the Company’s lease liabilities as of March 31, 2019 is as follows (in thousands):
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REVENUE RECOGNITION (Tables) |
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Schedule of estimated revenues expected to be recognized in the future related to unsatisfied performance obligations |
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Schedule of change in contract liabilities |
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STOCK-BASED COMPENSATION (Tables) |
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Performance Shares Stock Options Other Forms Of Compensation And Common Share Repurchases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-Based Compensation [Table Text Block] |
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Schedule of Stock Options Roll Forward [Table Text Block] |
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Schedule of Unvested Restricted Stock Units Roll Forward [Table Text Block] |
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Schedule of Share-based Payment Award, Employee Stock Purchase Plan, Valuation Assumptions [Table Text Block] |
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ASSET IMPAIRMENT AND ESTIMATED LEASE TERMINATION AND OTHER CLOSING COSTS (Tables) |
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Asset Impairment, Estimated Lease Termination and Other Closing Costs [Table Text Block] |
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RESTAURANT ACQUISITIONS (Tables) |
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Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block] |
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Business Acquisition, Pro Forma Information [Table Text Block] |
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RELATED PARTY TRANSACTIONS (Tables) |
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Schedule of Related Party Transactions [Table Text Block] | The following table outlines amounts received from related parties during the three months ended March 31, 2019, and April 1, 2018:
The following table outlines accounts receivable from related parties as of March 31, 2019 and December 30, 2018:
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INTANGIBLE ASSETS, NET - Carrying Amounts (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 30, 2018 |
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Intangible assets | ||
Liquor licenses | $ 635 | $ 635 |
Intangible assets, net | 3,452 | 1,428 |
Lease Agreements [Member] | ||
Intangible assets | ||
Gross carrying amount | 1,123 | 1,091 |
Accumulated amortization | (333) | (323) |
Net carrying amount | 790 | 768 |
Reacquired Franchise Rights [Member] | ||
Intangible assets | ||
Net carrying amount | $ 2,027 | $ 25 |
INTANGIBLE ASSETS, NET - Amortization Expense (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 30, 2018 |
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Reacquired Franchise Rights [Member] | ||
Intangible assets | ||
Fiscal 2019 | $ 338 | |
Fiscal 2020 | 367 | |
Fiscal 2021 | 367 | |
Fiscal 2022 | 367 | |
Fiscal 2023 | 367 | |
Thereafter | 221 | |
Net carrying amount | 2,027 | $ 25 |
Lease Agreements [Member] | ||
Intangible assets | ||
Fiscal 2019 | 44 | |
Fiscal 2020 | 51 | |
Fiscal 2021 | 36 | |
Fiscal 2022 | 36 | |
Fiscal 2023 | 36 | |
Thereafter | 587 | |
Net carrying amount | $ 790 | $ 768 |
LONG-TERM DEBT AND FINANCING LEASE OBLIGATIONS - Narrative (Details) |
Mar. 31, 2019 |
Dec. 30, 2018 |
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Debt Disclosure [Abstract] | ||
Long-term Debt, Weighted Average Interest Rate | 4.19% | 4.41% |
LONG-TERM DEBT AND FINANCING LEASE OBLIGATIONS - Long-Term Debt and Financing Lease (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 30, 2018 |
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Less: current portion of long-term debt | $ (164) | $ (1,369) |
Long-term debt, less current portion | 2,358 | 2,411 |
First Loan Agreement [Member] | ||
Debt Instrument Carrying Amount | 2,664 | 2,705 |
Long-term Debt [Member] | ||
Less: deferred financing costs | (142) | (131) |
Less: current portion of long-term debt | $ (164) | $ (163) |
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 30, 2018 |
---|---|---|
Deferred Costs, Capitalized, Prepaid, And Other Assets Disclosure [Abstract] | ||
Prepaid expenses and deferred costs | $ 639 | $ 767 |
Prepaid insurance | 463 | 596 |
Prepaid expenses and other current assets | $ 1,102 | $ 1,363 |
OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 30, 2018 |
---|---|---|
Accrued Liabilities, Current [Abstract] | ||
Gift cards payable | $ 1,099 | $ 1,035 |
Accrued expenses | 1,343 | 1,238 |
Asset retirement obligations and lease reserves | 29 | 161 |
Sales tax payable | 345 | 274 |
State income tax payable | 16 | 16 |
Deferred franchise fees | 207 | 207 |
Accrued property and equipment purchases | 4 | 39 |
Total other current liabilities | $ 3,043 | $ 2,970 |
OTHER LIABILITIES (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 30, 2018 |
---|---|---|
Other Liabilities [Abstract] | ||
Deferred rent | $ 1,787 | |
Deferred franchise fees | $ 1,575 | 1,791 |
Miscellaneous other liabilities | 851 | 441 |
Asset retirement obligations | 8 | 16 |
Accrual for uncertain tax position | 10 | 10 |
Long term lease reserve | 254 | |
Long term deferred compensation | 186 | 193 |
Total other liabilities | $ 2,630 | $ 4,492 |
LEASES (Details) - lease |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Dec. 30, 2018 |
|
Lessee, Lease, Description [Line Items] | ||
Number of finance lease | 0 | 2 |
Operating lease, option to extend | true | |
Operating lease, renewal term | 5 years | |
Operating lease, Package practical expedient | true | |
Operating lease, Hindsight practical expedient | false | |
Minimum [Member] | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease, term | 5 years | |
Operating lease, number of renewal options | 1 | |
Operating lease, remaining lease term | 3 months | |
Maximum [Member] | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease, term | 20 years | |
Operating lease, remaining lease term | 21 years |
LEASES - Lease Expense (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Lease expense | |
Operating lease cost | $ 544 |
Short-term lease cost | 18 |
Variable lease cost | 3 |
Sublease income | (69) |
Total lease cost | $ 496 |
LEASES - Supplemental Cash Flow Information Related to Leases (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Cash paid for amounts included in the measurement of lease liabilities: | |
Operating cash flows from operating leases | $ 650 |
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 5,651 |
Weighted-average remaining lease term of operating | 11 years 5 months 19 days |
Weighted-average discount rate of operating leases | 5.64% |
LEASES - Maturities of lease liabilities (Details) $ in Thousands |
Mar. 31, 2019
USD ($)
|
---|---|
Maturities of lease liabilities | |
2019 | $ 2,210 |
2020 | 2,876 |
2021 | 2,836 |
2022 | 2,587 |
2023 | 2,067 |
Thereafter | 14,574 |
Total future minimum payments | 27,150 |
Less imputed interest | (8,315) |
Total lease liability | $ 18,835 |
LEASES - Additional Informations (Details) |
Dec. 31, 2018
Options
lease
|
---|---|
Leases [Abstract] | |
Number of operating lease not yet commenced | lease | 1 |
Operating lease not yet commenced, term | 15 years |
Operating lease not yet commenced, option to extend | true |
Operating lease not yet commenced, number of renewal options | Options | 2 |
Operating lease not yet commenced, renewal term | 5 years |
REVENUE RECOGNITION - (Details) |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Disaggregation of Revenue [Line Items] | |
Revenue expected to be recognized | $ 1,782,000 |
Gift Card Breakage [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue from contract with customer | 133,000 |
Revenue expected to be recognized | $ 1,100,000 |
STOCK-BASED COMPENSATION - Stock Options (Details) - $ / shares shares in Thousands |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2019 |
Dec. 30, 2018 |
|
Performance Shares Stock Options Other Forms Of Compensation And Common Share Repurchases [Abstract] | ||
Outstanding options at beginning of period (in shares) | 384 | |
Options granted | 40 | |
Options forfeited or expired (in shares) | (3) | |
Outstanding options at end of period (in shares) | 421 | 384 |
Outstanding Weighted Average Price at beginning of period | $ 7.43 | |
Granted Weighted Average Exercise Price | 4.81 | |
Forfeited or Expired Weighted Average Exercise Price | 6.71 | |
Outstanding Weighted Average Price at end of period | $ 7.18 | $ 7.43 |
Options Outstanding Weighted Average Remaining Contractual Term | 6 years 8 months 12 days | 6 years 8 months 12 days |
STOCK-BASED COMPENSATION - Restricted Stock (Details) - Restricted Stock [Member] shares in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2019
$ / shares
shares
| |
Number of Awards | |
Granted | shares | 189 |
Vested | shares | (4) |
Unvested at end of period | shares | 185 |
Weighted Average Award Date Fair Value | |
Granted | $ / shares | $ 5.00 |
Vested | $ / shares | 5.00 |
Unvested at end of period | $ / shares | $ 5.00 |
Weighted Average Remaining Contractual Life in Years | |
Balance at end of period | 3 years 10 months 24 days |
STOCK-BASED COMPENSATION - Valuation Assumptions (Details) - $ / shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Apr. 01, 2018 |
|
Performance Shares Stock Options Other Forms Of Compensation And Common Share Repurchases [Abstract] | ||
Weighted-average fair value of options granted during the period | $ 2.33 | $ 3.39 |
Expected life (in years) | 5 years 6 months | 6 years 1 month 6 days |
Expected dividend | 0.00% | 0.00% |
Expected stock volatility | 50.31% | 46.66% |
Risk-free interest rate | 2.50% | 2.70% |
ASSET IMPAIRMENT, ESTIMATED LEASE TERMINATION AND OTHER CLOSING COSTS (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Apr. 01, 2018 |
|
Impaired Long-Lived Assets Held and Used [Line Items] | ||
Asset impairments, net | $ 348 | $ 150 |
Asset impairment, estimated lease termination and other closing costs | 407 | (104) |
Lease Termination Charges [Member] | ||
Impaired Long-Lived Assets Held and Used [Line Items] | ||
Business exit costs | 20 | (433) |
Restaurant Closure Expenses [Member] | ||
Impaired Long-Lived Assets Held and Used [Line Items] | ||
Business exit costs | $ 39 | $ 179 |
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 30, 2018 |
---|---|---|
Fair Value Disclosures [Abstract] | ||
Assets, Fair Value Disclosure | $ 0 | $ 0 |
RESTAURANT ACQUISITIONS - Assets Acquired (Details) |
Mar. 04, 2019
USD ($)
restaurant
|
Mar. 31, 2019
USD ($)
|
Dec. 30, 2018
USD ($)
|
---|---|---|---|
Liabilities assumed | |||
Goodwill | $ 1,104,000 | $ 61,000 | |
Colorado Restaurants | |||
Business Acquisition [Line Items] | |||
Number of restaurants acquired | restaurant | 4 | ||
Acquisition costs | $ 157,000 | ||
Assets acquired: | |||
Cash and cash equivalents | 10,000 | ||
Inventory | 150,000 | ||
Property, plant, equipment and leasehold improvements, net | 1,902,000 | ||
Identifiable intangible assets, net | 1,495,000 | ||
Total assets acquired | 3,557,000 | ||
Liabilities assumed | |||
Gift card liability | (172,000) | ||
Net assets acquired | 3,385,000 | ||
Goodwill | 1,043,000 | ||
Total consideration transferred | $ 4,100,000 | $ 4,428,000 |
RESTAURANT ACQUISITIONS - Pro Forma (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Apr. 01, 2018 |
|
Business Combinations [Abstract] | ||
Business Acquisition, Pro Forma Revenue | $ 16,292 | $ 16,249 |
Business Acquisition, Pro Forma Income (Loss) from Continuing Operations, Net of Tax | $ 388 | $ 1,237 |
Business Acquisition, Pro Forma Income (Loss) from Continuing Operations, Net of Tax, Per Share, Basic | $ 0.04 | $ 0.17 |
Business Acquisition, Pro Forma Income (Loss) from Continuing Operations, Net of Tax, Per Share, Diluted | $ 0.04 | $ 0.17 |
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Apr. 01, 2018 |
Dec. 30, 2018 |
|
Director [Member] | |||
Related Party Transaction [Line Items] | |||
Revenues and NAF contributions | $ 388 | $ 382 | |
Accounts receivable from related parties | $ 291 | $ 271 | |
Beneficial Owner [Member] | |||
Related Party Transaction [Line Items] | |||
Beneficial ownership percentage | 18.20% | ||
Investor [Member] | |||
Related Party Transaction [Line Items] | |||
Revenues and NAF contributions | $ 77 | $ 75 | |
Accounts receivable from related parties | $ 40 | $ 44 |
SUBSEQUENT EVENTS (Details) - Subsequent Event [Member] - Famous Dave's Ribs, Inc. |
Apr. 29, 2019
USD ($)
restaurant
|
---|---|
Big Ten Ribs Purchased | |
Subsequent event line items | |
Number of restaurants acquired | 3 |
Contract purchase price | $ | $ 69,000 |
Grandville Restaurant | |
Subsequent event line items | |
Number of restaurants acquired | 1 |
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