Related Party Transactions

9 Months Ended

Sep. 27, 2011

Related Party Transactions

Related Party Transactions

(7)Related Party Transactions

The Longview, Texas restaurant, which was acquired by us in connection with the completion of our initial public offering, leases the land and restaurant building from an entity controlled by Steven L. Ortiz, our Chief Operating Officer. The lease term is 15 years and will terminate in November 2014. The lease can be renewed for two additional terms of five years each. Rent is approximately $19,000 per month. The lease can be terminated if the tenant fails to pay the rent on a timely basis, fails to maintain the insurance specified in the lease, fails to maintain the building or property or becomes insolvent. Total rent payments were approximately $55,000 for each of the 13 week periods ending September 27, 2011 and September 28, 2010.  For each of the 39 week periods ended September 27, 2011 and September 28, 2010, rent payments were $0.2 million.

The Bossier City, Louisiana restaurant, of which Steven L. Ortiz beneficially owns 66.0% and we own 5.0%, leases the land and building from an entity owned by Mr. Ortiz.  The lease term is 15 years and will terminate on March 31, 2020.  Rent is approximately $16,600 per month and escalates 10% each five year period during the term.  The next rent escalation is in the second quarter of 2015.  The lease can be terminated if the tenant fails to pay rent on a timely basis, fails to maintain insurance, abandons the property or becomes insolvent.  Total rent payments were approximately $50,000 for each of the 13 week periods ended September 27, 2011 and September 28, 2010.  For each of the 39 week periods ended September 27, 2011 and September 28, 2010, rent payments were $0.1 million.

We have 15 franchise and license restaurants owned, in whole or part, by certain of our officers, directors or 5% shareholders at September 27, 2011 and September 28, 2010. These entities paid us fees of approximately $0.5 million during both of the 13 week periods ended September 27, 2011 and September 28, 2010, respectively.  For both of the 39 week periods ended September 27, 2011 and September 28, 2010, these entities paid us fees of $1.6 million.  As disclosed in note 6, we are contingently liable on leases which are related to three of these restaurants.

On August 17, 2011, we entered into an agreement with G.J. Hart, our former President and Chief Executive Officer, whereby Mr. Hart will provide consulting services to us from August 17, 2011 through January 2, 2012.  In consideration of the services to be performed by Mr. Hart, our Board of Directors accelerated the vesting of a grant of 60,000 restricted stock units from January 7, 2012 to January 2, 2012.  The agreement also provides for partial payment of health insurance premiums through December 31, 2011.