Segment Reporting

3 Months Ended

Mar. 21, 2017

Segment Reporting [Abstract]

Segment Reporting

7. SEGMENT REPORTING

The Company operates the Del Frisco’s, Sullivan’s, and Grille brands as operating segments. The restaurant concepts operate solely in the U.S. within the full-service dining industry, providing similar products to similar customers. Sales from external customers are derived principally from food and beverage sales, and the Company does not rely on any major customers as a source of sales. The restaurant concepts also possess similar economic characteristics, resulting in similar long-term expected financial performance characteristics. However, as Del Frisco’s restaurants typically have higher revenues, driven by their larger physical presence and higher average check, the Del Frisco’s, Sullivan’s, and Grille operating segments have varying operating income and restaurant-level EBITDA margins due to the leveraging of higher revenues on certain fixed operating costs such as management labor, rent, utilities, and building maintenance.

The following tables present information about reportable segments (in thousands):

	12 Weeks Ended March 21, 2017
	Del Frisco's		Sullivan's		Grille		Corporate		Consolidated
Revenues	$	39,760	$	17,782	$	26,348	$	—	$	83,890
Restaurant-level EBITDA		10,698		3,498		3,762		—		17,958
Capital expenditures		4,475		3,916		3,287		107		11,785
Property and equipment		120,349		53,299		119,728		2,533		295,909
	12 Weeks Ended March 22, 2016
	Del Frisco's		Sullivan's		Grille		Corporate		Consolidated
Revenues	$	38,343	$	18,901	$	23,950	$	—	$	81,194
Restaurant-level EBITDA		10,713		3,548		3,768		—		18,029
Capital expenditures		1,284		208		1,270		7		2,769
Property and equipment		105,788		47,786		100,641		2,457		256,672

In addition to using consolidated results in evaluating the Company’s performance and allocating its resources, the Company’s chief operating decision maker uses restaurant-level EBITDA, which is not a measure defined by GAAP. The Company defines restaurant-level EBITDA as income before income taxes, other income (expenses), net, pre-opening costs, general and administrative costs, consulting project costs, lease termination and closing costs, and depreciation and amortization. Pre-opening costs are excluded because they vary in timing and magnitude and are not related to the health of ongoing operations. General and administrative costs are only included in the Company’s consolidated financial results as they are generally not specifically identifiable to individual operating segments as these costs relate to supporting all of the restaurant operations of the Company and the extension of the Company’s concepts into new markets. Lease termination and closing costs, consulting project costs, impairment charges, and depreciation and amortization are excluded because they are not ongoing controllable cash expenses, and they are not related to the health of ongoing operations. Property and equipment is the only balance sheet measure used by the Company’s chief operating decision maker in allocating resources.

The following table reconciles net income to restaurant-level EBITDA (in thousands).

	12 Weeks Ended
	March 21, 2017		March 22, 2016
Net income	$	3,310	$	5,411
Income tax expense		1,086		2,437
Net income before income taxes		4,396		7,848
Interest expense, net of capitalized interest		10		31
Other		2		—
Operating income		4,408		7,879
Pre-opening costs		389		94
General and administrative costs		6,311		5,750
Consulting project costs		2,036		—
Lease termination and closing costs		(2)		21
Depreciation and amortization		4,816		4,285
Restaurant-level EBITDA	$	17,958	$	18,029