Income Taxes (Tables)

12 Months Ended

Jan. 02, 2022

Income Tax Disclosure [Abstract]

Schedule of Income before Income Tax, Domestic and Foreign

Income before income taxes is set forth below:

	Year Ended
	2021		2020		2019
Domestic	$	228,756	$	149,046	$	160,474
Foreign (a)	11,822		3,749		11,007
	$	240,578	$	152,795	$	171,481

_______________

(a)Excludes foreign income of domestic subsidiaries.

Schedule of Components of Income Tax (Expense) Benefit

The (provision for) benefit from income taxes is set forth below:

	Year Ended
	2021		2020		2019
Current:
U.S. federal	$	(38,416)	$	(16,176)	$	(18,421)
State	(7,039)		(3,723)		(6,093)
Foreign	(8,512)		(4,798)		(9,190)
Current tax provision	(53,967)		(24,697)		(33,704)
Deferred:
U.S. federal	(52)		(6,707)		1,585
State	15,993		(3,185)		(2,449)
Foreign	(2,160)		(374)		27
Deferred tax (provision) benefit	13,781		(10,266)		(837)
Income tax provision	$	(40,186)	$	(34,963)	$	(34,541)

Schedule of Deferred Tax Assets and Liabilities

Deferred tax assets (liabilities) are set forth below:

	Year End
	January 2, 2022		January 3, 2021
Deferred tax assets:
Operating and finance lease liabilities	$	368,932	$	365,005
Net operating loss and credit carryforwards	60,620		62,210
Deferred revenue	23,636		24,303
Unfavorable leases	19,060		23,511
Accrued compensation and related benefits	18,487		16,443
Accrued expenses and reserves	6,763		7,673
Other	7,586		5,869
Valuation allowances	(38,277)		(49,968)
Total deferred tax assets	466,807		455,046
Deferred tax liabilities:
Operating and finance lease assets	(341,681)		(332,515)
Intangible assets	(290,088)		(301,969)
Fixed assets	(63,936)		(63,826)
Other	(38,812)		(37,491)
Total deferred tax liabilities	(734,517)		(735,801)
	$	(267,710)	$	(280,755)

Summary of Net Operating Loss and Tax Credit Carryforwards

The amounts and expiration dates of net operating loss and tax credit carryforwards are as follows:

	Amount		Expiration
Tax credit carryforwards:
U.S. federal foreign tax credits	$	15,309	2022-2032
State tax credits	593		2022-2023
Foreign tax credits of non-U.S. subsidiaries	4,159		Indefinite
Total	$	20,061
Net operating loss carryforwards (pre-tax):
State and local net operating loss carryforwards	$	1,131,604	2022-Indefinite
Foreign net operating loss carryforwards	6,962		Indefinite
Total	$	1,138,566

Schedule of Effective Income Tax Rate Reconciliation

The reconciliation of income tax computed at the U.S. federal statutory rate of 21% to reported income tax is set forth below:

	Year Ended
	2021		2020		2019
Income tax provision at the U.S. federal statutory rate	$	(50,521)	$	(32,087)	$	(36,011)
State income tax provision, net of U.S. federal income tax effect	(6,256)		(4,664)		(6,470)
Prior years’ tax matters (a)	1,820		1,761		6,135
Excess federal tax benefits from share-based compensation	7,160		5,338		5,841
Foreign and U.S. tax effects of foreign operations	(5)		(397)		250
Valuation allowances (b)	11,807		(4,593)		(2,833)
Non-deductible goodwill (c)	(947)		—		—
Tax credits	1,028		1,901		879
Non-deductible executive compensation	(3,810)		(1,973)		(1,925)
Unrepatriated earnings	(282)		(283)		(402)
Non-deductible expenses and other	(180)		34		(5)
	$	(40,186)	$	(34,963)	$	(34,541)

_______________

(a)2019 primarily relates to a reduction in unrecognized tax benefits due to a lapse of statute of limitations.

(b)2021 primarily relates to the $12,606 benefit resulting from the state tax law change described above. The effect of the tax law change also included $840 of additional deferred tax expense included in the State income tax provision line item, for a total of $11,766.

(c)Related to the sale of the New York Company-operated restaurants (including Manhattan). See Note 4 for further information.

Schedule of Unrecognized Tax Benefits Roll Forward

As of January 2, 2022, the Company had unrecognized tax benefits of $18,849, which, if resolved favorably would reduce income tax expense by $14,890. A reconciliation of the beginning and ending amount of unrecognized tax benefits follows:

	Year Ended
	2021		2020		2019
Beginning balance	$	20,973	$	22,323	$	27,632
Additions:
Tax positions of current year	157		322		1,356
Tax positions of prior years	—		—		—
Reductions:
Tax positions of prior years	(2,015)		(1,183)		(227)
Settlements	(46)		(119)		—
Lapse of statute of limitations	(220)		(370)		(6,438)
Ending balance	$	18,849	$	20,973	$	22,323