XML 23 R11.htm IDEA: XBRL DOCUMENT v3.22.4
Reorganization and Realignment Costs
 12 Months Ended
Jan. 01, 2023
Restructuring and Related Activities [Abstract]  
Reorganization and Realignment Costs Reorganization and Realignment Costs
The following is a summary of the initiatives included in “Reorganization and realignment costs:”
Year Ended
202220212020
Operations and field realignment$59 $1,758 $3,801 
IT realignment32 (10)7,288 
G&A realignment(4)(52)614 
System optimization initiative611 6,852 4,327 
Reorganization and realignment costs$698 $8,548 $16,030 

Operations and Field Realignment

In September 2020, the Company initiated a plan to reallocate resources to better support the long-term growth strategies for Company and franchise operations (the “Operations and Field Realignment Plan”). The Operations and Field Realignment Plan realigned the Company’s restaurant operations team, including transitioning from separate leaders of Company and franchise operations to a single leader of all U.S. restaurant operations. The Operations and Field Realignment Plan also included contract terminations, including the closure of certain field offices. During 2021 and 2020, the Company recognized costs totaling $1,758 and $3,801, respectively, which primarily included third-party and other costs in 2021 and severance and related employee costs and share-based compensation in 2020. The Company does not expect to incur any material additional costs under the Operations and Field Realignment Plan.

The following is a summary of the activity recorded as a result of the Operations and Field Realignment Plan:
Year EndedTotal Incurred Since Inception
202220212020
Severance and related employee costs$7 $270 $3,113 $3,390 
Third-party and other costs52 1,488 67 1,607 
59 1,758 3,180 4,997 
Share-based compensation (a)— — 621 621 
Total operations and field realignment$59 $1,758 $3,801 $5,618 
_______________

(a)Primarily represents incremental share-based compensation resulting from the modification of stock options in connection with the termination of employees under the Operations and Field Realignment Plan.
The tables below present a rollforward of our accruals for the Operations and Field Realignment Plan, which are included in “Accrued expenses and other current liabilities” as of January 2, 2022.
Balance January 2, 2022
ChargesPayments
Balance January 1, 2023
Severance and related employee costs$155 $7 $(162)$— 
Third-party and other costs11 52 (63)— 
$166 $59 $(225)$— 
Balance January 3, 2021
ChargesPayments
Balance January 2, 2022
Severance and related employee costs$2,600 $270 $(2,715)$155 
Third-party and other costs— 1,488 (1,477)11 
$2,600 $1,758 $(4,192)$166 

Information Technology (“IT”) Realignment

In December 2019, our Board of Directors approved a plan to realign and reinvest resources in the Company’s IT organization to strengthen its ability to accelerate growth (the “IT Realignment Plan”). The Company has partnered with a third-party global IT consultant on this new structure to leverage their global capabilities, enabling a more seamless integration between its digital and corporate IT assets. The IT Realignment Plan has reduced certain employee compensation and other related costs that the Company has reinvested back into IT to drive additional capabilities and capacity across all of its technology platforms. Additionally, in June 2020, the Company made changes to its leadership structure that included the elimination of the Chief Digital Experience Officer position and the creation of a Chief Information Officer position. During 2020, the Company recognized costs totaling $7,288, which primarily included third-party and other costs and recruitment and relocation costs. The Company does not expect to incur any material additional costs under the IT Realignment Plan.

The following is a summary of the activity recorded as a result of the IT Realignment Plan:
Year EndedTotal Incurred Since Inception
202220212020
Severance and related employee costs (a)$— $(165)$843 $8,226 
Recruitment and relocation costs29 146 1,296 1,471 
Third-party and other costs3 9 5,149 6,547 
32 (10)7,288 16,244 
Share-based compensation (b)— — — 193 
Total IT realignment $32 $(10)$7,288 $16,437 
_______________

(a)2021 includes a reversal of an accrual as a result of a change in estimate.

(b)Primarily represents incremental share-based compensation resulting from the modification of stock options in connection with the termination of employees under the IT realignment plan.

General and Administrative (“G&A”) Realignment

In May 2017, the Company initiated a plan to reduce its G&A expenses (the “G&A Realignment Plan”). No material costs were incurred by the Company under the G&A Realignment Plan during 2022, 2021 and 2020. The Company does not expect to incur any material additional costs under the G&A Realignment Plan.
System Optimization Initiative

The Company recognizes costs related to acquisitions and dispositions under its system optimization initiative. During 2022, the Company recognized costs totaling $611, which were primarily comprised of professional fees and other costs associated with the Company’s acquisition of 93 franchise-operated restaurants in Florida during the fourth quarter of 2021. During 2021, the Company recognized costs totaling $6,852, which were primarily comprised of the write-off of certain lease assets, lease termination fees and transaction fees associated with the NPC bankruptcy sale process, as well as professional fees and transaction fees associated with the Company’s acquisition of 93 franchise-operated restaurants in Florida during the fourth quarter of 2021. During 2020, the Company recognized costs totaling $4,327, which primarily included professional fees related to the NPC bankruptcy sale process. See Note 3 for further information. The Company expects to recognize a gain of approximately $700, primarily related to the write-off of certain NPC-related lease liabilities upon final termination of the leases.

The following is a summary of the costs recorded as a result of our system optimization initiative:
Year EndedTotal Incurred Since Inception
202220212020
Severance and related employee costs$4 $661 $— $18,902 
Professional fees395 1,570 4,323 24,072 
Other (a)145 1,765 4 7,763 
544 3,996 4,327 50,737 
Accelerated depreciation and amortization (b)— — — 25,398 
NPC lease termination costs (c)67 2,856 — 2,923 
Share-based compensation (d)— — — 5,013 
Total system optimization initiative$611 $6,852 $4,327 $84,071 
_______________

(a)2021 includes transaction fees of $1,350 associated with the NPC bankruptcy sale process.

(b)Primarily includes accelerated amortization of previously acquired franchise rights related to the Company-operated restaurants in territories that have been sold to franchisees in connection with our system optimization initiative.

(c)2021 includes the write-off of lease assets of $1,376 and lease termination fees paid of $1,480.

(d)Represents incremental share-based compensation resulting from the modification of stock options and performance-based awards in connection with the termination of employees under our system optimization initiative.

The table below presents a rollforward of our accruals for our system optimization initiative.
Balance January 3, 2021
ChargesPayments
Balance January 2, 2022
Severance and related employee costs$— $661 $(661)$— 
Professional fees1,230 1,570 (2,800)— 
Other— 1,765 (1,765)— 
$1,230 $3,996 $(5,226)$— 
Organizational Redesign

On February 16, 2023, the Board of Directors approved a plan to redesign the Company’s organizational structure to better support the execution of the Company’s long-term growth strategy by maximizing organizational efficiency and streamlining decision making. As a result of the redesign, the Company expects to hold its general and administrative expense in 2023 and 2024 relatively flat compared with 2022. The Company expects to incur total costs of approximately $11,000 to $13,000 related to these savings. The total costs expected to be incurred are comprised of (1) severance and related employee costs of approximately $8,000, (2) recruitment and relocation costs of approximately $1,000, (3) third-party and other costs of approximately $1,000 and (4) share-based compensation of approximately $2,000. The Company expects costs to be recognized during 2023 and continue into 2026, with approximately three-fourths to be recognized during 2023.