0001789940-22-000083 | 10-Q | XBRL Viewer | First Watch Restaurant Group INC

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Cover - shares	6 Months Ended
Cover - shares	Jun. 26, 2022	Aug. 05, 2022
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 26, 2022
Document Transition Report	false
Entity File Number	001-40866
Entity Registrant Name	First Watch Restaurant Group, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	82-4271369
Entity Address, Address Line One	8725 Pendery Place
Entity Address, Address Line Two	Suite 201
Entity Address, City or Town	Bradenton
Entity Address, State or Province	FL
Entity Address, Postal Zip Code	34201
City Area Code	941
Local Phone Number	907-9800
Title of 12(b) Security	Common Stock, $0.01 par value
Trading Symbol	FWRG
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	true
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		59,080,348
Entity Central Index Key	0001789940
Amendment Flag	false
Current Fiscal Year End Date	--12-25
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q2

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 26, 2022	Dec. 26, 2021
Current assets:
Cash and cash equivalents	$ 53,566	$ 51,864
Restricted cash	251	251
Accounts receivable	3,869	4,450
Inventory	3,966	4,023
Prepaid expenses	5,542	5,677
Other current assets	2,837	1,432
Total current assets	70,031	67,697
Goodwill	345,219	345,219
Intangible assets, net	142,894	143,000
Operating lease right-of-use assets	343,797	324,995
Property, fixtures and equipment, net of accumulated depreciation of $130,380 and $115,582, respectively	177,025	164,695
Other long-term assets	1,282	1,311
Total assets	1,080,248	1,046,917
Current liabilities:
Accounts payable	6,986	11,060
Accrued liabilities	21,348	15,889
Accrued compensation and deferred payroll taxes	18,973	21,196
Deferred revenues	3,066	4,654
Current portion of operating lease liabilities	37,591	38,186
Current portion of long-term debt	4,395	3,186
Note payable	523	2,352
Total current liabilities	92,882	96,523
Operating lease liabilities	353,777	330,495
Long-term debt, net	97,180	99,753
Deferred income taxes	15,655	12,489
Other long-term liabilities	3,632	3,228
Total liabilities	563,126	542,488
Commitments and contingencies (Note 9)
Equity:
Preferred stock; $0.01 par value; 10,000,000 shares authorized; none issued and outstanding	0	0
Common stock; $0.01 par value; 300,000,000 shares authorized; 59,075,562 and 59,048,446 shares issued and outstanding at June 26, 2022 and December 26, 2021, respectively	591	590
Additional paid-in capital	614,223	608,878
Accumulated deficit	(97,692)	(105,039)
Total equity	517,122	504,429
Total liabilities and equity	$ 1,080,248	$ 1,046,917

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Jun. 26, 2022	Dec. 26, 2021
Statement of Financial Position [Abstract]
Accumulated depreciation	$ 130,380	$ 115,582
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock authorized (in shares)	300,000,000	300,000,000
Common stock, shares issued (in shares)	59,075,562	59,048,446
Common stock, shares outstanding (in shares)	59,075,562	59,048,446

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 26, 2022	Jun. 27, 2021	Jun. 26, 2022	Jun. 27, 2021
Revenues:
Total revenues	$ 184,453	$ 153,963	$ 357,565	$ 281,132
Restaurant operating expenses (exclusive of depreciation and amortization shown below):
Food and beverage costs	45,219	33,596	84,622	60,512
Labor and other related expenses	58,687	45,950	113,829	85,999
Other restaurant operating expenses	28,759	23,423	56,076	45,443
Occupancy expenses	14,844	13,765	29,227	27,066
Pre-opening expenses	1,094	899	2,079	2,063
General and administrative expenses	21,942	15,388	41,505	27,341
Depreciation and amortization	8,400	7,976	16,623	15,762
Impairments and loss on disposal of assets	155	39	234	163
Transaction expenses, net	300	615	557	626
Total operating costs and expenses	179,400	141,651	344,752	264,975
Income from operations	5,053	12,312	12,813	16,157
Interest expense	(1,126)	(6,289)	(2,132)	(12,605)
Other income, net	116	67	279	321
Income before income taxes	4,043	6,090	10,960	3,873
Income tax expense	(1,336)	(2,285)	(3,613)	(2,110)
Net income	2,707	3,805	7,347	1,763
Comprehensive income	$ 2,707	$ 3,805	$ 7,347	$ 1,763
Net income per common share - basic (in dollars per share)	$ 0.05	$ 0.08	$ 0.12	$ 0.04
Net income per common share - diluted (in dollars per share)	$ 0.05	$ 0.08	$ 0.12	$ 0.04
Weighted average common shares outstanding - basic (in shares)	59,057,991	45,013,784	59,053,219	45,013,784
Weighted average common shares outstanding - diluted (in shares)	59,888,029	45,562,703	59,933,003	45,560,575
Restaurant sales
Revenues:
Total revenues	$ 181,682	$ 151,688	$ 352,351	$ 277,054
Franchise revenues
Revenues:
Total revenues	$ 2,771	$ 2,275	$ 5,214	$ 4,078

CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Thousands	Total	Preferred Stock	Common Stock	Additional Paid-in Capital	Accumulated Deficit
Beginning balance (in shares) at Dec. 27, 2020		266,667	45,013,784
Beginning balance at Dec. 27, 2020	$ 320,866	$ 3	$ 450	$ 423,345	$ (102,932)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	1,763				1,763
Stock-based compensation	316			316
Ending balance (in shares) at Jun. 27, 2021		266,667	45,013,784
Ending balance at Jun. 27, 2021	322,945	$ 3	$ 450	423,661	(101,169)
Beginning balance (in shares) at Mar. 28, 2021		266,667	45,013,784
Beginning balance at Mar. 28, 2021	318,953	$ 3	$ 450	423,474	(104,974)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	3,805				3,805
Stock-based compensation	187			187
Ending balance (in shares) at Jun. 27, 2021		266,667	45,013,784
Ending balance at Jun. 27, 2021	322,945	$ 3	$ 450	423,661	(101,169)
Beginning balance (in shares) at Dec. 26, 2021			59,048,446
Beginning balance at Dec. 26, 2021	504,429		$ 590	608,878	(105,039)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	7,347				7,347
Stock-based compensation	5,102			5,102
Common stock issued upon exercise of stock options, net (in shares)			27,116
Common stock issued upon exercise of stock options, net	244		$ 1	243
Ending balance (in shares) at Jun. 26, 2022			59,075,562
Ending balance at Jun. 26, 2022	517,122		$ 591	614,223	(97,692)
Beginning balance (in shares) at Mar. 27, 2022			59,048,446
Beginning balance at Mar. 27, 2022	511,363		$ 590	611,172	(100,399)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	2,707				2,707
Stock-based compensation	2,808			2,808
Common stock issued upon exercise of stock options, net (in shares)			27,116
Common stock issued upon exercise of stock options, net	244		$ 1	243
Ending balance (in shares) at Jun. 26, 2022			59,075,562
Ending balance at Jun. 26, 2022	$ 517,122		$ 591	$ 614,223	$ (97,692)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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- Definition

Total of all stockholders' equity (deficit) items, net of receivables from officers, directors, owners, and affiliates of the entity which are attributable to the parent. The amount of the economic entity's stockholders' equity attributable to the parent excludes the amount of stockholders' equity which is allocable to that ownership interest in subsidiary equity which is not attributable to the parent (noncontrolling interest, minority interest). This excludes temporary equity and is sometimes called permanent equity.

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 26, 2022	Jun. 27, 2021
Cash flows from operating activities:
Net income	$ 7,347	$ 1,763
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	16,623	15,762
Stock-based compensation	5,102	316
Non-cash operating lease costs	7,730	6,285
Non-cash portion of gain on lease modifications	(62)	(13)
Deferred income taxes	3,166	2,033
Amortization of debt discount and deferred issuance costs	223	639
Impairments and loss on disposal of assets	234	163
Changes in assets and liabilities:
Accounts receivable	581	965
Inventory	57	(332)
Prepaid expenses	135	(1,374)
Deferred offering costs	0	(1,049)
Other assets, current and long-term	(1,376)	(366)
Accounts payable	(4,074)	2,147
Accrued liabilities and other long-term liabilities	3,636	5,567
Accrued compensation and deferred payroll taxes, current and long-term	(2,223)	5,347
Deferred revenues, current and long-term	(1,504)	(1,410)
Operating lease liabilities	(3,783)	(6,015)
Net cash provided by operating activities	31,812	30,428
Cash flows from investing activities:
Capital expenditures	(26,566)	(19,165)
Purchase of intangible assets	(379)	(359)
Net cash used in investing activities	(26,945)	(19,524)
Cash flows from financing activities:
Repayments of note payable	(1,829)	0
Repayments of long-term debt, including finance lease liabilities	(1,502)	(1,717)
Proceeds from exercise of stock options, net of employee taxes paid	244	0
Contingent consideration payment	(78)	0
Net cash used in financing activities	(3,165)	(1,717)
Net increase in cash and cash equivalents and restricted cash	1,702	9,187
Cash and cash equivalents and restricted cash, beginning of period	52,115	39,097
Cash and cash equivalents and restricted cash, end of period	53,817	48,284
Supplemental cash flow information:
Cash paid for interest	1,996	9,866
Cash paid for income taxes, net of refunds	593	31
Supplemental disclosures of non-cash investing and financing activities:
Interest converted to long-term debt	0	2,198
Leased assets obtained in exchange for new operating lease liabilities	27,216	19,355
Leased assets obtained in exchange for new finance lease liabilities	50	143
Remeasurements of operating lease assets and lease liabilities	(746)	(1,476)
Remeasurements of finance lease assets and lease liabilities	(135)	7
Increase (Decrease) in liabilities from acquisition of property, fixtures and equipment	$ 2,221	$ (475)

Nature of Business and Organization	6 Months Ended
Nature of Business and Organization	Jun. 26, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Nature of Business and Organization	Nature of Business and OrganizationFirst Watch Restaurant Group, Inc. (collectively with its wholly-owned subsidiaries, “the Company,” or “Management”) is a Delaware holding company. The Company operates and franchises restaurants in 28 states operating under the “First Watch” trade name, which are focused on made-to-order breakfast, brunch and lunch. The Company does not operate outside of the United States and all of its assets are located in the United States. As of June 26, 2022 and December 26, 2021, the Company operated 350 company-owned restaurants and 341 company-owned restaurants, respectively, and had 99 franchise-owned restaurants and 94 franchise-owned restaurants, respectively.

Summary of Significant Accounting Policies	6 Months Ended
Summary of Significant Accounting Policies	Jun. 26, 2022
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	Summary of Significant Accounting Policies Basis of Presentation The Company reports financial information on a 52- or 53-week fiscal year ending on the last Sunday of each calendar year. The Company’s fiscal quarters are comprised of 13 weeks each, except for fiscal years consisting of 53 weeks for which the fourth quarter will consist of 14 weeks, and end on the 13th Sunday of each quarter (14th Sunday of the fourth quarter, when applicable). The quarters ended June 26, 2022 and June 27, 2021 were both 13-week periods. These unaudited interim 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 as of and for the year ended December 26, 2021 (“2021 Form 10-K”). The accompanying unaudited interim consolidated financial statements have been prepared by the Company in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all the information and notes required by GAAP for complete financial statements. The unaudited interim consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements included in the 2021 Form 10-K and include all adjustments necessary for the fair statement of the consolidated financial statements for the interim periods presented. The results of operations for interim periods are not necessarily indicative of the results to be expected for other interim periods or the entire fiscal year. Reclassifications The Company reclassified certain items in the accompanying unaudited interim consolidated financial statements for the prior periods to be comparable with the classification for the current period. These reclassifications are related to the presentation of Pre-opening expenses on the Consolidated Statements of Operations and Comprehensive Income for the prior periods presented, which were previously included in Other restaurant operating expenses and Occupancy expenses. These reclassifications had no effect on previously reported net income and comprehensive income. Use of Estimates The preparation of the unaudited interim consolidated financial statements in accordance with GAAP requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited interim consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from the estimates and such differences could be material. Fair Value of Financial Instruments Certain assets and liabilities are carried at fair value. Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The carrying amounts of the Company’s financial instruments, including cash equivalents, accounts receivable, accounts payable, accrued expenses, note payable and other current liabilities, approximate their fair values due to their short-term maturities. At June 26, 2022, the Company’s outstanding debt under the new facilities pursuant to the new credit agreement executed in October 2021 had a fair value of $95.5 million and a carrying value of $98.8 million. Summary of Recently Issued Accounting Pronouncements In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”). The new guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. ASU 2020-04 was effective beginning March 12, 2020 and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. Management is currently evaluating its contracts and the optional expedients provided by the new standard. Recent accounting guidance not discussed herein is not applicable, did not have, or is not expected to have a material impact to the Company.

Revenues

6 Months Ended

Jun. 26, 2022

Revenue from Contract with Customer [Abstract]

Revenues

The following tables include a detail of liabilities from contracts with customers:


(in thousands)	JUNE 26, 2022		DECEMBER 26, 2021
Deferred revenues:
Deferred gift card revenue	$	2,805	$	4,410
Deferred franchise fee revenue - current	261		244
Total current deferred revenues	$	3,066	$	4,654
Other long-term liabilities:
Deferred franchise fee revenue - non-current	$	2,376	$	2,292

Changes in deferred gift card contract liabilities were as follows:


	THIRTEEN WEEKS ENDED				TWENTY-SIX WEEKS ENDED
(in thousands)	JUNE 26, 2022		JUNE 27, 2021		JUNE 26, 2022		JUNE 27, 2021
Deferred gift card revenue:
Balance, beginning of period	$	2,752	$	2,670	$	4,410	$	4,024
Gift card sales	2,362		2,153		3,578		3,085
Gift card redemptions	(2,089)		(1,987)		(4,679)		(4,060)
Gift card breakage	(220)		(179)		(504)		(392)
Balance, end of period	$	2,805	$	2,657	$	2,805	$	2,657

Changes in deferred franchise fee contract liabilities were as follows:


	THIRTEEN WEEKS ENDED				TWENTY-SIX WEEKS ENDED
(in thousands)	JUNE 26, 2022		JUNE 27, 2021		JUNE 26, 2022		JUNE 27, 2021
Deferred franchise fee revenue:
Balance, beginning of period	$	2,592	$	2,288	$	2,536	$	2,274
Cash received	110		—		230		82
Franchise revenues recognized	(65)		(56)		(129)		(124)
Balance, end of period	$	2,637	$	2,232	$	2,637	$	2,232

Revenues recognized disaggregated by type were as follows:


	THIRTEEN WEEKS ENDED				TWENTY-SIX WEEKS ENDED
(in thousands)	JUNE 26, 2022		JUNE 27, 2021		JUNE 26, 2022		JUNE 27, 2021
Restaurant sales:
In-restaurant dining sales	$	144,839	$	116,705	$	277,731	$	203,836
Third-party delivery sales	19,829		16,598		40,855		37,352
Take-out sales	17,014		18,385		33,765		35,866
Total restaurant sales	$	181,682	$	151,688	$	352,351	$	277,054

Franchise revenues:
Royalty and system fund contributions	$	2,706	$	2,219	$	5,085	$	3,954
Initial fees	65		56		129		124
Total franchise revenues	$	2,771	$	2,275	$	5,214	$	4,078
Total revenues	$	184,453	$	153,963	$	357,565	$	281,132

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-URI https://asc.fasb.org/topic&trid=49130388

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 10
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130551-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130556-203045

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
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-Paragraph 12
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 9
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130550-203045

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-SubTopic 10
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-Paragraph 12
-Subparagraph (e)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (d)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 15
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130558-203045

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (c)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045

+ Details

Accounts Receivable

6 Months Ended

Jun. 26, 2022

Receivables [Abstract]

Accounts Receivable

Accounts receivable consisted of the following:


(in thousands)	JUNE 26, 2022		DECEMBER 26, 2021
Receivables from third-party delivery providers	$	1,224	$	1,021
Receivables from franchisees	1,167		927
Receivables from vendors	805		428
Receivables related to gift card sales	617		1,453
Other receivables	56		621
Total accounts receivable	$	3,869	$	4,450

Accrued Liabilities

6 Months Ended

Jun. 26, 2022

Payables and Accruals [Abstract]

Accrued Liabilities

Accrued LiabilitiesAccrued liabilities consisted of the following:


(in thousands)	JUNE 26, 2022		DECEMBER 26, 2021
Construction liabilities	$	6,666	$	4,445
Sales tax	3,833		3,337
Self-insurance and general liability reserves	1,548		1,353
Utilities	1,319		1,306
Credit card fees	1,040		940
Property tax	993		638
Contingent rent	687		628
Common area maintenance	592		482
Other	4,670		2,760
Total accrued liabilities	$	21,348	$	15,889

Leases

6 Months Ended

Jun. 26, 2022

Leases [Abstract]

Leases

The following table includes a detail of lease assets and liabilities:


(in thousands)	Consolidated Balance Sheets Classification	JUNE 26, 2022		DECEMBER 26, 2021
Operating lease right-of-use assets	Operating lease right-of-use assets	$	343,797	$	324,995
Finance lease assets	Property, fixtures and equipment, net	1,561		1,892
Total lease assets		$	345,358	$	326,887

Operating lease liabilities (1) - current	Current portion of operating lease liabilities	37,591		38,186
Operating lease liabilities - non-current	Operating lease liabilities	353,777		330,495
Finance lease liabilities - current	Current portion of long-term debt	645		686
Finance lease liabilities - non-current	Long-term debt, net	1,034		1,331
Total lease liabilities		$	393,047	$	370,698

_____________

(1) Excludes all variable lease expense.

The components of lease expense are as follows:


(in thousands)	Consolidated Statements of Operations and Comprehensive Income Classification	THIRTEEN WEEKS ENDED				TWENTY-SIX WEEKS ENDED
		JUNE 26, 2022		JUNE 27, 2021		JUNE 26, 2022		JUNE 27, 2021
Operating lease expense	Other restaurant operating expenses Occupancy expenses Pre-opening expenses General and administrative expenses	$	12,130	$	11,034	$	24,176	$	21,886
Variable lease expense	Food and beverage costs Occupancy expenses General and administrative expenses	3,594		3,146		6,993		6,092
Finance lease expense:
Amortization of leased assets	Depreciation and amortization	132		135		267		266
Interest on lease liabilities	Interest expense	39		44		76		90
Total lease expense (1)		$	15,895	$	14,359	$	31,512	$	28,334

_____________

(1) Includes contingent rent expense of $0.4 million and $0.3 million during the thirteen weeks ended June 26, 2022 and June 27, 2021, respectively, and $0.8 million and $0.4 million during the twenty-six weeks ended June 26, 2022 and June 27, 2021, respectively.

Supplemental cash flow information related to leases was as follows:


	TWENTY-SIX WEEKS ENDED
(in thousands)	JUNE 26, 2022		JUNE 27, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows - operating leases	$	20,229	$	21,617
Operating cash flows - finance leases	$	76	$	90
Financing cash flows - finance leases	$	252	$	244

Supplemental information related to leases was as follows:


	TWENTY-SIX WEEKS ENDED
	JUNE 26, 2022		JUNE 27, 2021
Weighted-average remaining lease term (in years)
Operating leases	15.0		15.8
Finance leases	3.1		3.9
Weighted-average discount rate (1)
Operating leases	8.7	%	9.1	%
Finance leases	7.8	%	8.0	%

____________

(1) Based on the Company’s incremental borrowing rate.

As of June 26, 2022, future minimum lease payments for operating and finance leases consisted of the following:


(in thousands)	OPERATING LEASES		FINANCE LEASES
Fiscal year
2022	$	20,948	$	358
2023	42,053		626
2024	47,979		626
2025	47,872		221
2026	47,772		31
Thereafter	525,270		27
Total future minimum lease payments (1)	731,894		1,889
Less: imputed interest	(340,526)		(210)
Total present value of lease liabilities	$	391,368	$	1,679

_____________

(1) Excludes approximately $40.9 million of executed operating leases that have not commenced as of June 26, 2022.

Leases

The following table includes a detail of lease assets and liabilities:


(in thousands)	Consolidated Balance Sheets Classification	JUNE 26, 2022		DECEMBER 26, 2021
Operating lease right-of-use assets	Operating lease right-of-use assets	$	343,797	$	324,995
Finance lease assets	Property, fixtures and equipment, net	1,561		1,892
Total lease assets		$	345,358	$	326,887

Operating lease liabilities (1) - current	Current portion of operating lease liabilities	37,591		38,186
Operating lease liabilities - non-current	Operating lease liabilities	353,777		330,495
Finance lease liabilities - current	Current portion of long-term debt	645		686
Finance lease liabilities - non-current	Long-term debt, net	1,034		1,331
Total lease liabilities		$	393,047	$	370,698

_____________

(1) Excludes all variable lease expense.

The components of lease expense are as follows:


(in thousands)	Consolidated Statements of Operations and Comprehensive Income Classification	THIRTEEN WEEKS ENDED				TWENTY-SIX WEEKS ENDED
		JUNE 26, 2022		JUNE 27, 2021		JUNE 26, 2022		JUNE 27, 2021
Operating lease expense	Other restaurant operating expenses Occupancy expenses Pre-opening expenses General and administrative expenses	$	12,130	$	11,034	$	24,176	$	21,886
Variable lease expense	Food and beverage costs Occupancy expenses General and administrative expenses	3,594		3,146		6,993		6,092
Finance lease expense:
Amortization of leased assets	Depreciation and amortization	132		135		267		266
Interest on lease liabilities	Interest expense	39		44		76		90
Total lease expense (1)		$	15,895	$	14,359	$	31,512	$	28,334

_____________

Supplemental cash flow information related to leases was as follows:


	TWENTY-SIX WEEKS ENDED
(in thousands)	JUNE 26, 2022		JUNE 27, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows - operating leases	$	20,229	$	21,617
Operating cash flows - finance leases	$	76	$	90
Financing cash flows - finance leases	$	252	$	244

Supplemental information related to leases was as follows:


	TWENTY-SIX WEEKS ENDED
	JUNE 26, 2022		JUNE 27, 2021
Weighted-average remaining lease term (in years)
Operating leases	15.0		15.8
Finance leases	3.1		3.9
Weighted-average discount rate (1)
Operating leases	8.7	%	9.1	%
Finance leases	7.8	%	8.0	%

____________

(1) Based on the Company’s incremental borrowing rate.

As of June 26, 2022, future minimum lease payments for operating and finance leases consisted of the following:


(in thousands)	OPERATING LEASES		FINANCE LEASES
Fiscal year
2022	$	20,948	$	358
2023	42,053		626
2024	47,979		626
2025	47,872		221
2026	47,772		31
Thereafter	525,270		27
Total future minimum lease payments (1)	731,894		1,889
Less: imputed interest	(340,526)		(210)
Total present value of lease liabilities	$	391,368	$	1,679

_____________

(1) Excludes approximately $40.9 million of executed operating leases that have not commenced as of June 26, 2022.

Stock-Based Compensation

6 Months Ended

Jun. 26, 2022

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

Stock-based awards are granted to employees and non-employee directors. The Company has two compensation plans that provide for the granting of stock options and other share-based awards to key employees and non-employee members of the board of directors. The 2017 Omnibus Equity Incentive Plan (the “2017 Equity Plan”) and the 2021 Equity Incentive Plan (the “2021 Equity Plan”) provide for the grant of incentive stock options, non-qualified stock options, restricted stock awards, restricted stock units, stock appreciation rights and stock-based awards. No awards were granted under the 2017 Equity Plan during the thirteen and twenty-six weeks ended June 26, 2022 and the Company does not intend to grant any further awards under the 2017 Equity Plan. At June 26, 2022, a total of 3,002,180 common shares were available to grant under the 2021 Equity Plan.

Stock option awards

A total of 1,002,239 time-based stock option awards were granted under the 2021 Equity Plan during the twenty-six weeks ended June 26, 2022 which vest over a three-year requisite service period from the date of grant and expire 10 years after the grant date.

A summary of stock option activity during the twenty-six weeks ended June 26, 2022 is as follows:


	NUMBER OF OPTIONS	WEIGHTED AVERAGE EXERCISE PRICE		AGGREGATE INTRINSIC VALUE (in thousands)
Outstanding, December 26, 2021	4,409,331	$	9.48	$	28,598
Granted	1,002,239	$	12.58
Forfeited	(71,020)	$	11.95
Exercised	(30,274)	$	9.34
Outstanding, June 26, 2022	5,310,276	$	10.04	$	23,703

Exercisable, June 26, 2022	1,816,706	$	9.10	$	9,806

The aggregate intrinsic value is based on the difference between the exercise price of the stock option and the closing price of the Company’s common stock on the Nasdaq Global Select Market.

A summary of the non-vested stock option activity during the twenty-six weeks ended June 26, 2022 is as follows:


	NUMBER OF OPTIONS	WEIGHTED AVERAGE GRANT DATE FAIR VALUE
Nonvested, December 26, 2021	2,633,391	$	7.03
Granted	1,002,239	$	12.58
Vested	(71,040)	$	2.07
Forfeited	(71,020)	$	3.05
Nonvested, June 26, 2022	3,493,570	$	8.80

Fair value of Stock Options

The fair value of stock option awards is estimated on the date of grant using the Black-Scholes valuation model. The assumptions utilized to estimate the grant date fair value of the stock option awards granted during the twenty-six weeks ended June 26, 2022 were as follows:


Expected term (years)	6.5
Expected volatility	52.4	%
Risk-free interest rate	2.6	%
Expected dividend yield	—

The Company does not have sufficient historical stock option exercise activity and therefore Management estimated the expected term of stock options granted using the simplified method, which represents the mid-point between the vesting period and the contractual term for each grant. The expected volatility of stock options is based on the historical volatilities of a set of publicly traded peer companies in a similar industry. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve for time periods approximately equal to the expected term of the stock option award. The expected dividend yield is based on the fact that the Company has never paid cash dividends and does not have intentions of paying dividends in the foreseeable future.

Restricted Stock Units

During the thirteen and twenty-six weeks ended June 26, 2022, a total of 38,311 restricted stock units were granted under the 2021 Equity Plan at the weighted average grant date fair value of $14.36. The restricted stock units will vest over a one-year requisite service period from the date of grant.

Stock-Based Compensation Expense

Stock-based compensation expense was $2.8 million and $5.1 million during the thirteen and twenty-six weeks ended June 26, 2022, respectively. Stock based compensation expense was $0.2 million and $0.3 million during the thirteen and twenty-six weeks ended June 27, 2021, respectively.

Unrecognized Stock-Based Compensation Expense

The following represents unrecognized stock-based compensation expense and the remaining weighted average vesting period as of June 26, 2022:


	UNRECOGNIZED STOCK-BASED COMPENSATION EXPENSE (in thousands)		REMAINING WEIGHTED AVERAGE VESTING PERIOD (in years)
Stock options	$	14,309	1.5
Restricted stock units	$	508	0.9

Income Taxes

6 Months Ended

Jun. 26, 2022

Income Tax Disclosure [Abstract]

Income Taxes


	THIRTEEN WEEKS ENDED						TWENTY-SIX WEEKS ENDED
(in thousands)	JUNE 26, 2022			JUNE 27, 2021			JUNE 26, 2022			JUNE 27, 2021
Income before income taxes	$	4,043		$	6,090		$	10,960		$	3,873
Income tax expense	$	(1,336)		$	(2,285)		$	(3,613)		$	(2,110)
Effective income tax rate	33.0		%	37.5		%	33.0		%	54.5		%

The change in the effective income tax rates for the thirteen and twenty-six weeks ended June 26, 2022 as compared to the thirteen and twenty-six weeks ended June 27, 2021 was primarily due to (i) the change in the valuation allowance for federal and state deferred tax assets, (ii) the benefit of tax credits for FICA taxes on certain employees’ tips and (iii) permanent items including limitations on deductions of certain compensation.

The Company has a blended federal and state statutory rate of approximately 25.0%. The effective income tax rates for the thirteen and twenty-six weeks ended June 26, 2022 as compared to the thirteen and twenty-six weeks ended June 27, 2021 was primarily due to (i) the change in the valuation allowance for federal and state deferred tax assets, (ii) the benefit of tax credits for FICA taxes on certain employees’ tips and (iii) permanent items including limitations on deductions of certain compensation.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 21
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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-Paragraph 17
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-Subparagraph (SX 210.4-08(h)(2))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

+ Details

Commitment and Contingencies	6 Months Ended
Commitment and Contingencies	Jun. 26, 2022
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies Legal Proceedings The Company is subject to legal proceedings, claims and liabilities that arise in the ordinary course of business. The amount of the ultimate liability with respect to these matters was not material as of June 26, 2022. In the event any litigation losses become probable and estimable, the Company will recognize any anticipated losses. Unclaimed Property The Company is subject to unclaimed or abandoned property (escheat) laws which require it to turn over to state governmental authorities the property of others held by the Company that has been unclaimed for specified periods of time. Property subject to escheat laws generally relates to uncashed checks, trade accounts receivable credits and unredeemed gift card balances. During the first quarter of 2022, the Company received a letter from the Delaware Secretary of State inviting the Company to participate in the Delaware Secretary of State’s Abandoned or Unclaimed Property Voluntary Disclosure Agreement Program to avoid being sent an audit notice by the Delaware Department of Finance. On April 22, 2022, the Company entered into Delaware’s Voluntary Disclosure Agreement Program in order to voluntarily comply with Delaware’s abandoned property law in exchange for certain protections and benefits. The Company intends to work in good faith to complete a review of its books and records related to unclaimed or abandoned property during the periods required under the program. The Company will continue to examine its options regarding the escheat laws of Delaware including completing Delaware’s Voluntary Disclosure Agreement Program or proceeding to audit. Any potential loss, or range of loss, that may result from this matter is not currently reasonably estimable.

Net Income Per Common Share

6 Months Ended

Jun. 26, 2022

Earnings Per Share [Abstract]

Net Income Per Common Share

The following table sets forth the computations of basic and diluted net income per common share:


	THIRTEEN WEEKS ENDED				TWENTY-SIX WEEKS ENDED
(in thousands, except share and per share data)	JUNE 26, 2022		JUNE 27, 2021		JUNE 26, 2022		JUNE 27, 2021
Numerator:
Net income	$	2,707	$	3,805	$	7,347	$	1,763
Denominator:
Weighted average common shares outstanding - basic	59,057,991		45,013,784		59,053,219		45,013,784
Weighted average common shares outstanding - diluted	59,888,029		45,562,703		59,933,003		45,560,575
Net income per common share - basic	$	0.05	$	0.08	$	0.12	$	0.04
Net income per common share - diluted	$	0.05	$	0.08	$	0.12	$	0.04
Stock options outstanding not included in diluted net income per common share as their effect is anti-dilutive	2,213,408		630,195		1,567,102		630,195
Restricted stock units outstanding not included in diluted net income per share as their effect is anti-dilutive	11,185		—		—		—

Diluted net income per common share is calculated by adjusting the weighted average shares outstanding for the theoretical effect of potential common shares that would be issued for preferred stock using the two-class method, as well as for stock options and restricted stock units outstanding and unvested as of the respective periods using the treasury method.

During the thirteen and twenty-six weeks ended June 27, 2021, the performance-based stock options that were granted under the 2017 Equity Plan, certain of which were converted into time-based stock options upon the Company’s IPO, were excluded from the diluted net income per common share calculation as the performance condition was not considered probable of being met.

Summary of Significant Accounting Policies (Policies)	6 Months Ended
Summary of Significant Accounting Policies (Policies)	Jun. 26, 2022
Accounting Policies [Abstract]
Fiscal Period, Policy	The Company reports financial information on a 52- or 53-week fiscal year ending on the last Sunday of each calendar year. The Company’s fiscal quarters are comprised of 13 weeks each, except for fiscal years consisting of 53 weeks for which the fourth quarter will consist of 14 weeks, and end on the 13th Sunday of each quarter (14th Sunday of the fourth quarter, when applicable). The quarters ended June 26, 2022 and June 27, 2021 were both 13-week periods.
Basis of Presentation	The accompanying unaudited interim consolidated financial statements have been prepared by the Company in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).
Consolidation, Policy	Accordingly, they do not include all the information and notes required by GAAP for complete financial statements. The unaudited interim consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements included in the 2021 Form 10-K and include all adjustments necessary for the fair statement of the consolidated financial statements for the interim periods presented. The results of operations for interim periods are not necessarily indicative of the results to be expected for other interim periods or the entire fiscal year.
Reclassifications	ReclassificationsThe Company reclassified certain items in the accompanying unaudited interim consolidated financial statements for the prior periods to be comparable with the classification for the current period. These reclassifications are related to the presentation of Pre-opening expenses on the Consolidated Statements of Operations and Comprehensive Income for the prior periods presented, which were previously included in Other restaurant operating expenses and Occupancy expenses. These reclassifications had no effect on previously reported net income and comprehensive income.
Use of Estimates	Use of Estimates The preparation of the unaudited interim consolidated financial statements in accordance with GAAP requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited interim consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from the estimates and such differences could be material.
Fair Value of Financial Instruments	Fair Value of Financial InstrumentsCertain assets and liabilities are carried at fair value. Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The carrying amounts of the Company’s financial instruments, including cash equivalents, accounts receivable, accounts payable, accrued expenses, note payable and other current liabilities, approximate their fair values due to their short-term maturities. At June 26, 2022, the Company’s outstanding debt under the new facilities pursuant to the new credit agreement executed in October 2021 had a fair value of $95.5 million and a carrying value of $98.8 million.
Summary of Recently Issued Accounting Pronouncements	Summary of Recently Issued Accounting Pronouncements In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”). The new guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. ASU 2020-04 was effective beginning March 12, 2020 and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. Management is currently evaluating its contracts and the optional expedients provided by the new standard. Recent accounting guidance not discussed herein is not applicable, did not have, or is not expected to have a material impact to the Company.

Revenues (Tables)

6 Months Ended

Jun. 26, 2022

Revenue from Contract with Customer [Abstract]

Contract with Customer, Contract Asset, Contract Liability, and Receivable

The following tables include a detail of liabilities from contracts with customers:


(in thousands)	JUNE 26, 2022		DECEMBER 26, 2021
Deferred revenues:
Deferred gift card revenue	$	2,805	$	4,410
Deferred franchise fee revenue - current	261		244
Total current deferred revenues	$	3,066	$	4,654
Other long-term liabilities:
Deferred franchise fee revenue - non-current	$	2,376	$	2,292

Changes in deferred gift card contract liabilities were as follows:


	THIRTEEN WEEKS ENDED				TWENTY-SIX WEEKS ENDED
(in thousands)	JUNE 26, 2022		JUNE 27, 2021		JUNE 26, 2022		JUNE 27, 2021
Deferred gift card revenue:
Balance, beginning of period	$	2,752	$	2,670	$	4,410	$	4,024
Gift card sales	2,362		2,153		3,578		3,085
Gift card redemptions	(2,089)		(1,987)		(4,679)		(4,060)
Gift card breakage	(220)		(179)		(504)		(392)
Balance, end of period	$	2,805	$	2,657	$	2,805	$	2,657

Changes in deferred franchise fee contract liabilities were as follows:


	THIRTEEN WEEKS ENDED				TWENTY-SIX WEEKS ENDED
(in thousands)	JUNE 26, 2022		JUNE 27, 2021		JUNE 26, 2022		JUNE 27, 2021
Deferred franchise fee revenue:
Balance, beginning of period	$	2,592	$	2,288	$	2,536	$	2,274
Cash received	110		—		230		82
Franchise revenues recognized	(65)		(56)		(129)		(124)
Balance, end of period	$	2,637	$	2,232	$	2,637	$	2,232

Disaggregation of Revenue

Revenues recognized disaggregated by type were as follows:


	THIRTEEN WEEKS ENDED				TWENTY-SIX WEEKS ENDED
(in thousands)	JUNE 26, 2022		JUNE 27, 2021		JUNE 26, 2022		JUNE 27, 2021
Restaurant sales:
In-restaurant dining sales	$	144,839	$	116,705	$	277,731	$	203,836
Third-party delivery sales	19,829		16,598		40,855		37,352
Take-out sales	17,014		18,385		33,765		35,866
Total restaurant sales	$	181,682	$	151,688	$	352,351	$	277,054

Franchise revenues:
Royalty and system fund contributions	$	2,706	$	2,219	$	5,085	$	3,954
Initial fees	65		56		129		124
Total franchise revenues	$	2,771	$	2,275	$	5,214	$	4,078
Total revenues	$	184,453	$	153,963	$	357,565	$	281,132

Accounts Receivable (Tables)

6 Months Ended

Jun. 26, 2022

Receivables [Abstract]

Accounts Receivable

Accounts receivable consisted of the following:


(in thousands)	JUNE 26, 2022		DECEMBER 26, 2021
Receivables from third-party delivery providers	$	1,224	$	1,021
Receivables from franchisees	1,167		927
Receivables from vendors	805		428
Receivables related to gift card sales	617		1,453
Other receivables	56		621
Total accounts receivable	$	3,869	$	4,450

Accrued Liabilities (Tables)

6 Months Ended

Jun. 26, 2022

Payables and Accruals [Abstract]

Schedule of Accrued Liabilities

Accrued liabilities consisted of the following:


(in thousands)	JUNE 26, 2022		DECEMBER 26, 2021
Construction liabilities	$	6,666	$	4,445
Sales tax	3,833		3,337
Self-insurance and general liability reserves	1,548		1,353
Utilities	1,319		1,306
Credit card fees	1,040		940
Property tax	993		638
Contingent rent	687		628
Common area maintenance	592		482
Other	4,670		2,760
Total accrued liabilities	$	21,348	$	15,889

Leases (Tables)

6 Months Ended

Jun. 26, 2022

Leases [Abstract]

Supplemental Information Related to Leases

The following table includes a detail of lease assets and liabilities:


(in thousands)	Consolidated Balance Sheets Classification	JUNE 26, 2022		DECEMBER 26, 2021
Operating lease right-of-use assets	Operating lease right-of-use assets	$	343,797	$	324,995
Finance lease assets	Property, fixtures and equipment, net	1,561		1,892
Total lease assets		$	345,358	$	326,887

Operating lease liabilities (1) - current	Current portion of operating lease liabilities	37,591		38,186
Operating lease liabilities - non-current	Operating lease liabilities	353,777		330,495
Finance lease liabilities - current	Current portion of long-term debt	645		686
Finance lease liabilities - non-current	Long-term debt, net	1,034		1,331
Total lease liabilities		$	393,047	$	370,698

_____________

(1) Excludes all variable lease expense.

Supplemental information related to leases was as follows:


	TWENTY-SIX WEEKS ENDED
	JUNE 26, 2022		JUNE 27, 2021
Weighted-average remaining lease term (in years)
Operating leases	15.0		15.8
Finance leases	3.1		3.9
Weighted-average discount rate (1)
Operating leases	8.7	%	9.1	%
Finance leases	7.8	%	8.0	%

____________

(1) Based on the Company’s incremental borrowing rate.

Supplemental Cash Flow Information

The components of lease expense are as follows:


(in thousands)	Consolidated Statements of Operations and Comprehensive Income Classification	THIRTEEN WEEKS ENDED				TWENTY-SIX WEEKS ENDED
		JUNE 26, 2022		JUNE 27, 2021		JUNE 26, 2022		JUNE 27, 2021
Operating lease expense	Other restaurant operating expenses Occupancy expenses Pre-opening expenses General and administrative expenses	$	12,130	$	11,034	$	24,176	$	21,886
Variable lease expense	Food and beverage costs Occupancy expenses General and administrative expenses	3,594		3,146		6,993		6,092
Finance lease expense:
Amortization of leased assets	Depreciation and amortization	132		135		267		266
Interest on lease liabilities	Interest expense	39		44		76		90
Total lease expense (1)		$	15,895	$	14,359	$	31,512	$	28,334

_____________

Supplemental cash flow information related to leases was as follows:


	TWENTY-SIX WEEKS ENDED
(in thousands)	JUNE 26, 2022		JUNE 27, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows - operating leases	$	20,229	$	21,617
Operating cash flows - finance leases	$	76	$	90
Financing cash flows - finance leases	$	252	$	244

Operating Lease Maturity

As of June 26, 2022, future minimum lease payments for operating and finance leases consisted of the following:


(in thousands)	OPERATING LEASES		FINANCE LEASES
Fiscal year
2022	$	20,948	$	358
2023	42,053		626
2024	47,979		626
2025	47,872		221
2026	47,772		31
Thereafter	525,270		27
Total future minimum lease payments (1)	731,894		1,889
Less: imputed interest	(340,526)		(210)
Total present value of lease liabilities	$	391,368	$	1,679

_____________

(1) Excludes approximately $40.9 million of executed operating leases that have not commenced as of June 26, 2022

Finance Lease Maturity

As of June 26, 2022, future minimum lease payments for operating and finance leases consisted of the following:


(in thousands)	OPERATING LEASES		FINANCE LEASES
Fiscal year
2022	$	20,948	$	358
2023	42,053		626
2024	47,979		626
2025	47,872		221
2026	47,772		31
Thereafter	525,270		27
Total future minimum lease payments (1)	731,894		1,889
Less: imputed interest	(340,526)		(210)
Total present value of lease liabilities	$	391,368	$	1,679

_____________

(1) Excludes approximately $40.9 million of executed operating leases that have not commenced as of June 26, 2022

Stock-Based Compensation (Tables)

6 Months Ended

Jun. 26, 2022

Share-Based Payment Arrangement [Abstract]

Schedule of Stock Options Roll Forward

A summary of stock option activity during the twenty-six weeks ended June 26, 2022 is as follows:


	NUMBER OF OPTIONS	WEIGHTED AVERAGE EXERCISE PRICE		AGGREGATE INTRINSIC VALUE (in thousands)
Outstanding, December 26, 2021	4,409,331	$	9.48	$	28,598
Granted	1,002,239	$	12.58
Forfeited	(71,020)	$	11.95
Exercised	(30,274)	$	9.34
Outstanding, June 26, 2022	5,310,276	$	10.04	$	23,703

Exercisable, June 26, 2022	1,816,706	$	9.10	$	9,806

The aggregate intrinsic value is based on the difference between the exercise price of the stock option and the closing price of the Company’s common stock on the Nasdaq Global Select Market.

Schedule of Fair Value Non-vested Options at Grant Dates

A summary of the non-vested stock option activity during the twenty-six weeks ended June 26, 2022 is as follows:


	NUMBER OF OPTIONS	WEIGHTED AVERAGE GRANT DATE FAIR VALUE
Nonvested, December 26, 2021	2,633,391	$	7.03
Granted	1,002,239	$	12.58
Vested	(71,040)	$	2.07
Forfeited	(71,020)	$	3.05
Nonvested, June 26, 2022	3,493,570	$	8.80

Details of Weighted-Average Grant-Date Fair Values and Assumptions Used for Estimating Fair Values

The assumptions utilized to estimate the grant date fair value of the stock option awards granted during the twenty-six weeks ended June 26, 2022 were as follows:


Expected term (years)	6.5
Expected volatility	52.4	%
Risk-free interest rate	2.6	%
Expected dividend yield	—

Schedule of Unrecognized Stock-based Compensation Expense

The following represents unrecognized stock-based compensation expense and the remaining weighted average vesting period as of June 26, 2022:


	UNRECOGNIZED STOCK-BASED COMPENSATION EXPENSE (in thousands)		REMAINING WEIGHTED AVERAGE VESTING PERIOD (in years)
Stock options	$	14,309	1.5
Restricted stock units	$	508	0.9

Income Taxes (Tables)

6 Months Ended

Jun. 26, 2022

Income Tax Disclosure [Abstract]

Schedule of Components of Income Tax Expense (Benefit) and Effective Income Tax Rate


	THIRTEEN WEEKS ENDED						TWENTY-SIX WEEKS ENDED
(in thousands)	JUNE 26, 2022			JUNE 27, 2021			JUNE 26, 2022			JUNE 27, 2021
Income before income taxes	$	4,043		$	6,090		$	10,960		$	3,873
Income tax expense	$	(1,336)		$	(2,285)		$	(3,613)		$	(2,110)
Effective income tax rate	33.0		%	37.5		%	33.0		%	54.5		%

Net Income Per Common Share (Tables)

6 Months Ended

Jun. 26, 2022

Earnings Per Share [Abstract]

Computations of Basic and Diluted Net Income Per Common Share

The following table sets forth the computations of basic and diluted net income per common share:


	THIRTEEN WEEKS ENDED				TWENTY-SIX WEEKS ENDED
(in thousands, except share and per share data)	JUNE 26, 2022		JUNE 27, 2021		JUNE 26, 2022		JUNE 27, 2021
Numerator:
Net income	$	2,707	$	3,805	$	7,347	$	1,763
Denominator:
Weighted average common shares outstanding - basic	59,057,991		45,013,784		59,053,219		45,013,784
Weighted average common shares outstanding - diluted	59,888,029		45,562,703		59,933,003		45,560,575
Net income per common share - basic	$	0.05	$	0.08	$	0.12	$	0.04
Net income per common share - diluted	$	0.05	$	0.08	$	0.12	$	0.04
Stock options outstanding not included in diluted net income per common share as their effect is anti-dilutive	2,213,408		630,195		1,567,102		630,195
Restricted stock units outstanding not included in diluted net income per share as their effect is anti-dilutive	11,185		—		—		—

Nature of Business and Organization - Additional Information (Details)	Jun. 26, 2022 state restaurant	Dec. 26, 2021 restaurant
Franchisor Disclosure [Line Items]
Number of states where company operates and franchises restaurants \| state	28
Company-owned restaurants
Franchisor Disclosure [Line Items]
Number of restaurants	350	341
Franchise-owned restaurants
Franchisor Disclosure [Line Items]
Number of restaurants	99	94

Summary of Significant Accounting Policies (Details) - Term Facility - New Facilities - Line of Credit $ in Millions	Jun. 26, 2022 USD ($)
Debt Instrument [Line Items]
Fair value of outstanding debt, excluding finance lease liabilities and financing obligations	$ 95.5
Long-term debt	$ 98.8

- Definition

Amount, excluding unamortized premium (discount) and debt issuance cost, of long-term debt. Excludes lease obligation.

+ References + Details

Revenues - Detail of Contract Liabilities (Details) - USD ($) $ in Thousands	Jun. 26, 2022	Dec. 26, 2021
Revenue from Contract with Customer [Abstract]
Deferred gift card revenue	$ 2,805	$ 4,410
Deferred franchise fee revenue - current	261	244
Total current deferred revenues	3,066	4,654
Deferred franchise fee revenue - non-current	$ 2,376	$ 2,292

Revenues - Change in Contract Liabilities (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 26, 2022	Jun. 27, 2021	Jun. 26, 2022	Jun. 27, 2021
Changes in contract liabilities, deferred gift card revenue
Balance, beginning of period	$ 2,752	$ 2,670	$ 4,410	$ 4,024
Gift card sales	2,362	2,153	3,578	3,085
Gift card redemptions	(2,089)	(1,987)	(4,679)	(4,060)
Gift card breakage	(220)	(179)	(504)	(392)
Balance, end of period	2,805	2,657	2,805	2,657
Changes in contract liabilities, deferred franchise fee revenue
Balance, beginning of period	2,592	2,288	2,536	2,274
Cash received	110	0	230	82
Franchise revenues recognized	(65)	(56)	(129)	(124)
Balance, end of period	$ 2,637	$ 2,232	$ 2,637	$ 2,232

Revenues - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 26, 2022	Jun. 27, 2021	Jun. 26, 2022	Jun. 27, 2021
Disaggregation of Revenue [Line Items]
Total revenues	$ 184,453	$ 153,963	$ 357,565	$ 281,132
Restaurant sales
Disaggregation of Revenue [Line Items]
Total revenues	181,682	151,688	352,351	277,054
In-restaurant dining sales
Disaggregation of Revenue [Line Items]
Total revenues	144,839	116,705	277,731	203,836
Third-party delivery sales
Disaggregation of Revenue [Line Items]
Total revenues	19,829	16,598	40,855	37,352
Take-out sales
Disaggregation of Revenue [Line Items]
Total revenues	17,014	18,385	33,765	35,866
Franchise revenues
Disaggregation of Revenue [Line Items]
Total revenues	2,771	2,275	5,214	4,078
Royalty and system fund contributions
Disaggregation of Revenue [Line Items]
Total revenues	2,706	2,219	5,085	3,954
Initial fees
Disaggregation of Revenue [Line Items]
Total revenues	$ 65	$ 56	$ 129	$ 124

- Definition

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 30
-Subparagraph (a)
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-Publisher FASB
-Name Accounting Standards Codification
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-Section 50
-Paragraph 40
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-Publisher FASB
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-Name Accounting Standards Codification
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-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599

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-Name Accounting Standards Codification
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-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599

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-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 4
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130543-203045

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
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-Publisher FASB
-Name Accounting Standards Codification
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-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8736-108599

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
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-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9054-108599

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
-Topic 606
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-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130545-203045

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 924
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-Section S99
-Paragraph 1
-Subparagraph (SAB Topic 11.L)
-URI https://asc.fasb.org/extlink&oid=6472922&loc=d3e499488-122856

+ Details

Accounts Receivable (Details) - USD ($) $ in Thousands	Jun. 26, 2022	Dec. 26, 2021
Receivables [Abstract]
Receivables from third-party delivery providers	$ 1,224	$ 1,021
Receivables from franchisees	1,167	927
Receivables from vendors	805	428
Receivables related to gift card sales	617	1,453
Other receivables	56	621
Total accounts receivable	$ 3,869	$ 4,450

Accrued Liabilities (Details) - USD ($) $ in Thousands	Jun. 26, 2022	Dec. 26, 2021
Payables and Accruals [Abstract]
Construction liabilities	$ 6,666	$ 4,445
Sales tax	3,833	3,337
Self-insurance and general liability reserves	1,548	1,353
Utilities	1,319	1,306
Credit card fees	1,040	940
Property tax	993	638
Contingent rent	687	628
Common area maintenance	592	482
Other	4,670	2,760
Total accrued liabilities	$ 21,348	$ 15,889

Leases - Lease Assets and Lease Liabilities (Details) - USD ($) $ in Thousands	Jun. 26, 2022	Dec. 26, 2021
Leases [Abstract]
Operating lease right-of-use assets	$ 343,797	$ 324,995
Finance lease assets	1,561	1,892
Total lease assets	345,358	326,887
Operating lease liabilities - current	37,591	38,186
Operating lease liabilities - non-current	353,777	330,495
Finance lease liabilities - current	645	686
Finance lease liabilities - non-current	1,034	1,331
Total lease liabilities	$ 393,047	$ 370,698
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration]	Property, fixtures and equipment, net of accumulated depreciation of $130,380 and $115,582, respectively	Property, fixtures and equipment, net of accumulated depreciation of $130,380 and $115,582, respectively
Finance Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration]	Current portion of long-term debt	Current portion of long-term debt
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration]	Long-term debt, net	Long-term debt, net

Leases - Components of Lease Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 26, 2022	Jun. 27, 2021	Jun. 26, 2022	Jun. 27, 2021
Leases [Abstract]
Operating lease expense	$ 12,130	$ 11,034	$ 24,176	$ 21,886
Variable lease expense	3,594	3,146	6,993	6,092
Amortization of leased assets	132	135	267	266
Interest on lease liabilities	39	44	76	90
Total lease expense	15,895	14,359	31,512	28,334
Contingent rent expense	$ 400	$ 300	$ 800	$ 400

Leases - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 26, 2022	Jun. 27, 2021
Leases [Abstract]
Operating cash flows - operating leases	$ 20,229	$ 21,617
Operating cash flows - finance leases	76	90
Financing cash flows - finance leases	$ 252	$ 244

Leases - Supplemental Information Related to Leases (Details)	Jun. 26, 2022	Jun. 27, 2021
Weighted-average remaining lease term (in years)
Operating leases	15 years	15 years 9 months 18 days
Finance leases	3 years 1 month 6 days	3 years 10 months 24 days
Weighted-average discount rate
Operating leases	8.70%	9.10%
Finance leases	7.80%	8.00%

Leases - Operating and Finance Lease Maturity (Details) $ in Thousands	Jun. 26, 2022 USD ($)
OPERATING LEASES
2022	$ 20,948
2023	42,053
2024	47,979
2025	47,872
2026	47,772
Thereafter	525,270
Total future minimum lease payments	731,894
Less: imputed interest	(340,526)
Total present value of lease liabilities	391,368
FINANCE LEASES
2022	358
2023	626
2024	626
2025	221
2026	31
Thereafter	27
Total future minimum lease payments	1,889
Less: imputed interest	(210)
Total present value of lease liabilities	1,679
Executed operating leases that have not commenced	$ 40,900

Stock-Based Compensation - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 26, 2022	Jun. 27, 2021	Jun. 26, 2022	Jun. 27, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock available for grant (in shares)	3,002,180		3,002,180
Options granted (in shares)			1,002,239
Requisite service period			3 years
Share-based payment award, expiration period			10 years
Options granted (in shares)			1,002,239
Options granted, grant date fair value (in dollars per share)			$ 12.58
Stock-based compensation expense	$ 2.8	$ 0.2	$ 5.1	$ 0.3
Restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Requisite service period	1 year		1 year
Options granted (in shares)	38,311		38,311
Options granted, grant date fair value (in dollars per share)	$ 14.36		$ 14.36

Stock-Based Compensation - Schedule of Stock Options Roll Forward (Details) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 26, 2022 USD ($) $ / shares shares
NUMBER OF OPTIONS
Options outstanding, beginning of period (in shares) \| shares	4,409,331
Options granted (in shares) \| shares	1,002,239
Options forfeited (in shares) \| shares	(71,020)
Options exercised (in shares) \| shares	(30,274)
Options outstanding, end of period (in shares) \| shares	5,310,276
Options exercisable, end of period (in shares) \| shares	1,816,706
WEIGHTED AVERAGE EXERCISE PRICE
Options outstanding, beginning of period, weighted average exercise price (in dollars per share) \| $ / shares	$ 9.48
Options granted, weighted average exercise price (in dollars per share) \| $ / shares	12.58
Options forfeited, weighted average exercise price (in dollars per share) \| $ / shares	11.95
Options exercised, weighted average exercise price (in dollars per share) \| $ / shares	9.34
Options outstanding, end of period, weighted average exercise price (in dollars per share) \| $ / shares	10.04
Options exercisable, end of period, weighted average exercise price (in dollars per share) \| $ / shares	$ 9.10
AGGREGATE INTRINSIC VALUE (in thousands)
Options outstanding, beginning of period, aggregate intrinsic value \| $	$ 28,598
Options outstanding, end of period, aggregate intrinsic value \| $	23,703
Options exercisable, end of period, aggregate intrinsic value \| $	$ 9,806

Stock-Based Compensation - Schedule of Fair Value Non-vested Options at Grant Dates (Details)	6 Months Ended
	Jun. 26, 2022 $ / shares shares
NUMBER OF OPTIONS
Nonvested options, beginning balance (in shares) \| shares	2,633,391
Options granted (in shares) \| shares	1,002,239
Options vested (in shares) \| shares	(71,040)
Options forfeited (in shares) \| shares	(71,020)
Nonvested options, ending balance (in shares) \| shares	3,493,570
WEIGHTED AVERAGE GRANT DATE FAIR VALUE
Nonvested grant date fair value, beginning balance (in dollars per share) \| $ / shares	$ 7.03
Options granted, grant date fair value (in dollars per share) \| $ / shares	12.58
Options vested, grant date fair value (in dollars per share) \| $ / shares	2.07
Options forfeited, grant date fair value (in dollars per share) \| $ / shares	3.05
Nonvested grant date fair value, ending balance (in dollars per share) \| $ / shares	$ 8.80

Stock-Based Compensation - Details of Weighted-Average Grant-Date Fair Values and Assumptions Used for Estimating Fair Values (Details)	6 Months Ended
	Jun. 26, 2022 USD ($)
Share-Based Payment Arrangement [Abstract]
Expected term (years)	6 years 6 months
Expected volatility	52.40%
Risk-free interest rate	2.60%
Expected dividend yield	$ 0

Stock-Based Compensation - Schedule of Unrecognized Stock-based Compensation Expense (Details) $ in Thousands	6 Months Ended
	Jun. 26, 2022 USD ($)
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized stock compensation expense	$ 14,309
REMAINING WEIGHTED AVERAGE VESTING PERIOD (in years)	1 year 6 months
Restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized stock compensation expense	$ 508
REMAINING WEIGHTED AVERAGE VESTING PERIOD (in years)	10 months 24 days

Income Taxes - Components of Income Tax Expense (Benefit) and Effective Income Tax Rate (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 26, 2022	Jun. 27, 2021	Jun. 26, 2022	Jun. 27, 2021
Income Tax Disclosure [Abstract]
Income before income taxes	$ 4,043	$ 6,090	$ 10,960	$ 3,873
Income tax expense	$ (1,336)	$ (2,285)	$ (3,613)	$ (2,110)
Effective income tax rate	33.00%	37.50%	33.00%	54.50%

- Definition

Amount of income (loss) from continuing operations, including income (loss) from equity method investments, before deduction of income tax expense (benefit), and income (loss) attributable to noncontrolling interest.

+ References

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+ Details

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

Income Taxes - Additional Information (Details)	6 Months Ended
Income Taxes - Additional Information (Details)	Jun. 26, 2022
Income Tax Disclosure [Abstract]
Blended federal and state statutory rate	25.00%

Net Income Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 26, 2022	Jun. 27, 2021	Jun. 26, 2022	Jun. 27, 2021
Numerator
Net income	$ 2,707	$ 3,805	$ 7,347	$ 1,763
Net income	$ 2,707	$ 3,805	$ 7,347	$ 1,763
Denominator
Weighted average common shares outstanding - basic (in shares)	59,057,991	45,013,784	59,053,219	45,013,784
Weighted average common shares outstanding - diluted (in shares)	59,888,029	45,562,703	59,933,003	45,560,575
Net income per common share - basic (in dollars per share)	$ 0.05	$ 0.08	$ 0.12	$ 0.04
Net income per common share - diluted (in dollars per share)	$ 0.05	$ 0.08	$ 0.12	$ 0.04
Stock options
Denominator
Option awards and restricted stock units outstanding not included in diluted net income per common share as their effect is anti-dilutive (in shares)	2,213,408	630,195	1,567,102	630,195
Restricted stock units
Denominator
Option awards and restricted stock units outstanding not included in diluted net income per common share as their effect is anti-dilutive (in shares)	11,185	0	0	0