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Segment Information
 12 Months Ended
Dec. 29, 2024
Segment Reporting [Abstract]  
Segment Information
(11)
Segment Information

 

The Company has three reportable segments: (i) U.S. stores; (ii) supply chain; and (iii) international franchise.

 

The Company’s operations are organized by management on the combined basis of line of business and geography. The U.S. stores segment includes operations with respect to all franchised and Company-owned stores throughout the U.S. The supply chain segment primarily includes the distribution of food, and to a lesser extent, other products, from the Company’s supply chain center operations in the U.S. and Canada. Over 90% of the Company’s supply chain revenues are attributable to the U.S. The international franchise segment includes operations related to the Company’s franchising business in foreign markets. The accounting policies of the reportable segments are the same as those described in Note 1. The Company’s chief operating decision maker is its Chief Executive Officer, and he evaluates the performance of the Company’s segments and allocates resources to them based on revenues and earnings before interest, taxes, depreciation, amortization and other, referred to as Segment Income. The Company uses Segment Income to determine future business objectives and targets and for long-range planning for the reportable segments, as well as to evaluate their operating performance.

 

The tables below summarize the financial information, including revenues, significant segment expenses, Segment Income and capital expenditures, concerning the Company’s reportable segments for fiscal years 2024, 2023 and 2022. Intersegment revenues are comprised of sales of food, and to a lesser extent, other products, from the supply chain segment to the Company-owned stores in the U.S. stores segment. Intersegment sales prices are market based.

 

 

 

Fiscal year ended December 29, 2024

 

 

 

U.S.
Stores

 

 

Supply
Chain

 

 

International
Franchise

 

 

Total

 

U.S. Company-owned stores

 

$

393,898

 

 

$

—

 

 

$

—

 

 

$

393,898

 

U.S. franchise royalties and fees

 

 

638,193

 

 

 

—

 

 

 

—

 

 

 

638,193

 

Supply chain

 

 

—

 

 

 

2,966,953

 

 

 

—

 

 

 

2,966,953

 

Supply chain - intersegment revenues

 

 

—

 

 

 

(121,172

)

 

 

—

 

 

 

(121,172

)

International franchise royalties and fees

 

 

—

 

 

 

—

 

 

 

318,691

 

 

 

318,691

 

U.S. franchise advertising

 

 

509,853

 

 

 

—

 

 

 

—

 

 

 

509,853

 

Segment revenues

 

$

1,541,944

 

 

$

2,845,781

 

 

$

318,691

 

 

$

4,706,416

 

Cost of sales - food

 

 

114,220

 

 

 

2,027,816

 

 

 

—

 

 

 

2,142,036

 

Cost of sales - labor

 

 

123,251

 

 

 

262,312

 

 

 

—

 

 

 

385,563

 

Cost of sales - other (1)

 

 

78,197

 

 

 

202,694

 

 

 

—

 

 

 

280,891

 

U.S. franchise advertising

 

 

509,853

 

 

 

—

 

 

 

—

 

 

 

509,853

 

General and administrative (2)

 

 

151,030

 

 

 

72,348

 

 

 

58,029

 

 

 

281,407

 

Segment Income

 

$

565,393

 

 

$

280,611

 

 

$

260,662

 

 

$

1,106,666

 

Segment capital expenditures (3)

 

$

10,959

 

 

$

44,653

 

 

$

33

 

 

$

55,645

 

 

 

 

Fiscal year ended December 31, 2023

 

 

 

U.S.
Stores

 

 

Supply
Chain

 

 

International
Franchise

 

 

Total

 

U.S. Company-owned stores

 

$

376,180

 

 

$

—

 

 

$

—

 

 

$

376,180

 

U.S. franchise royalties and fees

 

 

604,897

 

 

 

—

 

 

 

—

 

 

 

604,897

 

Supply chain

 

 

—

 

 

 

2,829,224

 

 

 

—

 

 

 

2,829,224

 

Supply chain - intersegment revenues

 

 

—

 

 

 

(114,215

)

 

 

—

 

 

 

(114,215

)

International franchise royalties and fees

 

 

—

 

 

 

—

 

 

 

310,077

 

 

 

310,077

 

U.S. franchise advertising

 

 

473,195

 

 

 

—

 

 

 

—

 

 

 

473,195

 

Segment revenues

 

$

1,454,272

 

 

$

2,715,009

 

 

$

310,077

 

 

$

4,479,358

 

Cost of sales - food

 

 

109,554

 

 

 

1,964,500

 

 

 

—

 

 

 

2,074,054

 

Cost of sales - labor

 

 

118,798

 

 

 

247,048

 

 

 

—

 

 

 

365,846

 

Cost of sales - other (1)

 

 

75,457

 

 

 

192,794

 

 

 

—

 

 

 

268,251

 

U.S. franchise advertising

 

 

473,195

 

 

 

—

 

 

 

—

 

 

 

473,195

 

General and administrative (2)

 

 

156,291

 

 

 

65,237

 

 

 

50,469

 

 

 

271,997

 

Segment Income

 

$

520,977

 

 

$

245,430

 

 

$

259,608

 

 

$

1,026,015

 

Segment capital expenditures (3)

 

$

11,942

 

 

$

34,044

 

 

$

93

 

 

$

46,079

 

 

 

 

Fiscal year ended January 1, 2023

 

 

 

U.S.
Stores

 

 

Supply
Chain

 

 

International
Franchise

 

 

Total

 

U.S. Company-owned stores

 

$

445,810

 

 

$

—

 

 

$

—

 

 

$

445,810

 

U.S. franchise royalties and fees

 

 

556,269

 

 

 

—

 

 

 

—

 

 

 

556,269

 

Supply chain

 

 

—

 

 

 

2,898,069

 

 

 

—

 

 

 

2,898,069

 

Supply chain - intersegment revenues

 

 

—

 

 

 

(143,327

)

 

 

—

 

 

 

(143,327

)

International franchise royalties and fees

 

 

—

 

 

 

—

 

 

 

295,007

 

 

 

295,007

 

U.S. franchise advertising

 

 

485,330

 

 

 

—

 

 

 

—

 

 

 

485,330

 

Segment revenues

 

$

1,487,409

 

 

$

2,754,742

 

 

$

295,007

 

 

$

4,537,158

 

Cost of sales - food

 

 

139,887

 

 

 

2,046,049

 

 

 

—

 

 

 

2,185,936

 

Cost of sales - labor

 

 

135,993

 

 

 

240,950

 

 

 

—

 

 

 

376,943

 

Cost of sales - other (1)

 

 

88,764

 

 

 

194,919

 

 

 

—

 

 

 

283,683

 

U.S. franchise advertising

 

 

485,330

 

 

 

—

 

 

 

—

 

 

 

485,330

 

General and administrative (2)

 

 

198,831

 

 

 

64,025

 

 

 

58,863

 

 

 

321,719

 

Segment Income

 

$

438,604

 

 

$

208,799

 

 

$

236,144

 

 

$

883,547

 

Segment capital expenditures (3)

 

$

9,830

 

 

$

34,625

 

 

$

—

 

 

$

44,455

 

 

(1)
Cost of sales - other, includes delivery, occupancy costs (including rent, telephone and utilities) and insurance expense. Depreciation and amortization is not included in the measurement of Segment Income.
(2)
General and administrative expense consists primarily of labor cost (including variable performance-based compensation expense), computer expenses, professional fees, travel and entertainment, rent, insurance and other. Depreciation and amortization, non-cash equity-based compensation expense and gains and losses from the sale of assets are not included in the measurement of Segment Income.
(3)
The Company also had $53.7 million, $59.2 million and $44.4 million of other capital expenditures not attributable to the reportable segments primarily representing capitalized software in 2024, 2023 and 2022, respectively.

 

The following table reconciles total Segment Income to income before provision for income taxes:

 

 

 

2024

 

 

2023

 

 

2022

 

Total Segment Income

 

$

1,106,666

 

 

$

1,026,015

 

 

$

883,547

 

General and administrative - other (1)

 

 

(94,995

)

 

 

(86,894

)

 

 

(26,022

)

Depreciation and amortization

 

 

(87,732

)

 

 

(80,640

)

 

 

(80,251

)

Non-cash equity-based compensation expense

 

 

(43,255

)

 

 

(37,514

)

 

 

(28,709

)

Loss on sale/disposal of assets

 

 

(1,527

)

 

 

(1,299

)

 

 

(1,813

)

Refranchising (loss) gain

 

 

(158

)

 

 

(149

)

 

 

21,173

 

Income from operations

 

 

878,999

 

 

 

819,519

 

 

 

767,925

 

Other income

 

 

22,064

 

 

 

17,713

 

 

 

—

 

Interest income

 

 

17,022

 

 

 

11,683

 

 

 

3,162

 

Interest expense

 

 

(195,870

)

 

 

(196,475

)

 

 

(198,254

)

Income before provision for income taxes

 

$

722,215

 

 

$

652,440

 

 

$

572,833

 

 

(1)
Represents corporate administrative costs that have not been allocated to a reportable segment including labor, computer expenses, professional fees, travel and entertainment, rent, insurance and other corporate administrative costs.

 

In 2023, the Company changed its allocation methodology for certain costs which support certain internally developed software used across the Company’s franchise system. This allocation methodology change was implemented in order to reflect the way the chief operating decision maker allocates resources to the Company’s reportable segments and evaluates segment profitability, including the costs of internally developed software. The change in allocation methodology of certain software development costs resulted in an estimated increase in U.S. stores Segment Income of $65.7 million and an estimated increase in international franchise Segment Income of $8.9 million. These estimated increases in U.S. stores and international franchise Segment Income were offset by a corresponding $74.6 million decrease in unallocated general and administrative - other expenses. The change in allocation methodology of certain software development costs in 2023 had no impact on revenues, income from operations or supply chain Segment Income. The change in allocation methodology for certain software development costs was a prospective change and the comparative information for fiscal 2022 has not been restated.

The following table summarizes the Company’s identifiable asset information by reportable segment as of December 29, 2024 and December 31, 2023:

 

 

 

December 29,
2024

 

 

December 31,
2023

 

U.S. stores

 

$

240,408

 

 

$

232,336

 

Supply chain

 

 

641,523

 

 

 

631,908

 

International franchise

 

 

38,306

 

 

 

37,981

 

Reportable segment assets

 

 

920,237

 

 

 

902,225

 

Unallocated

 

 

816,776

 

 

 

772,674

 

Total assets

 

$

1,737,013

 

 

$

1,674,899

 

 

Unallocated assets primarily include cash and cash equivalents, restricted cash and cash equivalents, certain accounts receivable and prepaid expenses, investments and marketable securities, certain long-lived assets including certain property, plant and equipment, capitalized software and the operating lease right-of-use asset for the Company’s corporate headquarters and deferred income taxes. Over 95% of the Company’s long-lived assets including property, plant and equipment, capitalized software and operating lease right-of-use assets are located in the U.S.

 

The following table summarizes the Company’s goodwill balance by reportable segment as of December 29, 2024 and December 31, 2023:

 

 

 

December 29,
2024

 

 

December 31,
2023

 

U.S. stores

 

$

10,511

 

 

$

10,621

 

Supply chain

 

 

1,067

 

 

 

1,067

 

Consolidated goodwill

 

$

11,578

 

 

$

11,688