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Basis of Presentation (Policies) | 6 Months Ended
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Jun. 30, 2018
Accounting Policies [Abstract] |
Fiscal Year End | The Company uses a 52/53-week fiscal year that ends on the last Saturday of the calendar year. Fiscal years 2018 and 2017 have 52 weeks
Advertising Fund | Advertising Fund The Company administers the Wingstop Restaurants Advertising Fund (“Ad Fund”), which is used for various forms of advertising for the Wingstop brand. Advertising fund contributions and expenditures are reported on a gross basis in the Consolidated Statements of Operations, which are largely offsetting and therefore do not significantly impact our reported net income. Advertising expenses incurred by company-owned restaurants are included within cost of sales in the Consolidated Statements of Operations. Administrative support services and compensation expenses of employees that provide services directly to the Ad Fund, are included in selling, general and administrative expenses (“SG&A”) in the Consolidated Statements of Operations. The Ad Fund contribution collected from Wingstop restaurant franchisees and company-owned and operated restaurants is equal to 3% of gross sales. For the twenty-six weeks ended June 30, 2018 and July 1, 2017, the Company contributed $1.9 million and $3.8 million, respectively, for the purpose of supplementing the national advertising campaign, which were included in Advertising expenses in the Consolidated Statements of Operations. The Company consolidates and reports all assets and liabilities of the Ad Fund as restricted assets of the Ad Fund and liabilities of the Ad Fund within current assets and current liabilities, respectively, in the Consolidated Balance Sheets. The assets and liabilities of the Ad Fund consist primarily of cash, receivables, accrued expenses, other liabilities and any cumulative surplus related to the Ad Fund. Under the Company’s franchise agreements, contributions to the Ad Fund are restricted to advertising, public relations, merchandising, similar activities, and administrative expenses to increase sales and further enhance the public reputation of the Wingstop brand. The aforementioned administrative expenses may also include personnel expenses and allocated costs incurred by the Company which are directly associated with administering the Ad Fund, as outlined in the provisions of the applicable franchise agreements. Total cash balances related to the Ad Fund as of June 30, 2018 and December 30, 2017 were $2.5 million and $2.3 million, respectively.
Recent Accounting Pronouncements | Recently Issued Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2016-02, Leases (Topic 842). ASU 2016-02 amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU 2016-02 will be effective beginning in the first quarter of fiscal year 2019. Early adoption of ASU 2016-02 as of its issuance is permitted. This new guidance requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. We anticipate implementing the standard by taking advantage of the practical expedient option. The discounted minimum remaining rental payments will be the starting point for determining the right-of-use asset and lease liability. We expect that adoption of the new guidance will have a material impact on the consolidated balance sheets due to the recognition of the right-of-use asset and lease liability related to our current operating leases. The process of evaluating the full impact of the new guidance on our consolidated financial statements and disclosures is ongoing, but we anticipate the initial evaluation of the impact will be completed in fiscal 2018. In March 2018, the FASB issued ASU 2018-05, Income Taxes (Topic 740). ASU 2018-05 provides guidance on accounting for the income tax effects of the Tax Cuts and Jobs Act of 2017 (the “Act”), which impacts U.S. corporate tax rates, business-related exclusions, and deductions and credits. The Act also has tax consequences for many companies that operate internationally. The Company recognized the income tax effects of the Act in its 2017 financial statements in accordance with Staff Accounting Bulletin No. 118, which provides SEC staff guidance for the application of Accounting Standards Codification (“ASC”) Topic 740, "Income Taxes," in the reporting period in which the Act was signed into law. As such, the Company’s financial results reflect the income tax effects of the Act for which the accounting under ASC Topic 740 is complete and provisional amounts for those specific income tax effects of the Act for which the accounting under ASC Topic 740 is incomplete but a reasonable estimate could be determined. The Company will continue to analyze additional information and guidance related to the Act as supplemental legislation, regulatory guidance, or evolving technical interpretations become available. The final impacts may differ from the recorded amounts as of June 30, 2018, and we will continue to refine such amounts within the measurement period provided by Staff Accounting Bulletin No. 118. We expect to complete our analysis no later than the fourth quarter of 2018. Recently Adopted Accounting Pronouncements In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which superseded nearly all existing revenue recognition guidance. The new guidance provided a single framework in which revenue is required to be recognized to depict the transfer of goods or services to customers in amounts that reflect the consideration to which a company expects to be entitled in exchange for those goods or services. The Company adopted this new guidance effective the first day of fiscal year 2018, using the full retrospective transition method, which resulted in adjusting each prior reporting period presented and a cumulative effect adjustment, which was recorded as of the first day of 2016. The adoption changed the timing of recognition of initial franchise fees, development fees, territory fees for our international business and renewal and transfer fees, as well as the reporting of Ad Fund contributions and related expenditures. See Note 11 for further discussion. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”), which requires that restricted cash and cash equivalents be included as components of total cash and cash equivalents as presented on the statement of cash flows. ASU 2016-18 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017 and a retrospective transition method is required. The Company adopted this new guidance effective the first day of fiscal year 2018, using the full retrospective transition method, which resulted in adjusting the Statement of Cash Flows for each prior period presented. The following table presents the effect of the adoption of ASU 2014-09 on our consolidated balance sheets as of December 30, 2017 (in thousands):
| As reported |  | Adjustments for adoption of ASU 2014-09 |  | As Adjusted
Assets |  |  |  |  |
Current assets |  |  |  |  |
Cash and cash equivalents | $ | 4,063 |  |  | $ | — |  |  | $ | 4,063 |
Accounts receivable, net | 4,567 |  |  | — |  |  | 4,567 |
Prepaid expenses and other current assets | 4,334 |  |  | — |  |  | 4,334 |
Advertising fund assets, restricted | 2,944 |  |  | — |  |  | 2,944 |
Total current assets | 15,908 |  |  | — |  |  | 15,908 |
Property and equipment, net | 5,826 |  |  | — |  |  | 5,826 |
Goodwill | 46,557 |  |  | — |  |  | 46,557 |
Trademarks | 32,700 |  |  | — |  |  | 32,700 |
Customer relationships, net | 15,567 |  |  | — |  |  | 15,567 |
Other non-current assets | 3,278 |  |  | — |  |  | 3,278 |
Total assets | $ | 119,836 |  |  | $ | — |  |  | $ | 119,836 |
Liabilities and stockholders' deficit |  |  |  |  |
Current liabilities |  |  |  |  |
Accounts payable | $ | 1,752 |  |  | $ | — |  |  | $ | 1,752 |
Other current liabilities | 10,683 |  |  | 246 |  |  | 10,929 |
Current portion of debt | 3,500 |  |  | — |  |  | 3,500 |
Advertising fund liabilities | 2,944 |  |  | — |  |  | 2,944 |
Total current liabilities | 18,879 |  |  | 246 |  |  | 19,125 |
Long-term debt, net | 129,841 |  |  | — |  |  | 129,841 |
Deferred revenues, net of current | 8,427 |  |  | 12,799 |  |  | 21,226 |
Deferred income tax liabilities, net | 8,799 |  |  | (2,879 | ) |  | 5,920 |
Other non-current liabilities | 2,142 |  |  | — |  |  | 2,142 |
Total liabilities | 168,088 |  |  | 10,166 |  |  | 178,254 |
Stockholders' deficit |  |  |  |  |
Common stock | 291 |  |  | — |  |  | 291 |
Additional paid-in-capital | 262 |  |  | — |  |  | 262 |
Accumulated deficit | (48,805 | ) |  | (10,166 | ) |  | (58,971 | )
Total stockholders' deficit | (48,252 | ) |  | (10,166 | ) |  | (58,418 | )
Total liabilities and stockholders' deficit | $ | 119,836 |  |  | $ | — |  |  | $ | 119,836 |
The following table presents the effect of the adoption of ASU 2014-09 on our consolidated statements of operations for the thirteen weeks ended July 1, 2017 (in thousands, except per share amounts):
|  |  | Adjustments for adoption of ASU 2014-09 |  |
| As reported |  | Franchise Fees |  | Advertising |  | As Adjusted
Revenue: |  |  |  |  |  |  |
Royalty revenue, franchise fees and other | $ | 15,827 |  |  | $ | (560 | ) |  | $ | — |  |  | $ | 15,267 |
Advertising fees and related income | — |  |  | — |  |  | 7,466 |  |  | 7,466 |
Company-owned restaurant sales | 8,845 |  |  | — |  |  | — |  |  | 8,845 |
Total revenue | 24,672 |  |  | (560 | ) |  | 7,466 |  |  | 31,578 |
Costs and expenses: |  |  |  |  |  |  |
Cost of sales (1) | 6,867 |  |  | — |  |  | — |  |  | 6,867 |
Advertising expenses | — |  |  | — |  |  | 7,574 |  |  | 7,574 |
Selling, general and administrative | 8,288 |  |  | — |  |  | (108 | ) |  | 8,180 |
Depreciation and amortization | 771 |  |  | — |  |  | — |  |  | 771 |
Total costs and expenses | 15,926 |  |  | — |  |  | 7,466 |  |  | 23,392 |
Operating income | 8,746 |  |  | (560 | ) |  | — |  |  | 8,186 |
Interest expense, net | 1,307 |  |  | — |  |  | — |  |  | 1,307 |
Income before income tax expense | 7,439 |  |  | (560 | ) |  | — |  |  | 6,879 |
Income tax expense | 2,174 |  |  | (202 | ) |  | — |  |  | 1,972 |
Net income | $ | 5,265 |  |  | $ | (358 | ) |  | $ | — |  |  | $ | 4,907 |
Earnings per share |  |  |  |  |  |  |
Basic | $ | 0.18 |  |  | $ | (0.01 | ) |  | $ | — |  |  | $ | 0.17 |
Diluted | $ | 0.18 |  |  | $ | (0.01 | ) |  | $ | — |  |  | $ | 0.17 |
(1) Cost of sales excludes depreciation and amortization, which are presented separately, and includes advertising expenses incurred at company-owned restaurants. The following table presents the effect of the adoption of ASU 2014-09 on our consolidated statements of operations for the twenty-six weeks ended July 1, 2017 (in thousands, except per share amounts):
|  |  | Adjustments for adoption of ASU 2014-09 |  |
| As reported |  | Franchise Fees |  | Advertising |  | As Adjusted
Revenue: |  |  |  |  |  |  |
Royalty revenue, franchise fees and other | $ | 33,850 |  |  | $ | (987 | ) |  | $ | — |  |  | $ | 32,863 |
Advertising fees and related income | — |  |  | — |  |  | 14,734 |  |  | 14,734 |
Company-owned restaurant sales | 17,391 |  |  | — |  |  | — |  |  | 17,391 |
Total revenue | 51,241 |  |  | (987 | ) |  | 14,734 |  |  | 64,988 |
Costs and expenses: |  |  |  |  |  |  |
Cost of sales (1) | 13,467 |  |  | — |  |  | — |  |  | 13,467 |
Advertising expenses | — |  |  | — |  |  | 16,857 |  |  | 16,857 |
Selling, general and administrative | 18,550 |  |  | — |  |  | (2,123 | ) |  | 16,427 |
Depreciation and amortization | 1,526 |  |  | — |  |  | — |  |  | 1,526 |
Total costs and expenses | 33,543 |  |  | — |  |  | 14,734 |  |  | 48,277 |
Operating income | 17,698 |  |  | (987 | ) |  | — |  |  | 16,711 |
Interest expense, net | 2,606 |  |  | — |  |  | — |  |  | 2,606 |
Income before income tax expense | 15,092 |  |  | (987 | ) |  | — |  |  | 14,105 |
Income tax expense | 3,297 |  |  | (356 | ) |  | — |  |  | 2,941 |
Net income | $ | 11,795 |  |  | $ | (631 | ) |  | $ | — |  |  | $ | 11,164 |
Earnings per share |  |  |  |  |  |  |
Basic | $ | 0.41 |  |  | $ | (0.02 | ) |  | $ | — |  |  | $ | 0.39 |
Diluted | $ | 0.40 |  |  | $ | (0.02 | ) |  | $ | — |  |  | $ | 0.38 |
(1) Cost of sales excludes depreciation and amortization, which are presented separately, and includes advertising expenses incurred at company-owned restaurants. The following table presents the effect of the adoption of ASU 2014-09 and ASU 2016-18 on our consolidated statements of cash flows for the twenty-six weeks ended July 1, 2017 (in thousands):
| As reported |  | Adjustments for adoption of ASU 2014-09 |  | Adjustments for adoption of ASU 2016-18 |  | As adjusted
Operating activities |  |  |  |  |  |  |
Net income | $ | 11,795 |  |  | $ | (631 | ) |  | $ | — |  |  | $ | 11,164 |
Adjustments to reconcile net income to cash provided by operating activities: |  |
Depreciation and amortization | 1,526 |  |  | — |  |  | — |  |  | 1,526 |
Deferred income taxes | (149 | ) |  | (357 | ) |  | — |  |  | (506 | )
Stock-based compensation expense | 541 |  |  | — |  |  | — |  |  | 541 |
Amortization of debt issuance costs | 146 |  |  | — |  |  | — |  |  | 146 |
Changes in operating assets and liabilities: |  |  |  |  |  |  |  |
Accounts receivable | (619 | ) |  | — |  |  | — |  |  | (619 | )
Prepaid expenses and other assets | (568 | ) |  | — |  |  | — |  |  | (568 | )
Advertising fund assets and liabilities, net | — |  |  | — |  |  | (121 | ) |  | (121 | )
Accounts payable and other current liabilities | (2,281 | ) |  | — |  |  | — |  |  | (2,281 | )
Deferred revenue | 378 |  |  | 988 |  |  | — |  |  | 1,366 |
Other non-current liabilities | (83 | ) |  | — |  |  | — |  |  | (83 | )
Cash provided by operating activities | 10,686 |  |  | — |  |  | (121 | ) |  | 10,565 |
Investing activities |  |  |  |  |  |  |  |
Purchases of property and equipment | (1,301 | ) |  | — |  |  | — |  |  | (1,301 | )
Cash used in investing activities | (1,301 | ) |  | — |  |  | — |  |  | (1,301 | )
Financing activities |  |  |  |  |  |  |  |  |
Proceeds from exercise of stock options | 1,062 |  |  | — |  |  | — |  |  | 1,062 |
Repayments of long-term debt | (9,750 | ) |  | — |  |  | — |  |  | (9,750 | )
Cash used in financing activities | (8,688 | ) |  | — |  |  | — |  |  | (8,688 | )
Net change in cash, cash equivalents, and restricted cash | 697 |  |  | — |  |  | (121 | ) |  | 576 |
Cash, cash equivalents, and restricted cash at beginning of period | 3,750 |  |  |  |  |  | 1,943 |  |  | 5,693 |
Cash, cash equivalents, and restricted cash at end of period | $ | 4,447 |  |  |  |  |  | $ | 1,822 |  |  | $ | 6,269 |

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