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EQUITY-BASED COMPENSATION | 9 Months Ended
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Oct. 01, 2023
Share-Based Payment Arrangement [Abstract] |
EQUITY-BASED COMPENSATION | EQUITY-BASED COMPENSATION 2023 Equity Incentive Plan—In connection with the Company’s IPO, the Company adopted the 2023 Equity Incentive Plan (the “2023 Plan”). The 2023 Plan includes 9,398,771 authorized shares of the Company’s common stock for issuance to employees, directors, and consultants through non-qualified stock options and incentive stock options, restricted shares of our common stock, restricted stock units (“RSUs”), performance stock units and other equity-based awards tied to the value of our shares. The number of shares reserved for issuance under the 2023 Plan will automatically increase on the first day of each fiscal year beginning with fiscal 2024 by a number of shares equal to the lesser of (i) the positive difference between 1% of the then-outstanding shares of our common stock on the last day of the preceding fiscal year minus the plan reserve of the last day of the immediately preceding fiscal year and (ii) a lesser number of shares determined by our Board of Directors. 2015 Equity Incentive Plan—Prior to the Company’s IPO, the Company granted incentive stock options, non-statutory stock options, and restricted stock unit awards to employees, directors, and consultants under the 2015 Equity Incentive Plan (the “2015 Plan”). Following effectiveness of the 2023 Plan in connection with our IPO, no further awards will be granted under the 2015 Plan; however, awards outstanding under the 2015 Plan will continue to be governed by their existing terms. During the twelve weeks ended October 1, 2023 and October 2, 2022, the Company recognized compensation expense (including applicable payroll taxes) related to awards under the 2015 Plan and 2023 Plan of $3.0 million and $1.2 million, respectively. During the forty weeks ended October 1, 2023 and October 2, 2022, the Company recognized compensation expense (including applicable payroll taxes) related to awards under the 2015 Plan and 2023 Plan of $6.0 million and $3.0 million, respectively. Stock Options—Prior to the IPO, under the 2015 Plan, our Board of Directors determined the option exercise price and granted all stock options at exercise prices that were equal or exceed the fair value of the common stock on the date of grant. Under the 2023 Plan, the terms of all stock options may not exceed 10 years. Vesting terms are determined by our Board of Directors and generally vest over four years of continuous service, except for 647,123 options that were granted to our CEO in connection with the IPO that will vest over five years of continuous service. A summary of the Company’s stock option activity is as follows:
|  |  | Weighted Average |  |
($ in thousands except per share amounts) | Number Of Options |  | Exercise Price |  | Remaining Contractual Term (Years) |  | Aggregate Intrinsic Value
Outstanding - December 26, 2021 | 1,431,771 |  |  | $ | 4.45 |  |  | 5.8 |  | $ | 3,828 |
Granted | 459,066 |  |  | 6.75 |  |  |  |  |
Exercised | (13,608) |  |  | 2.39 |  |  |  |  |
Forfeited or expired | (10,800) |  |  | 2.70 |  |  |  |  |
Outstanding - October 2, 2022 | 1,866,429 |  |  | $ | 5.04 |  |  | 6.1 |  | $ | 5,424 |
Exercisable - October 2, 2022 | 1,344,153 |  |  | $ | 4.37 |  |  | 4.9 |  |
Vested and expected to vest - October 2, 2022 | 1,866,429 |  |  | $ | 5.04 |  |  | 6.1 |  | $ | 5,424 |
Outstanding - December 25, 2022 | 1,863,099 |  |  | $ | 5.04 |  |  | 5.9 |  | $ | 8,444 |
Granted | 1,373,215 |  |  | 19.61 |  |  |  |  |
Exercised | (61,748) |  |  | 4.75 |  |  |  |  |
Forfeited or expired | (79,741) |  |  | 9.47 |  |  |  |  |
Outstanding - October 1, 2023 | 3,094,825 |  |  | $ | 11.40 |  |  | 7.0 |  | $ | 59,508 |
Exercisable - October 1, 2023 | 1,457,407 |  |  | $ | 4.69 |  |  | 4.2 |  |
Vested and expected to vest - October 1, 2023 | 3,094,825 |  |  | $ | 11.40 |  |  | 7.0 |  | $ | 59,508 |
The Company uses the Black-Scholes option-pricing model to determine the fair value of stock options. The following table reflects the weighted-average assumptions utilized in the Black-Scholes option pricing model during the periods indicated:
| Forty Weeks Ended
| October 1, 2023 |  | October 2, 2022
Expected term (in years)1 | 6.4 |  | 6.2
Volatility 2 | 46.0% |  | 45.0%
Risk-free interest rate | 3.8% |  | 1.7%
Dividend rate | —% |  | —%
Weighted-average grant date fair value per share | $9.98 |  | $2.97
(1) Expected life was calculated using the simplified method, which is an average of the contractual term and vesting period of the option, as we do not have sufficient historical data for determining the expected term of our stock option awards.
(2) Volatility was based on a group of industry peers with sufficient history.
As of October 1, 2023, there was $13.2 million of unrecognized compensation costs related to option awards. This cost is expected to be recognized over a period of 4.1 years. Restricted Stock Units—Vesting terms of RSUs are determined by our Board of Directors and generally vest annually in equal installments over four years of continuous service, except for 332,386 RSUs that were granted to our CEO in connection with the IPO that will vest over five years of continuous service. A summary of the Company’s restricted stock unit activity is as follows:
($ in thousands, except per share amounts) | Number of Units |  | Weighted-Average Grant Date Fair Value |  | Aggregate Intrinsic Value
Non-vested - December 26, 2021 | 1,486,977 |  |  | $ | 3.08 |  |  | $ | 10,032 |
Granted | 880,656 |  |  | 6.74 |  |  |
Vested | (298,605) |  |  | 2.76 |  |  |
Forfeited | (149,607) |  |  | 3.55 |  |  |
Non-vested - October 2, 2022 | 1,919,421 |  |  | $ | 4.76 |  |  | $ | 15,240 |
Non-vested - December 25, 2022 | 1,775,988 |  |  | $ | 4.76 |  |  | $ | 16,996 |
Granted | 1,697,450 |  |  | 17.51 |  |  |
Vested | (457,545) |  |  | 4.56 |  |  |
Forfeited | (230,219) |  |  | 7.53 |  |  |
Non-vested - October 1, 2023 | 2,785,674 |  |  | $ | 12.35 |  |  | $ | 85,297 |
As of October 1, 2023, there was $30.2 million of unrecognized compensation expense related to RSU awards. This cost is expected to be recognized over a period of 3.6 years. 2023 Employee Stock Purchase Plan—In connection with the IPO, the Company’s Board of Directors adopted the 2023 Employee Stock Purchase Plan (the “2023 ESPP”). The 2023 ESPP authorizes issuance of 1,762,270 shares of common stock to the Company’s employees. The number of shares of the Company’s common stock reserved for issuance will automatically increase on the first day of each fiscal year ending on December 29, 2032 by the lesser of (i) 1% of the outstanding common stock of the Company on the last day of the immediately preceding fiscal year and (ii) a lower number of shares of our common stock as determined by the Board of Directors. The 2023 ESPP allows eligible employees to acquire shares of the Company’s common stock through payroll deduction over offering periods that are approximately six months. The per share purchase price is equal to 85% of the lesser of the fair market value of a share of the Company’s common stock on (i) the first day of the offering period or (ii) the last day of the offering period. The Company has not yet issued any shares of common stock under the 2023 ESPP. During the twelve and forty weeks ended October 1, 2023, the Company recognized $0.2 million and compensation expense related to the 2023 ESPP.

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