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Reorganization and Realignment Costs | 9 Months Ended
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Oct. 03, 2021
Restructuring and Related Activities [Abstract] |
Reorganization and Realignment Costs | Reorganization and Realignment Costs The following is a summary of the initiatives included in “Reorganization and realignment costs:”
| Three Months Ended |  | Nine Months Ended
| October 3, 2021 |  | September 27, 2020 |  | October 3, 2021 |  | September 27, 2020
Operations and field realignment | $ | 74 |  |  | $ | 3,021 |  |  | $ | 1,563 |  |  | $ | 3,021 |
IT realignment | (17) |  |  | 403 |  |  | (11) |  |  | 6,809 |
G&A realignment | (7) |  |  | (49) |  |  | (41) |  |  | 282 |
System optimization initiative | 295 |  |  | — |  |  | 5,870 |  |  | 84 |
Reorganization and realignment costs | $ | 345 |  |  | $ | 3,375 |  |  | $ | 7,381 |  |  | $ | 10,196 |
Operations and Field Realignment In September 2020, the Company initiated a plan to reallocate resources to better support the long-term growth strategies for Company and franchise operations (the “Operations and Field Realignment Plan”). The Operations and Field Realignment Plan realigned the Company’s restaurant operations team, including transitioning from separate leaders of Company and franchise operations to a single leader of all U.S. restaurant operations. The Operations and Field Realignment Plan also includes contract terminations, including the closure of certain field offices. The Company expects to incur total costs aggregating approximately $5,500 to $6,000 related to the Operations and Field Realignment Plan. During the nine months ended October 3, 2021, the Company recognized costs totaling $1,563, which primarily included third-party and other costs. During the three and nine months ended September 27, 2020, the Company recognized costs totaling $3,021, which included severance and related employee costs and share-based compensation. The Company expects to incur additional costs aggregating up to approximately $500, comprised primarily of third-party and other costs. The Company expects to recognize the majority of the remaining costs associated with the Operations and Field Realignment Plan during the remainder of 2021. The following is a summary of the activity recorded as a result of the Operations and Field Realignment Plan:
| Three Months Ended |  | Nine Months Ended |  | Total Incurred Since Inception
| October 3, 2021 |  | September 27, 2020 |  | October 3, 2021 |  | September 27, 2020 |
Severance and related employee costs | $ | — |  |  | $ | 2,502 |  |  | $ | 333 |  |  | $ | 2,502 |  |  | $ | 3,446 |
Third-party and other costs | 74 |  |  | — |  |  | 1,230 |  |  | — |  |  | 1,297 |
| 74 |  |  | 2,502 |  |  | 1,563 |  |  | 2,502 |  |  | 4,743 |
Share-based compensation (a) | — |  |  | 519 |  |  | — |  |  | 519 |  |  | 621 |
Total operations and field realignment | $ | 74 |  |  | $ | 3,021 |  |  | $ | 1,563 |  |  | $ | 3,021 |  |  | $ | 5,364 |
_______________ (a)Primarily represents incremental share-based compensation resulting from the modification of stock options in connection with the termination of employees under the Operations and Field Realignment Plan. The table below presents a rollforward of our accruals for the Operations and Field Realignment Plan, which are included in “Accrued expenses and other current liabilities” as of October 3, 2021.
| Balance January 3, 2021 |  | Charges |  | Payments |  | Balance October 3, 2021
Severance and related employee costs | $ | 2,600 |  |  | $ | 333 |  |  | $ | (2,377) |  |  | $ | 556 |
Third-party and other costs | — |  |  | 1,230 |  |  | (1,230) |  |  | — |
| $ | 2,600 |  |  | $ | 1,563 |  |  | $ | (3,607) |  |  | $ | 556 |
| Balance December 29, 2019 |  | Charges |  | Payments |  | Balance September 27, 2020
Severance and related employee costs | $ | — |  |  | $ | 2,502 |  |  | $ | — |  |  | $ | 2,502 |
Information Technology (“IT”) Realignment In December 2019, our Board of Directors approved a plan to realign and reinvest resources in the Company’s IT organization to strengthen its ability to accelerate growth (the “IT Realignment Plan”). The Company has partnered with a third-party global IT consultant on this new structure to leverage their global capabilities, enabling a more seamless integration between its digital and corporate IT assets. The IT Realignment Plan has reduced certain employee compensation and other related costs that the Company has reinvested back into IT to drive additional capabilities and capacity across all of its technology platforms. Additionally, in June 2020, the Company made changes to its leadership structure that included the elimination of the Chief Digital Experience Officer position and the creation of a Chief Information Officer position, for which the Company completed the hiring process in October 2020. During the nine months ended September 27, 2020, the Company recognized costs totaling $6,809, which primarily included third-party and other costs and severance and related employee costs. The Company does not expect to incur any material additional costs under the IT Realignment Plan. The following is a summary of the activity recorded as a result of the IT Realignment Plan:
| Three Months Ended |  | Nine Months Ended |  | Total Incurred Since Inception
| October 3, 2021 |  | September 27, 2020 |  | October 3, 2021 |  | September 27, 2020 |
Severance and related employee costs (a) | $ | (32) |  |  | $ | 34 |  |  | $ | (151) |  |  | $ | 1,009 |  |  | $ | 8,240 |
Recruitment and relocation costs | 12 |  |  | 345 |  |  | 133 |  |  | 659 |  |  | 1,429 |
Third-party and other costs | 3 |  |  | 24 |  |  | 7 |  |  | 5,141 |  |  | 6,542 |
| (17) |  |  | 403 |  |  | (11) |  |  | 6,809 |  |  | 16,211 |
Share-based compensation (b) | — |  |  | — |  |  | — |  |  | — |  |  | 193 |
Total IT realignment | $ | (17) |  |  | $ | 403 |  |  | $ | (11) |  |  | $ | 6,809 |  |  | $ | 16,404 |
_______________ (a)The three and nine months ended October 3, 2021 include a reversal of an accrual as a result of a change in estimate. (b)Primarily represents incremental share-based compensation resulting from the modification of stock options in connection with the termination of employees under the IT Realignment Plan. As of October 3, 2021, the accruals for the IT Realignment Plan are included in “Accrued expenses and other current liabilities.” As of September 27, 2020, the accruals for the IT Realignment Plan were included in “Accrued expenses and other current liabilities” and “Other liabilities” and totaled $2,739 and $178, respectively. The tables below present a rollforward of our accruals for the IT Realignment Plan.
| Balance January 3, 2021 |  | Charges |  | Payments |  | Balance October 3, 2021
Severance and related employee costs | $ | 1,508 |  |  | $ | (151) |  |  | $ | (1,115) |  |  | $ | 242 |
Recruitment and relocation costs | — |  |  | 133 |  |  | (133) |  |  | — |
Third-party and other costs | — |  |  | 7 |  |  | (7) |  |  | — |
| $ | 1,508 |  |  | $ | (11) |  |  | $ | (1,255) |  |  | $ | 242 |
| Balance December 29, 2019 |  | Charges |  | Payments |  | Balance September 27, 2020
Severance and related employee costs | $ | 7,548 |  |  | $ | 1,009 |  |  | $ | (5,640) |  |  | $ | 2,917 |
Recruitment and relocation costs | — |  |  | 659 |  |  | (659) |  |  | — |
Third-party and other costs | 1,076 |  |  | 5,141 |  |  | (6,217) |  |  | — |
| $ | 8,624 |  |  | $ | 6,809 |  |  | $ | (12,516) |  |  | $ | 2,917 |
General and Administrative (“G&A”) Realignment In May 2017, the Company initiated a plan to further reduce its G&A expenses (the “G&A Realignment Plan”). Additionally, in May 2019, the Company announced changes to its management and operating structure that included the creation of two new positions, a President, U.S. and Chief Commercial Officer and a President, International and Chief Development Officer, and the elimination of the Chief Operations Officer position. During the nine months ended September 27, 2020, the Company recognized costs totaling $282, which primarily included share-based compensation. The Company does not expect to incur any material additional costs under the G&A Realignment Plan. The following is a summary of the activity recorded as a result of the G&A Realignment Plan:
| Three Months Ended |  | Nine Months Ended |  | Total Incurred Since Inception
| October 3, 2021 |  | September 27, 2020 |  | October 3, 2021 |  | September 27, 2020 |
Severance and related employee costs (a) | $ | (8) |  |  | $ | (116) |  |  | $ | (61) |  |  | $ | 30 |  |  | $ | 24,205 |
Recruitment and relocation costs | 1 |  |  | 27 |  |  | 1 |  |  | 42 |  |  | 2,877 |
Third-party and other costs | — |  |  | 9 |  |  | — |  |  | 10 |  |  | 2,223 |
| (7) |  |  | (80) |  |  | (60) |  |  | 82 |  |  | 29,305 |
Share-based compensation (b) | — |  |  | 31 |  |  | 19 |  |  | 200 |  |  | 8,130 |
Termination of defined benefit plans | — |  |  | — |  |  | — |  |  | — |  |  | 1,335 |
Total G&A realignment | $ | (7) |  |  | $ | (49) |  |  | $ | (41) |  |  | $ | 282 |  |  | $ | 38,770 |
_______________ (a)The three and nine months ended October 3, 2021 and September 27, 2020 include a reversal of an accrual as a result of a change in estimate. (b)Primarily represents incremental share-based compensation resulting from the modification of stock options in connection with the termination of employees under our G&A Realignment Plan. As of October 3, 2021, the accruals for the G&A realignment plan are included in “Accrued expenses and other current liabilities.” As of September 27, 2020, the accruals for the G&A realignment plan are included in “Accrued expenses and other current liabilities” and “Other liabilities” and totaled and $1,705 and $18, respectively. The tables below present a rollforward of our accruals for the G&A Realignment Plan.
| Balance January 3, 2021 |  | Charges |  | Payments |  | Balance October 3, 2021
Severance and related employee costs | $ | 932 |  |  | $ | (61) |  |  | $ | (828) |  |  | $ | 43 |
Recruitment and relocation costs | — |  |  | 1 |  |  | (1) |  |  | — |
Third-party and other costs | — |  |  | — |  |  | — |  |  | — |
| $ | 932 |  |  | $ | (60) |  |  | $ | (829) |  |  | $ | 43 |
| Balance December 29, 2019 |  | Charges |  | Payments |  | Balance September 27, 2020
Severance and related employee costs | $ | 5,276 |  |  | $ | 30 |  |  | $ | (3,627) |  |  | $ | 1,679 |
Recruitment and relocation costs | 83 |  |  | 42 |  |  | (81) |  |  | 44 |
Third-party and other costs | — |  |  | 10 |  |  | (10) |  |  | — |
| $ | 5,359 |  |  | $ | 82 |  |  | $ | (3,718) |  |  | $ | 1,723 |
System Optimization Initiative The Company recognizes costs related to acquisitions and dispositions under its system optimization initiative. During the nine months ended October 3, 2021, the Company recognized costs totaling $5,870, which were primarily comprised of the write-off of certain lease assets and lease termination fees associated with the NPC bankruptcy sale process. See Note 3 for further information. The Company expects to recognize a gain of approximately $1,000 related to the write-off of certain NPC-related lease liabilities upon final termination of the leases. The following is a summary of the costs recorded as a result of our system optimization initiative:
| Three Months Ended |  | Nine Months Ended |  | Total Incurred Since Inception
| October 3, 2021 |  | September 27, 2020 |  | October 3, 2021 |  | September 27, 2020 |
Severance and related employee costs | $ | — |  |  | $ | — |  |  | $ | 661 |  |  | $ | — |  |  | $ | 18,898 |
Professional fees | 277 |  |  | — |  |  | 1,016 |  |  | 80 |  |  | 23,123 |
Other (a) | — |  |  | — |  |  | 1,354 |  |  | 4 |  |  | 7,207 |
| 277 |  |  | — |  |  | 3,031 |  |  | 84 |  |  | 49,228 |
Accelerated depreciation and amortization (b) | — |  |  | — |  |  | — |  |  | — |  |  | 25,398 |
NPC lease termination costs (c) | 18 |  |  | — |  |  | 2,839 |  |  | — |  |  | 2,839 |
Share-based compensation (d) | — |  |  | — |  |  | — |  |  | — |  |  | 5,013 |
Total system optimization initiative | $ | 295 |  |  | $ | — |  |  | $ | 5,870 |  |  | $ | 84 |  |  | $ | 82,478 |
_______________ (a)The nine months ended October 3, 2021 includes transaction fees of $1,350 associated with the NPC bankruptcy sale process. (b)Primarily includes accelerated amortization of previously acquired franchise rights related to the Company-operated restaurants in territories that have been sold to franchisees in connection with our system optimization initiative. (c)The nine months ended October 3, 2021 includes the write-off of lease assets of $1,359 and lease termination fees paid of $1,480. (d)Represents incremental share-based compensation resulting from the modification of stock options and performance-based awards in connection with the termination of employees under our system optimization initiative. The table below presents a rollforward of our accruals for our system optimization initiative, which were included in “Accrued expenses and other current liabilities” as of January 3, 2021.
| Balance January 3, 2021 |  | Charges |  | Payments |  | Balance October 3, 2021
Severance and related employee costs | $ | — |  |  | $ | 661 |  |  | $ | (661) |  |  | $ | — |
Professional fees | 1,230 |  |  | 1,016 |  |  | (2,246) |  |  | — |
Other | — |  |  | 1,354 |  |  | (1,354) |  |  | — |
| $ | 1,230 |  |  | $ | 3,031 |  |  | $ | (4,261) |  |  | $ | — |

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- Definition The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 5.P.4(e)) -URI http://asc.fasb.org/extlink&oid=115931487&loc=d3e140904-122747 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -SubTopic 10 -Section 50 -Paragraph 1 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6394359&loc=d3e17939-110869 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -URI http://asc.fasb.org/topic&trid=2175745 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -SubTopic 10 -Section 50 -Paragraph 1 -Subparagraph (e) -URI http://asc.fasb.org/extlink&oid=6394359&loc=d3e17939-110869 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -SubTopic 10 -Section 50 -Paragraph 1 -Subparagraph (b)(2) -URI http://asc.fasb.org/extlink&oid=6394359&loc=d3e17939-110869 + Details
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