XML 29 R15.htm IDEA: XBRL DOCUMENT
v3.19.1

Revenue Recognition | 3 Months Ended
--- | ---
Mar. 31, 2019
Revenue Recognition |
Revenue Recognition | 6. Revenue Recognition Adoption of Topic 606 The Company adopted Topic 606 in the first quarter of 2018 with an adjustment to retained earnings to reflect the cumulative impact of adoption. The consolidation of PJMF impacted the cumulative adjustment from adoption as follows:
|  | January 1, 2018
(In thousands) |  | As Reported |  | As Restated
Cumulative effect of adoption of Topic 606 |  | $ | (21,528) |  | $ | (24,359)
The change to the cumulative effect of adoption on retained earnings is the result of the consolidation of PJMF in the Company’s consolidated financial statements, as discussed in more detail in Notes 2 and 5. This included a change in the timing of breakage revenue and commission expense recognition under Topic 606. The adoption of the new guidance changed the reporting of contributions made to PJMF from franchisees and the related advertising fund expenditures, which were not previously included in the Condensed Consolidated Statements of Operations. The new guidance requires these advertising fund contributions and expenditures to be reported on a gross basis in the Condensed Consolidated Statements of Operations. Disaggregation of Revenue In the following table (in thousands), revenues are disaggregated by major product line. The table also includes a reconciliation of the disaggregated revenues by the reportable segment.
|  | Reportable Segments
|  | Three Months Ended March 31, 2019
Major Products/Services Lines |  | Domestic Company-owned restaurants |  | North America commissaries |  | North America franchising |  | International |  | All others |  | Total
Company-owned restaurant sales | $ | 161,803 | $ | - | $ | - | $ | - | $ | - | $ | 161,803
Commissary sales |  | - |  | 194,459 |  | - |  | 15,866 |  | - |  | 210,325
Franchise royalties and fees |  | - |  | - |  | 18,203 |  | 9,801 |  | - |  | 28,004
Other revenues |  | - |  | - |  | - |  | 5,930 |  | 54,079 |  | 60,009
Eliminations |  | - |  | (45,555) |  | (673) |  | (97) |  | (15,411) |  | (61,736)
Total | $ | 161,803 | $ | 148,904 | $ | 17,530 | $ | 31,500 | $ | 38,668 | $ | 398,405
|  | Reportable Segments
|  | Three Months Ended April 1, 2018
Major Products/Services Lines |  | Domestic Company-owned restaurants |  | North America commissaries |  | North America franchising |  | International |  | All others |  | Total
Company-owned restaurant sales | $ | 190,242 | $ | - | $ | - | $ | 3,453 | $ | - | $ | 193,695
Commissary sales |  | - |  | 217,587 |  | - |  | 17,679 |  | - |  | 235,266
Franchise royalties and fees |  | - |  | - |  | 25,825 |  | 8,982 |  | - |  | 34,807
Other revenues |  | - |  | - |  | - |  | 5,488 |  | 54,506 |  | 59,994
Eliminations |  | - |  | (55,874) |  | (1,019) |  | (70) |  | (16,677) |  | (73,640)
Total | $ | 190,242 | $ | 161,713 | $ | 24,806 | $ | 35,532 | $ | 37,829 | $ | 450,122
Contract Balances Our contract liabilities primarily relate to franchise fees and unredeemed gift card liabilities, which we classify as “Deferred revenue” and customer loyalty program obligations which are classified as “Accrued expenses and other current liabilities.” During the three months ended March 31, 2019 and April 1, 2018, the Company recognized $7.4 million and $4.1 million in revenue, respectively, related to deferred revenue and the customer loyalty program. The contract liability balances are included in the following (in thousands):
|  | Contract Liabilities (in thousands)
|  |  | March 31, 2019 |  |  | December 30, 2018 |  |  | Change
Deferred revenue |  | $ | 21,078 |  | $ | 23,272 |  | $ | (2,194)
Customer loyalty program |  |  | 19,295 |  |  | 18,019 |  |  | 1,276
Total contract liabilities |  | $ | 40,373 |  | $ | 41,291 |  | $ | (918)
Our contract assets consist primarily of equipment incentives provided to franchisees. Equipment incentives are related to the future value of commissary revenue the Company will receive over the term of the agreement. The contract assets were approximately $6.6 million for both March 31, 2019 and December 30, 2018. For the three months ended March 31, 2019, revenue was reduced approximately $800,000 for the amortization of contract assets over the applicable contract terms. Contract assets are included in Other Current Assets and Other Assets. Transaction Price Allocated to the Remaining Performance Obligations The following table (in thousands) includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied at the end of the reporting period.
|  |  | Performance Obligations by Period
|  | Less than 1 Year |  | 1-2 Years |  | 2-3 Years |  | 3-4 Years |  | 4-5 Years |  | Thereafter |  | Total
Franchise Fees |  | $ | 2,419 |  | $ | 2,157 |  | $ | 1,951 |  | $ | 1,750 |  | $ | 1,446 |  | $ | 3,757 |  | $ | 13,480
Approximately $2.8 million of area development fees related to unopened stores and unearned royalties are included in deferred revenue. Timing of revenue recognition is dependent upon the timing of store openings and franchisees’ revenues. Gift Card liabilities of approximately $4.8 million, included in deferred revenue, will be recognized at Company-owned restaurant revenues when gift cards are redeemed. The Company will recognize redemption fee revenue when cards are redeemed at franchised restaurant locations. As of March 31, 2019, the amount allocated to the Papa Rewards loyalty program is $19.3 million and is reflected in the Condensed Consolidated Balance Sheet as part of the contract liability included in accrued expenses and other current liabilities. This will be recognized as revenue as the points are redeemed, which is expected to occur within the next year. The Company applies the practical expedient in ASU paragraph 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one year or less.

X
- References No definition available. + Details
Name: | us-gaap_RevenueFromContractWithCustomerAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 + Details
Name: | us-gaap_RevenueFromContractWithCustomerTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration