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Income Taxes | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | 11. Income Taxes Income tax benefit for the last three fiscal years consists of the following (in thousands):
|  | Fiscal Year |
|  | 2024 |  |  | 2023 |  |  | 2022 |
Current: |  |  |  |  |  |  |  |  |
Federal |  | $ | 2,780 |  |  | $ | 1,378 |  |  | $ | 647 |
State |  |  | 969 |  |  |  | 897 |  |  |  | 379 |
|  |  | 3,749 |  |  |  | 2,275 |  |  |  | 1,026 |
Deferred: |  |  |  |  |  |  |  |  |
Federal |  |  | (10,891 | ) |  |  | (11,344 | ) |  |  | (12,653 | )
State |  |  | (1,280 | ) |  |  | (491 | ) |  |  | (757 | )
|  |  | (12,171 | ) |  |  | (11,835 | ) |  |  | (13,410 | )
Income tax benefit |  | $ | (8,422 | ) |  | $ | (9,560 | ) |  | $ | (12,384 | )
Income tax benefit for the last three fiscal years differs from the amount that would result from applying the federal statutory rate as follows:
|  | Fiscal Year |
|  | 2024 |  |  | 2023 |  |  | 2022 |
Income tax at statutory rates |  |  | 21.0 | % |  |  | 21.0 | % |  |  | (21.0 | )%
State income taxes, net of federal benefit |  |  | 5.5 |  |  |  | 5.8 |  |  |  | (10.4 | )
Permanent differences |  |  | 10.6 |  |  |  | 7.7 |  |  |  | 17.3 |
Income tax credits |  |  | (147.1 | ) |  |  | (117.9 | ) |  |  | (156.8 | )
Return to provision |  |  | 0.4 |  |  |  | 0.9 |  |  |  | (4.3 | )
Stock warrant extension |  |  | 11.7 |  |  |  | — |  |  |  | — |
Prior year tax credit true-up |  |  | 4.3 |  |  |  | (6.4 | ) |  |  | 14.1 |
Benefit from net operating loss carryback |  |  | — |  |  |  | — |  |  |  | 1.8 |
Change in valuation allowance |  |  | (8.5 | ) |  |  | (2.6 | ) |  |  | 6.8 |
Other, net |  |  | 0.2 |  |  |  | (3.2 | ) |  |  | 3.4 |
|  |  | (101.9 | )% |  |  | (94.7 | )% |  |  | (149.1 | )%
The components of the deferred income tax asset (liability) consist of the following (in thousands):
|  | December 31, 2024 |  |  | January 2, 2024 |
Deferred income tax asset: |  |  |  |  |  |
Accrued expenses |  | $ | 12,526 |  |  | $ | 12,939 |
Other |  |  | 8,436 |  |  |  | 6,933 |
Deferred revenues |  |  | 23 |  |  |  | — |
Gift cards |  |  | 1,128 |  |  |  | 876 |
Stock-based compensation |  |  | 3,667 |  |  |  | 5,026 |
Operating lease liability |  |  | 111,254 |  |  |  | 116,527 |
Income tax credits |  |  | 74,826 |  |  |  | 67,596 |
Net operating losses |  |  | 4,831 |  |  |  | 5,085 |
State tax |  |  | 358 |  |  |  | 226 |
Gross deferred income tax asset |  |  | 217,049 |  |  |  | 215,208 |
Valuation allowance |  |  | (186 | ) |  |  | (889 | )
Deferred income tax asset, net of valuation allowance |  |  | 216,863 |  |  |  | 214,319 |
Deferred income tax liability: |  |  |  |  |  |
Property and equipment |  |  | (51,516 | ) |  |  | (55,269 | )
Intangible assets |  |  | (2,807 | ) |  |  | (2,951 | )
Operating lease assets |  |  | (96,255 | ) |  |  | (101,358 | )
Smallwares |  |  | (3,967 | ) |  |  | (4,594 | )
Deferred income tax liability |  |  | (154,545 | ) |  |  | (164,172 | )
Net deferred income tax asset |  | $ | 62,318 |  |  | $ | 50,147 |
At December 31, 2024, we had federal and state income tax credit carryforwards of approximately $75.0 million and $0.1 million, respectively, consisting primarily of the credit for FICA taxes paid on reported team member tip income. The FICA tax credits will begin to expire in 2039. At December 31, 2024, we have state and city net operating loss carryforwards of $106.4 million with statutory carryforward periods ranging from 5 years to 20 years. The earliest year that a material state net operating loss will expire is 2025. We have completed an analysis of our ability to use our federal and state tax credit and net operating loss carry forwards. As of December 31, 2024 and January 2, 2024, we have determined that no valuation allowance is required against federal tax credit carryforwards; however, we have recorded a valuation allowance against certain state net operating loss and tax credit carryforwards of $0.2 million and $0.9 million, respectively, net of the federal benefit which are not more likely than not to be realized prior to expiration. We recognize interest and penalties related to uncertain tax positions in income tax expense. At December 31, 2024 and January 2, 2024, we had accrued $0.1 million for interest and penalties with respect to uncertain tax positions. As of December 31, 2024, unrecognized tax benefits recorded was approximately $0.9 million, of which approximately $0.9 million, if reversed would impact our effective tax rate. We anticipate no change in our liability for unrecognized tax benefits within the next twelve-month period. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
|  | Fiscal Year |
|  | 2024 |  |  | 2023 |  |  | 2022 |
Gross unrecognized tax benefits at beginning of year |  | $ | 967 |  |  | $ | 1,249 |  |  | $ | 1,198 |
Increases for tax positions taken in prior years |  |  | 29 |  |  |  | 102 |  |  |  | 3 |
Decreases for tax positions taken in prior years |  |  | — |  |  |  | — |  |  |  | (29 | )
Increases for tax positions taken in the current year |  |  | 134 |  |  |  | 104 |  |  |  | 91 |
Lapse in statute of limitations |  |  | (256 | ) |  |  | (488 | ) |  |  | (14 | )
Gross unrecognized tax benefits at end of year |  | $ | 874 |  |  | $ | 967 |  |  | $ | 1,249 |
Our uncertain tax positions are related to tax years th at remain subject to examination by tax agencies. As of December 31, 2024, the earliest tax year still subject to examination by the Internal Revenue Service is 2021. The earliest year still subject to examination by a significant state or local taxing authority is 2020.

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