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Discontinued Operations | 12 Months Ended
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Dec. 29, 2024
Discontinued Operations and Disposal Groups [Abstract] |
Discontinued Operations | Discontinued Operations On November 6, 2024, an indirect wholly owned subsidiary of the Company (the “Seller”) entered into a Quota Purchase Agreement and Other Covenants (the “Purchase Agreement”) with a fund managed by an affiliate of Vinci Partners Investments Ltd. (the “Buyer”) for the sale of 67% of its business in Brazil (the “Disposal Group”). The sale (the “Brazil Sale Transaction”) closed on December 30, 2024 (the “Closing Date”). The aggregate consideration paid to the Seller consists of 67% of the enterprise valuation of the Disposal Group in the amount of R$2.06 billion Brazilian Reais, which equals R$1.4 billion Brazilian Reais (approximately $225.3 million in U.S. Dollars based on the exchange rate on the Closing Date), subject to customary adjustments, and withholding for Brazilian taxes (the “Purchase Price”). On December 30, 2024 the Company received cash proceeds, net of withheld income taxes, of $103.9 million, in U.S. dollars based on the exchange rate on the Closing Date, representing 52% of the Purchase Price. The proceeds were applied to the Company’s revolving credit facility during the thirteen weeks ended March 30, 2025. The second installment payment, representing 48% of the Purchase Price is due on the first anniversary of the Closing Date (based on the exchange rate on the date of payment) and will generate interest income based on the interbank deposit rate in Brazil until paid. Following the closing, the Brazil restaurants began operating as unconsolidated franchisees. The sale represents a strategic shift to a primarily franchised model for the Company’s international operations. The assets and liabilities of the Disposal Group are classified as held for sale on the Company’s Consolidated Balance Sheets as of December 29, 2024 and December 31, 2023. For fiscal years 2024, 2023 and 2022, all sales, direct costs and expenses and income taxes attributable to restaurants classified as discontinued operations have been aggregated to a single caption titled (Loss) income from discontinued operations, net of tax in the Company’s Consolidated Statements of Operations and Comprehensive (Loss) Income for all periods presented. The Company entered into foreign exchange forward contracts to mitigate most of the exchange rate risk associated with the Purchase Price installment payments. See Note 13 - Derivative Instruments and Hedging Activities for details regarding the foreign exchange forward contracts. On the Closing Date, the Seller and the Buyer entered into a shareholders agreement (the “Shareholders Agreement”), pursuant to which Buyer and Seller will have representation on a board of directors and in executive management based on their respective equity interests. During the thirteen weeks ended December 29, 2024, the Company recorded $68.3 million of impairment in connection with the Brazil Sale Transaction within (Loss) income from discontinued operations, net of tax in its Consolidated Statements of Operations and Comprehensive (Loss) Income. The impairment represents the difference between the estimated fair value of the Disposal Group and its carrying value, which included $212.2 million of cumulative currency translation adjustment losses and the impact of measurement of the Company’s 33% retained interest. As of the Closing Date, the fair value of the Company’s retained interest was $59.9 million based on the proportional enterprise valuation of the Disposal Group negotiated as a part of the Purchase Agreement, adjusted for debt used by the Buyer to fund a portion of the Purchase Price and to be pushed down to the operating entity subsequent to the Closing Date. Under the Shareholders Agreement, the Buyer may cause the Seller to sell or the Seller may cause the Buyer to purchase the totality of the remaining interest in the Disposal Group for a period between October 1, 2028 and December 31, 2028 at a defined multiple of earnings less net indebtedness. The following table presents the carrying amounts of the major classes of assets and liabilities of the Disposal Group classified as held for sale on the Company’s Consolidated Balance Sheets as of the periods indicated:
(dollars in thousands) | DECEMBER 29, 2024 |  | DECEMBER 31, 2023 |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |  |  |  |
Current assets |  |  |  |  |  |  |  |  |  |  |
Inventories | $ | 7,872 |  |  | $ | 12,991 |  |  |  |  |  |  |  |  |
Other current assets, net | 15,117 |  |  | 15,104 |  |  |  |  |  |  |  |  |
Total current assets of disposal group classified as held for sale | $ | 22,989 |  |  | $ | 28,095 |  |  |  |  |  |  |  |  |
Non-current assets |  |  |  |  |  |  |  |  |  |  |
Property, fixtures and equipment, net | $ | 99,532 |  |  | $ | 103,757 |  |  |  |  |  |  |  |  |
Operating lease right-of-use assets | 43,884 |  |  | 53,679 |  |  |  |  |  |  |  |  |
Goodwill | 51,906 |  |  | 62,995 |  |  |  |  |  |  |  |  |
Intangible assets, net | 6,841 |  |  | 10,069 |  |  |  |  |  |  |  |  |
Deferred income tax assets, net | 2,056 |  |  | 4,233 |  |  |  |  |  |  |  |  |
Other assets, net | 64,553 |  |  | 25,097 |  |  |  |  |  |  |  |  |
Total non-current assets | 268,772 |  |  | 259,830 |  |  |  |  |  |  |  |  |
Impairment of disposal group assets | (68,271) |  |  | — |  |  |  |  |  |  |  |  |
Net non-current assets of disposal group classified as held for sale | $ | 200,501 |  |  | $ | 259,830 |  |  |  |  |  |  |  |  |
Liabilities: |  |  |  |  |  |  |  |  |  |  |
Current liabilities |  |  |  |  |  |  |  |  |  |  |
Accounts Payable | $ | 24,168 |  |  | $ | 33,328 |  |  |  |  |  |  |  |  |
Current operating lease liabilities | 10,109 |  |  | 11,718 |  |  |  |  |  |  |  |  |
Accrued and other current liabilities | 52,442 |  |  | 58,133 |  |  |  |  |  |  |  |  |
Unearned revenue | 1,237 |  |  | 1,723 |  |  |  |  |  |  |  |  |
Total current liabilities of disposal group classified as held for sale | $ | 87,956 |  |  | $ | 104,902 |  |  |  |  |  |  |  |  |
Non-current liabilities |  |  |  |  |  |  |  |  |  |  |
Non-current operating lease liabilities | $ | 36,297 |  |  | $ | 44,286 |  |  |  |  |  |  |  |  |
Other long-term liabilities, net | 13,568 |  |  | 14,359 |  |  |  |  |  |  |  |  |
Total non-current liabilities of disposal group classified as held for sale | $ | 49,865 |  |  | $ | 58,645 |  |  |  |  |  |  |  |  |
Included in discontinued operations are benefits from a law in Brazil that provided a 100% exemption from income tax (IRPJ and CSLL) and federal value added taxes (PIS and COFINS). These exemptions impacted GAAP diluted earnings per share from discontinued operations by approximately $0.25 for 2023. After receipt of an unfavorable court ruling in January 2024, a cash judicial deposit of $42.9 million, inclusive of principal, interest and potential penalties, was made during 2024 to appeal the unfavorable court ruling. During 2024, new tax legislation granted certain industries additional exemptions from income and federal value added taxes for varying timeframes resulting in a benefit of $0.15 GAAP diluted earnings per share from discontinued operations during 2024. Following closing of the Brazil Sale Transaction, the Company retained certain rights to favorable resolution of the ongoing litigation and recorded a contingent consideration asset at fair value on the Closing Date. See Contingent Consideration Assets and Indemnification Liabilities section below for details. (Loss) income from discontinued operations, net of tax in the Company’s Consolidated Statements of Operations and Comprehensive (Loss) Income includes the following for the periods indicated:
| FISCAL YEAR
(dollars in thousands) | 2024 |  | 2023 |  | 2022 |  |
Revenues |  |  |  |  |  |  |
Restaurant sales | $ | 525,216 |  |  | $ | 529,619 |  |  | $ | 428,801 |  |  |
Other revenue | 52 |  |  | 52 |  |  | 39 |  |  |
Total revenues | 525,268 |  |  | 529,671 |  |  | 428,840 |  |  |
Costs and expenses |  |  |  |  |  |  |
Food and beverage | 167,741 |  |  | 169,164 |  |  | 146,214 |  |  |
Labor and other related | 109,853 |  |  | 105,500 |  |  | 84,834 |  |  |
Other restaurant operating (1) | 165,492 |  |  | 163,816 |  |  | 131,916 |  |  |
Depreciation and amortization | 22,191 |  |  | 21,905 |  |  | 19,717 |  |  |
General and administrative | 28,744 |  |  | 26,911 |  |  | 21,820 |  |  |
Provision for impaired assets and restaurant closings | 1,577 |  |  | — |  |  | — |  |  |
Impairment of assets held for sale | 68,271 |  |  | — |  |  | — |  |  |
Total costs and expenses | 563,869 |  |  | 487,296 |  |  | 404,501 |  |  |
(Loss) income from operations | (38,601) |  |  | 42,375 |  |  | 24,339 |  |  |
Interest income (expense), net | 1,545 |  |  | (587) |  |  | 165 |  |  |
(Loss) income before provision for income taxes | (37,056) |  |  | 41,788 |  |  | 24,504 |  |  |
Provision for income taxes | 38,926 |  |  | 159 |  |  | 8,451 |  |  |
(Loss) income from discontinued operations, net of tax | $ | (75,982) |  |  | $ | 41,629 |  |  | $ | 16,053 |  |  |
____________________ (1)Includes royalty expense of $25.9 million, $26.4 million and $21.6 million for fiscal years 2024, 2023 and 2022, respectively, eliminated in consolidation prior to the Brazil Sale Transaction, with the corresponding royalty revenues recorded within Franchise and other revenues from continuing operations in the Company’s Consolidated Statements of Operations and Comprehensive (Loss) Income. On December 30, 2024, the Company entered into franchise agreements that include royalty rates that are lower than its historical intercompany rates and on the low end of its international franchisee royalty percentage range. Contingent Consideration Assets and Indemnification Liabilities - Subsequent to December 29, 2024, the Company recognized contingent consideration assets of $29.3 million and indemnifications liabilities of $6.9 million within Other assets, net and Other long-term liabilities, net, respectively, on the Company’s Consolidated Balance Sheet in connection with the Brazil Sale Transaction. Contingent consideration assets relate to supervening rights to certain tax benefits, including from judicial deposits paid prior to the sale. Collection of amounts in connection with these assets will be net of applicable taxes and related costs incurred. Indemnification liabilities primarily relate to known labor and tax exposures. Contingent consideration assets and indemnification liabilities were valued utilizing a probability-adjusted discounted cash flow model using inputs not observable in the market. The key internally developed assumptions used in these models are: (i) the probabilities of outcomes, (ii) interest rates for contingencies entitled to interest, (iii) discount rates and (iv) the anticipated timing of recognition. The Company utilized discount rates of approximately 13%, in its calculations of the estimated fair values of its contingent assets and liabilities as of the Closing Date. Subsequent measurement of contingent consideration assets is based on ASC 450 gain contingency guidance and indemnification liabilities under ASC 460 guarantees guidance. Any subsequent recognition and measurement of contingent consideration and indemnification liabilities will be presented within discontinued operations.

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/205-20/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 360 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/360/tableOfContent + Details
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