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Revenues | 12 Months Ended
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Dec. 26, 2018
Revenue from Contract with Customer [Abstract] |
Revenues | Revenues Our revenues are derived primarily from two sales channels, which we operate as one segment: company restaurants and franchised and licensed restaurants. The following table disaggregates our revenue by sales channels and types of goods or services.
| Fiscal Year Ended
| December 26, 2018 |  | December 27, 2017 (1) |  | December 28, 2016 (1)
Company restaurant sales | $ | 411,932 |  |  | $ | 390,352 |  |  | $ | 367,310 |
Franchise and license revenue: |  |  |  |  |
Royalties | 101,557 |  |  | 100,631 |  |  | 98,416 |
Advertising revenue | 78,308 |  |  | — |  |  | — |
Initial and other fees | 6,422 |  |  | 2,466 |  |  | 2,717 |
Occupancy revenue | 31,960 |  |  | 35,720 |  |  | 38,505 |
Franchise and license revenue | 218,247 |  |  | 138,817 |  |  | 139,638 |
Total operating revenue | $ | 630,179 |  |  | $ | 529,169 |  |  | $ | 506,948 |
(1) | As disclosed in Note 2, prior period amounts have not been adjusted under the modified retrospective method of adoption of Topic 606.
Financial Statement Impact of Adoption The following tables summarize the impact of adopting Topic 606 on our financial statement line items as of December 26, 2018 and for the quarter and year ended December 26, 2018.
| Year ended December 26, 2018
Consolidated Balance Sheet | As Reported |  | Adjustments |  | Amounts without adoption of Topic 606
| (In thousands)
Prepaid and other current assets | $ | 10,866 |  |  | $ | 509 |  |  | $ | 11,375 |
Deferred income taxes | 17,333 |  |  | (4,988 | ) |  | 12,345 |
Other current liabilities | 61,790 |  |  | (407 | ) |  | 61,383 |
Other noncurrent liabilities | 48,087 |  |  | (18,370 | ) |  | 29,717 |
Deficit | (306,414 | ) |  | 14,298 |  |  | (292,116 | )
| Quarter ended December 26, 2018 |  | Year ended December 26, 2018
Consolidated Statement of Income | As Reported |  | Adjustments |  | Amounts without adoption of Topic 606 |  | As Reported |  | Adjustments |  | Amounts without adoption of Topic 606
| (In thousands, except per share amounts)
Franchise and license revenue | $ | 55,160 |  |  | $ | (21,162 | ) |  | $ | 33,998 |  |  | $ | 218,247 |  |  | $ | (82,815 | ) |  | $ | 135,432 |
Costs of franchise and license revenue | 28,517 |  |  | (20,962 | ) |  | 7,555 |  |  | 114,296 |  |  | (81,268 | ) |  | 33,028 |
Provision for income taxes | 1,340 |  |  | (52 | ) |  | 1,288 |  |  | 8,557 |  |  | (400 | ) |  | 8,157 |
Net income | 11,503 |  |  | (148 | ) |  | 11,355 |  |  | 43,693 |  |  | (1,147 | ) |  | 42,546 |
Basic net income per share | $ | 0.19 |  |  | $ | (0.01 | ) |  | $ | 0.18 |  |  | $ | 0.69 |  |  | $ | (0.02 | ) |  | $ | 0.67 |
Diluted net income per share | $ | 0.18 |  |  | $ | — |  |  | $ | 0.18 |  |  | $ | 0.67 |  |  | $ | (0.02 | ) |  | $ | 0.65 |
| Quarter ended December 26, 2018 |  | Year ended December 26, 2018
Consolidated Statement of Comprehensive Income | As Reported |  | Adjustments |  | Amounts without adoption of Topic 606 |  | As Reported |  | Adjustments |  | Amounts without adoption of Topic 606
| (In thousands)
Net income | $ | 11,503 |  |  | $ | (148 | ) |  | $ | 11,355 |  |  | $ | 43,693 |  |  | $ | (1,147 | ) |  | $ | 42,546 |
Total comprehensive income | 4,816 |  |  | (148 | ) |  | 4,668 |  |  | 41,863 |  |  | (1,147 | ) |  | 40,716 |
| Year ended December 26, 2018
Consolidated Statement of Cash Flow | As Reported |  | Adjustments |  | Amounts without adoption of Topic 606
| (In thousands)
Net income | $ | 43,693 |  |  | $ | (1,147 | ) |  | $ | 42,546 |
Deferred income tax expense | 6,193 |  |  | (400 | ) |  | 5,793 |
Changes in assets and liabilities: |  |  |  |  |
Other current assets | 921 |  |  | (509 | ) |  | 412 |
Other accrued liabilities | (1,676 | ) |  | 573 |  |  | (1,103 | )
Other noncurrent liabilities | (4,418 | ) |  | 1,483 |  |  | (2,935 | )
Net cash flows provided by operating activities | 73,690 |  |  | — |  |  | 73,690 |
The following significant changes impacted our financial statement line items as of December 26, 2018 and for the quarter and year ended December 26, 2018:
• | Upon adoption of Topic 606, we recorded a cumulative effect adjustment related to previously recognized initial franchise fees resulting in a $21.0 million increase to deferred franchise revenue, a $15.6 million increase to opening deficit and a $5.4 million increase to deferred tax assets. The deferred franchise revenue resulting from the cumulative effect adjustment will be amortized over the remaining lives of the individual franchise agreements. Also upon adoption, we recorded a cumulative effect adjustment to recognize breakage in proportion to redemptions that occurred prior to December 28, 2017 resulting in a decrease of $0.6 million to gift card liability (a component of other current liabilities), a $0.5 million increase to accrued advertising (a component of other current liabilities) and a $0.1 million decrease to opening deficit.
• | We recognized franchise and license revenue and costs of franchise and license revenue of $19.9 million for the quarter and $78.3 million year-to-date resulting from the recording of advertising revenues and expenditures on a gross basis under Topic 606 versus recording these amounts on a net basis under Topic 605.
• | We recognized additional franchise and license revenue of $0.2 million for the quarter and $1.5 million year-to-date under Topic 606 than we would have recognized under Topic 605, resulting from the timing of recognition of initial franchise fees.
• | We recognized franchise and license revenue and costs of franchise and license revenue of $1.0 million for the quarter and $3.0 million year-to-date resulting from the recording of other franchise services fees on a gross basis under Topic 606 versus recording these amount on a net basis under Topic 605.
Contract Balances Contract balances related to contracts with customers consists of receivables, deferred franchise revenue and deferred gift card revenue. See Note 5 for details on our receivables. Deferred franchise revenue consists primarily of the unamortized portion of initial franchise fees that are currently being amortized into revenue and amounts related to development agreements and unopened restaurants that will begin amortizing into revenue when the related restaurants are opened. Deferred franchise revenue represents our remaining performance obligations to our franchisees, excluding amounts of variable consideration related to sales-based royalties and advertising. The components of the change in deferred franchise revenue are as follows:
| (In thousands)
Balance, December 27, 2017 | $ | 1,643 |
Cumulative effect adjustment recognized upon adoption of Topic 606 | 20,976 |
Fees received from franchisees | 1,256 |
Revenue recognized (1) | (3,337 | )
Balance, December 26, 2018 | 20,538 |
Less current portion included in other current liabilities | 2,124 |
Deferred franchise revenue included in other noncurrent liabilities | $ | 18,414 |
(1) | Of this amount $3.3 million was included in either the deferred franchise revenue balance as of December 27, 2017 or the cumulative effect adjustment.
As of December 26, 2018, the deferred franchise revenue expected to be recognized in the future is as follows:
| (In thousands)
2019 | $ | 2,124 |
2020 | 1,977 |
2021 | 1,796 |
2022 | 1,687 |
2023 | 1,608 |
Thereafter | 11,346 |
Deferred franchise revenue | $ | 20,538 |
Deferred gift card liabilities consist of the unredeemed portion of gift cards sold in company restaurants and at third party locations. The balance of deferred gift card liabilities represents our remaining performance obligations to our customers. The balance of deferred gift card liabilities as of both December 26, 2018 and December 27, 2017 was $6.5 million. During the year ended December 26, 2018, we recognized revenue of $1.9 million from gift card redemptions at company restaurants.

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- 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
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