DIVERSIFIED RESTAURANT HOLDINGS, INC., 10-Q filed on 5/6/2016
Quarterly Report
Document And Entity Information
3 Months Ended
Mar. 27, 2016
May 4, 2016
Document and Entity Information [Abstract]
 
 
Entity Registrant Name
Diversified Restaurant Holdings, Inc. 
 
Document Type
10-Q 
 
Current Fiscal Year End Date
--12-25 
 
Entity Common Stock, Shares Outstanding
 
26,334,193 
Amendment Flag
false 
 
Entity Central Index Key
0001394156 
 
Entity Filer Category
Accelerated Filer 
 
Document Period End Date
Mar. 27, 2016 
 
Document Fiscal Year Focus
2016 
 
Document Fiscal Period Focus
Q1 
 
Consolidated Balance Sheets (Unaudited) (USD $)
Mar. 27, 2016
Dec. 27, 2015
Current assets
 
 
Cash and cash equivalents
$ 5,336,494 
$ 14,200,528 
Accounts receivable
844,198 
620,942 
Inventory
1,936,541 
1,934,584 
Prepaid assets
1,290,527 
1,618,429 
Total current assets
9,407,760 
18,374,483 
Deferred income taxes
14,000,323 
13,320,177 
Property and equipment, net
82,335,422 
79,189,661 
Intangible assets, net
3,521,846 
3,638,716 
Goodwill
50,097,081 
50,097,081 
Other long-term assets
1,194,170 
1,152,377 
Total assets
160,556,602 
165,772,495 
Current liabilities
 
 
Accounts payable
7,444,625 
7,807,552 
Accrued compensation
1,862,394 
3,087,883 
Other accrued liabilities
3,482,503 
3,663,211 
Current portion of long-term debt
9,842,417 
9,891,825 
Current portion of deferred rent
332,948 
396,113 
Total current liabilities
22,964,887 
24,846,584 
Deferred rent, less current portion
2,905,992 
2,826,210 
Unfavorable operating leases
651,477 
671,553 
Other long-term liabilities
5,684,827 
4,463,631 
Long-term debt, less current portion
112,259,339 
116,364,165 
Total liabilities
144,466,522 
149,172,143 
Commitments and contingencies (Notes 9 and 10)
   
   
Stockholders' equity
 
 
Common stock - $0.0001 par value; 100,000,000 shares authorized; 26,297,068 and 26,298,725, respectively, issued and outstanding
2,585 
2,584 
Additional paid-in capital
36,244,464 
36,136,332 
Accumulated other comprehensive loss
(2,055,477)
(1,006,667)
Accumulated deficit
(18,101,492)
(18,531,897)
Total stockholders' equity
16,090,080 
16,600,352 
Total liabilities and stockholders' equity
$ 160,556,602 
$ 165,772,495 
Consolidated Balance Sheets (Unaudited) (Parentheticals) (USD $)
Mar. 27, 2016
Dec. 27, 2015
Statement of Financial Position [Abstract]
 
 
Common stock, par value (in dollars per share)
$ 0.0001 
$ 0.0001 
Common stock, shares authorized
100,000,000 
100,000,000 
Common stock, shares issued
26,297,068 
26,298,725 
Common stock, shares outstanding
26,297,068 
26,298,725 
Consolidated Statements of Income (Unaudited) (USD $)
3 Months Ended
Mar. 27, 2016
Mar. 29, 2015
Income Statement [Abstract]
 
 
Revenue
$ 48,412,799 
$ 39,440,332 
Restaurant operating costs (exclusive of depreciation and amortization shown separately below):
 
 
Food, beverage, and packaging costs
13,695,543 
11,447,903 
Compensation costs
12,511,941 
10,154,792 
Occupancy costs
3,170,755 
2,372,467 
Other operating costs
10,038,844 
7,960,549 
General and administrative expenses
2,662,758 
2,496,887 
Pre-opening costs
272,364 
1,093,500 
Depreciation and amortization
4,307,717 
3,157,322 
Loss on disposal of property and equipment
66,128 
148,408 
Total operating expenses
46,726,050 
38,831,828 
Operating profit
1,686,749 
608,504 
Interest expense
(1,444,940)
(432,223)
Other income, net
45,272 
17,003 
Income before income taxes
287,081 
193,284 
Income tax benefit
(143,324)
(69,358)
Net income
$ 430,405 
$ 262,642 
Basic earnings per share (in dollars per share)
$ 0.02 
$ 0.01 
Fully diluted earnings per share (in dollars per share)
$ 0.02 
$ 0.01 
Weighted average number of common shares outstanding
 
 
Basic (in shares)
26,298,034 
26,149,184 
Diluted (in shares)
26,298,034 
26,248,424 
Consolidated Statements of Comprehensive Loss (Unaudited) (USD $)
3 Months Ended
Mar. 27, 2016
Mar. 29, 2015
Statement of Comprehensive Income [Abstract]
 
 
Net income
$ 430,405 
$ 262,642 
Other comprehensive loss
 
 
Unrealized changes in fair value of interest rate swaps, net of tax of $540,296, and $161,691, respectively
(1,048,810)
(313,873)
Unrealized changes in fair value of investments, net of tax of $0 and $1,959 , respectively
3,804 
Total other comprehensive loss
(1,048,810)
(310,069)
Comprehensive loss
$ (618,405)
$ (47,427)
Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (Parentheticals) (USD $)
3 Months Ended
Mar. 27, 2016
Mar. 29, 2015
Statement of Comprehensive Income [Abstract]
 
 
Unrealized changes in fair value of interest rate swaps, tax
$ 540,296 
$ 161,691 
Unrealized changes in fair value of investments, tax
$ 0 
$ 1,959 
Consolidated Statements of Stockholders' Equity (Unaudited) (USD $)
Total
Common Stock
Additional Paid-in Capital
Accumulated Other Comprehensive Income (Loss)
Retained Earnings
Balance at Dec. 28, 2014
$ 33,156,022 
$ 2,582 
$ 35,668,001 
$ (175,156)
$ (2,339,405)
Balance (in shares) at Dec. 28, 2014
 
26,149,824 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
Forfeitures of restricted shares (in shares)
 
(1,917)
 
 
 
Employee stock purchase plan (in shares)
 
4,662 
 
 
 
Employee stock purchase plan
19,222 
 
19,222 
 
 
Share-based compensation
55,793 
 
55,793 
 
 
Other comprehensive income (loss)
(310,069)
 
 
(310,069)
 
Net income
262,642 
 
 
 
262,642 
Balance at Mar. 29, 2015
33,183,610 
2,582 
35,743,016 
(485,225)
(2,076,763)
Balance (in shares) at Mar. 29, 2015
 
26,152,569 
 
 
 
Balance at Dec. 27, 2015
16,600,352 
2,584 
36,136,332 
(1,006,667)
(18,531,897)
Balance (in shares) at Dec. 27, 2015
26,298,725 
26,298,725 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
Issuance of restricted shares (in shares)
 
3,500 
 
 
 
Forfeitures of restricted shares (in shares)
 
(10,766)
 
 
 
Employee stock purchase plan (in shares)
 
5,609 
 
 
 
Employee stock purchase plan
10,707 
10,706 
 
 
Share-based compensation
97,426 
 
97,426 
 
 
Other comprehensive income (loss)
(1,048,810)
 
 
(1,048,810)
 
Net income
430,405 
 
 
 
430,405 
Balance at Mar. 27, 2016
$ 16,090,080 
$ 2,585 
$ 36,244,464 
$ (2,055,477)
$ (18,101,492)
Balance (in shares) at Mar. 27, 2016
26,297,068 
26,297,068 
 
 
 
Consolidated Statements of Cash Flows (Unaudited) (USD $)
3 Months Ended
Mar. 27, 2016
Mar. 29, 2015
Net income
 
 
Net income
$ 430,405 
$ 262,642 
Adjustments to reconcile net income to net cash provided by operating activities
 
 
Depreciation and amortization
4,307,717 
3,157,322 
Amortization of debt discount and loan fees
50,880 
6,954 
Amortization of gain on sale-leaseback
(39,302)
(39,302)
Loss on disposal of property and equipment
66,128 
148,408 
Share-based compensation
97,426 
55,793 
Deferred income taxes
(139,850)
(129,358)
Changes in operating assets and liabilities that provided (used) cash
 
 
Accounts receivable
(223,256)
1,015,328 
Inventory
(1,957)
(85,783)
Prepaid assets
327,902 
91,219 
Intangible assets
57,659 
(68,796)
Other long-term assets
(41,793)
(55,106)
Accounts payable
(353,333)
(904,717)
Accrued liabilities
(1,734,805)
(407,575)
Deferred rent
16,617 
8,591 
Net cash provided by operating activities
2,820,438 
3,055,620 
Cash flows from investing activities
 
 
Proceeds from sale of investments
2,917,522 
Purchases of property and equipment
(7,506,410)
(7,766,440)
Net cash used in investing activities
(7,506,410)
(4,848,918)
Cash flows from financing activities
 
 
Proceeds from issuance of long-term debt
3,311,231 
4,420,322 
Repayments of long-term debt
(7,500,000)
(2,000,000)
Proceeds from employee stock purchase plan
10,707 
19,222 
Net cash (used in) provided by financing activities
(4,178,062)
2,439,544 
Net (decrease) increase in cash and cash equivalents
(8,864,034)
646,246 
Cash and cash equivalents, beginning of period
14,200,528 
18,688,281 
Cash and cash equivalents, end of period
$ 5,336,494 
$ 19,334,527 
Business and Summary of Significant Accounting Policies
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Nature of Business
 
Diversified Restaurant Holdings, Inc. (“DRH”) is a restaurant company operating two complementary concepts:   Buffalo Wild Wings ® Grill & Bar (“BWW”) and Bagger Dave’s Burger Tavern ® (“Bagger Dave’s”).  As the largest franchisee of BWW and the creator, developer, and operator of Bagger Dave’s, we provide a unique guest experience in a casual and inviting environment.  We were incorporated in 2006 and are headquartered in the Detroit metropolitan area.  As of March 27, 2016, we had 80 locations in Florida, Illinois, Indiana, Michigan, Missouri and Ohio.
  
DRH is the largest BWW franchisee and currently operates 63 DRH-owned BWW restaurants (20 in Michigan, 16 in Florida, seven in Illinois, five in Indiana and 15 in Missouri), including the nation’s largest BWW, based on square footage, in downtown Detroit, Michigan. We remain on track to fulfill our area development agreement (“ADA”) with Buffalo Wild Wings International, Inc. (“BWLD”) and expect to operate 77 DRH-owned BWW restaurants by the end of 2020, exclusive of potential additional BWW restaurant acquisitions. 

DRH originated the Bagger Dave’s concept with our first restaurant opening in January 2008 in Berkley, Michigan.  Currently, there are 19 Bagger Dave’s, 16 in Michigan and one in Indiana and two in Ohio.
 
Basis of Presentation
 
The consolidated financial statements as of March 27, 2016 and December 27, 2015, and for the three-month periods ended March 27, 2016 and March 29, 2015, have been prepared by DRH and its wholly-owned subsidiaries (collectively, the "Company") pursuant to accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the SEC. The financial information as of March 27, 2016 and for the three-month periods ended March 27, 2016 and March 29, 2015 is unaudited, but, in the opinion of management, reflects all adjustments and accruals necessary for a fair presentation of the financial position, results of operations, and cash flows for the interim periods.
 
The consolidated financial information as of December 27, 2015 is derived from our audited consolidated financial statements and notes thereto for the fiscal year ended December 27, 2015, which is included in Item 8 in the Fiscal 2015 Annual Report on Form 10-K, and should be read in conjunction with such consolidated financial statements.
 
The results of operations for the three-month period ended March 27, 2016 are not necessarily indicative of the results of operations that may be achieved for the entire fiscal year ending December 25, 2016.
 
Segment Reporting
 
During the First Quarter 2016, the Company reorganized segment reporting from one reportable segment to two reportable segments, BWW and Bagger Dave's, due to differences that have developed in the economic characteristics between the two concepts. All prior period information was recast to reflect this change. The Company’s reportable segments are organized based on restaurant concept. Resources are allocated and performance is assessed for the concepts by the Company’s Chief Executive Officer, Chief Financial Officer and Chief Operating Officer whom the Company has determined to be its Chief Operating Decision Makers. See Note 15 for additional information.

Goodwill
 
Goodwill is not amortized and represents the excess of cost over the fair value of identified net assets of businesses acquired. Goodwill is subject to an annual impairment analysis or more frequently if indicators of impairment exist. At March 27, 2016 and December 27, 2015, we had goodwill of $50.1 million, that was assigned to our BWW operating segment.
 
The impairment analysis, if necessary, consists of a two-step process. The first step is to compare the fair value of the reporting unit to its carrying value, including goodwill. We estimate fair value using market information (market approach) and discounted cash flow projections (income approach). The income approach uses the reporting unit’s projection of estimated operating results and cash flows that is discounted using a weighted-average cost of capital that reflects market conditions. The projection uses management’s best estimates of projected revenue, costs and cash expenditures, including an estimate of new restaurant openings and related capital expenditures. Other significant estimates also include terminal growth rates and working capital requirements. We supplement our estimate of fair value under the income approach by using a market approach which estimates fair value by applying multiples to the reporting unit’s projected operating performance. The multiples are derived from comparable publicly traded companies with similar characteristics to the reporting unit. If the fair value of the reporting unit is less than its carrying value, the second step of the impairment analysis must be performed in order to determine the amount of impairment loss, if any. The second step compares the implied fair value of goodwill with the carrying amount of that goodwill. If the carrying amount of the goodwill exceeds its implied fair value, an impairment charge is recognized in an amount equal to that excess. As of December December 27, 2015, based on our quantitative analysis, goodwill was considered recoverable. At March 27, 2016, there were no impairment indicators warranting an analysis.
  
Impairment or Disposal of Long-Lived Assets

We review long-lived assets quarterly to determine if triggering events have occurred which would require a test to determine if the carrying amount of these assets may not be recoverable based on estimated future cash flows. Assets are reviewed at the lowest level for which cash flows can be identified, which is at the individual restaurant level. In the absence of extraordinary circumstances, restaurants are included in the impairment analysis after they have been open for two years. We evaluate the recoverability of a restaurant’s long-lived assets, including buildings, intangibles, leasehold improvements, furniture, fixtures, and equipment over the remaining life of the primary asset in the asset group, after considering the potential impact of planned operational improvements, marketing programs, and anticipated changes in the trade area. In determining future cash flows, significant estimates are made by management with respect to future operating results for each restaurant over the remaining life of the primary asset in the asset group. If assets are determined to be impaired, the impairment charge is measured by calculating the amount by which the asset carrying amount exceeds its fair value based on our estimate of discounted future cash flows. The determination of asset fair value is also subject to significant judgment. No impairment was recognized for quarter-ended March 27, 2016. As of December 27, 2015 based on impairment indicators and subsequent analysis the Company recorded a fixed asset impairment of $2.8 million related to four underperforming Bagger Dave's locations. We continue to monitor several other restaurants for potential impairment of long-lived assets while we continue to develop plans to improve operating results. As such, based on our current estimates of the future operating results of these restaurants, we believe that the assets at these restaurants are not impaired. As we periodically refine our estimated future operating results, changes in our estimates and assumptions may cause us to realize impairment charges in the future that could be material. For additional details refer to the 2015 10-K filed on March 11, 2015.

We account for exit or disposal activities, including restaurant closures, in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 420, Exit or Disposal Cost Obligations. Such costs include the cost of disposing of the assets as well as other facility-related expenses from previously closed restaurants. These costs are generally expensed as incurred. Additionally, at the date we cease using a property under an operating lease, we record a liability for the net present value of any remaining lease obligations, net of estimated sublease income. Any subsequent adjustments to that liability as a result of lease termination or changes in estimates of sublease income are recorded in the period incurred. During fiscal 2015, the Company decided to close 12 underperforming locations, eight in Indiana, three in Michigan and one in Florida. The Company closed the restaurants during the third and fourth quarters of 2015. In connection with the 2015 closures, the Company recorded a liability of $1.3 million, for the net present value of any remaining lease obligations, net of estimated sublease income. As of March 27, 2016, a liability of $830,361 remains on our Consolidated Balance Sheet and is classified as Other accrued liabilities and Other long-term liabilities. For additional details refer to the 2015 10-K filed on March 11, 2015.

Indefinite-Lived Intangible Assets

Liquor licenses, also a component of intangible assets, are deemed to have an indefinite life and, accordingly, are not amortized. Management reviews liquor license assets on an annual basis (at year-end) to determine whether carrying values have been impaired. We identify potential impairments for liquor licenses by comparing the fair value with its carrying amount. If the fair value exceeds the carrying amount, the liquor licenses are not impaired. If the carrying amount exceeds the fair value, an impairment loss is recorded for the difference.  If the fair value of the asset is less than the carrying amount, an impairment is recorded. No impairments were recognized for quarter-ended March 27, 2016 or fiscal year ended December 27, 2015.

Use of Estimates
 
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

Interest Rate Swap Agreements
 
The Company utilizes interest rate swap agreements with Citizens Bank, N.A. (“Citizens”) to fix interest rates on a portion of the Company’s portfolio of variable rate debt, which reduces exposure to interest rate fluctuations.  The Company does not use any other types of derivative financial instruments to hedge such exposures, nor does it use derivatives for speculative purposes. The Company’s interest rate swap agreements qualify for hedge accounting. As such, the Company records the change in the fair value of its swap agreements as a component of accumulated other comprehensive income (loss), net of tax. The Company records the fair value of its interest swaps on the Consolidated Balance Sheet in other long-term assets or other long-term liabilities depending on the fair value of the swaps. See Note 6 and Note 13 for additional information on the interest rate swap agreements.
 
Recent Accounting Pronouncements

In March 2016, the FASB issued Accounting Standards Update ("ASU") 2016-09, Topic 718: Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"). ASU 2016-09 simplifies several aspects of accounting for share-based payment award transactions, including income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. ASU 2016-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, with early adoption permitted. The Company is in the process of assessing the impact of adoption of ASU 2016-09 on its consolidated financial statements.

In February 2016, FASB issued ASU 2016-02, Leases ("ASU 2016-02"). ASU 2016-02 requires that lease arrangements longer than 12 months result in a lessee recognizing a lease asset and liability. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The updated guidance is effective for interim and annual periods beginning after December 15, 2018, and early adoption is permitted. We are currently evaluating the impact of the updated guidance on our consolidated financial statements.
 
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"), which supersedes nearly all existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP.  The standard is effective for annual periods beginning after December 15, 2017, and interim periods therein.  We are currently evaluating the impact of our pending adoption of ASU 2014-09, although based on the nature of our business we do not expect the standard will have a significant impact on our consolidated financial statements.  
 
We reviewed all other significant newly-issued accounting pronouncements and concluded that they either are not applicable to our operations or that no material effect is expected on our consolidated financial statements as a result of future adoption.

Recently Adopted Accounting Standards

In November 2015, the FASB issued ASU 2015-17, Topic 740: Balance Sheet Classification of Deferred Taxes (“ASU No. 2015-17”), which simplifies the presentation of deferred income taxes. ASU No. 2015-17 provides presentation requirements to classify deferred tax assets and liabilities as noncurrent in a classified statement of financial position. The Company adopted this standard as of December 27, 2015, with prospective application. The adoption of ASU No. 2015-17 had no impact on the Company’s Consolidated Statements of Income and Comprehensive Loss.

In April 2015, the FASB issued ASU No. 2015-03, Interest-Imputation of Interest, which updates guidance on the presentation of debt issuance costs. The guidance requires debt issuance costs to be presented as a direct deduction of debt balances on the statement of financial position, similar to the presentation of debt discounts. The guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. We retrospectively adopted this guidance in First Quarter 2016. This resulted in a reclassification of the December 27, 2015 Consolidated Balance Sheet of $345,317 from Intangible assets, net to Current portion of long-term debt and Long-term debt, $27,002 and $318,315, respectively.
Property and Equipment
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT
 
Property and equipment are comprised of the following assets:
 
 
March 27, 2016
 
December 27, 2015
Land
 
$
37,500

 
$
37,500

Building
 
2,339,219

 
2,339,219

Equipment
 
33,759,598

 
32,912,992

Furniture and fixtures
 
8,481,222

 
8,194,060

Leasehold improvements
 
73,272,456

 
72,148,545

Restaurant construction in progress
 
5,410,138

 
1,768,027

Total
 
123,300,133

 
117,400,343

Less accumulated depreciation
 
(40,964,711
)
 
(38,210,682
)
Property and equipment, net
 
$
82,335,422

 
$
79,189,661

At March 27, 2016 and December 27, 2015, $0.6 million and $0.9 million, respectively, of fixed and intangible assets for the closed locations are held for sale, which is recorded in Property and equipment on the Consolidated Balance Sheets. We anticipate auctioning the remaining assets held for sale in Second Quarter 2016. See Note 1 for additional information.
Intangible Assets
INTANGIBLE ASSETS
INTANGIBLE ASSETS
 
Intangible assets are comprised of the following:
 
 
March 27, 2016
 
December 27, 2015
Amortized intangibles:
 
 
 
 
Franchise fees
 
$
1,278,142

 
$
1,278,142

Trademark
 
70,576

 
66,826

Non-compete agreement
 
76,560

 
76,560

Favorable lease
 
351,344

 
351,344

Loan fees - Revolving line of credit and DLOC
 
368,084

 
368,084

Total
 
2,144,706

 
2,140,956

Less accumulated amortization
 
(580,177
)
 
(519,858
)
Amortized intangibles, net
 
1,564,529

 
1,621,098

 
 
 
 
 
Unamortized intangibles:
 
 
 
 
Liquor licenses
 
1,957,317

 
2,017,618

Total intangibles, net
 
$
3,521,846

 
$
3,638,716


 
Amortization expense for the three-month periods ended March 27, 2016 and March 29, 2015 was $22,790 and $25,742, respectively. Amortization of favorable leases and loan fees are reflected as part of occupancy and interest expense, respectively.
 
The aggregate weighted-average amortization period for intangible assets is 10.8 years at March 27, 2016.
Related Party Transactions
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS
 
Fees for monthly accounting and financial statement services are paid to an entity owned by a member of the DRH Board of Directors and a stockholder of the Company. Fees paid during the three-month periods ended March 27, 2016 and March 29, 2015, were $41,682, and $138,620, respectively.
Other Accrued Liabilities
OTHER ACCRUED LIABILITIES
OTHER ACCRUED LIABILITES
 
 
March 27, 2016
 
December 27, 2015
Sales tax payable
 
$
954,111

 
$
987,795

Accrued interest
 
481,549
 
 
495,365
 
Closure liability - current
 
823,264
 
 
1,008,707
 
Other
 
1,223,579
 
 
1,171,344
 
Total other accrued liabilities
 
$
3,482,503
 
 
$
3,663,211
 
Long-Term Debt
LONG-TERM DEBT
LONG-TERM DEBT
 
Long-term debt consists of the following obligations:
 
 
March 27, 2016
 
December 27, 2015
Note payable - $120.0 million term loan; payable to Citizens with a senior lien on all the Company’s personal property and fixtures. Scheduled monthly principal payments are approximately $833,333 plus accrued interest through maturity in June 2020. Interest is charged based on one-month LIBOR plus an applicable margin, which ranges from 2.25% to 3.5%, depending on the lease adjusted leverage ratio defined in the terms of the agreement. The rate at March 27, 2016 was approximately 3.94%.

 
$
108,333,333

 
$
115,833,333

 
 
 
 
 
Note payable - $30.0 million development line of credit; payable to Citizens with a senior lien on all the Company’s personal property and fixtures. Payments are due monthly once fully drawn and matures in June 2020. Interest is charged based on one-month LIBOR plus an applicable margin, which ranges from 2.25% to 3.5%, depending on the lease adjusted leverage ratio defined in the terms of the agreement. The rate at March 27, 2016 was approximately 3.94%.
 
14,401,554

 
11,090,323

 
 
 
 
 
Unamortized discount and debt issuance costs
 
(633,131
)
 
(667,666
)
 
 
 
 
 
Total debt
 
122,101,756

 
126,255,990

 
 
 
 
 
Less current portion
 
(9,842,417
)
 
(9,891,825
)
 
 
 
 
 
Long-term debt, net of current portion
 
$
112,259,339

 
$
116,364,165


 
On June 29, 2015, the Company entered into a $155.0 million senior secured credit facility with Citizens (the “June 2015 Senior Secured Credit Facility”).  The June 2015 Senior Secured Credit Facility consists of a $120.0 million term loan (the “June 2015 Term Loan”), a $30.0 million development line of credit (the “June 2015 DLOC”), and a $5.0 million revolving line of credit (the “June 2015 RLOC”). The Company used approximately $65.5 million of the June 2015 Term Loan to refinance existing outstanding debt and used approximately $54.0 million of the June 2015 Term Loan to refinance an acquisition occurring in second quarter 2015.   The remaining balance of the June 2015 Term Loan, approximately $0.5 million, was used to pay the fees, costs, and expenses associated with the closing of the June 2015 Senior Secured Credit Facility.  The June 2015 Term Loan is for a period of five years.  Payments of principal are based upon an 12-month straight-line amortization schedule, with monthly principal payments of $833,333 plus accrued interest.  The interest rate for the June 2015 Term Loan is LIBOR plus an applicable margin, which ranges from 2.25% to 3.5%, depending on the lease adjusted leverage ratio defined in the terms of the agreement.  The entire remaining outstanding principal and accrued interest on the June 2015 Term Loan is due and payable on the maturity date of June 29, 2020.  The June 2015 DLOC is for a term of two years and is convertible upon maturity into a term note based on the terms of the agreement at which time monthly principal payments will be due based on a 12-month straight-line amortization schedule, plus interest, through maturity on June 29, 2020. The June 2015 RLOC is for a term of two years and no amounts were outstanding as of March 27, 2016.

Fees related to the term debt are recorded as debt discount and fees related to the DLOC and RLOC are capitalized as intangible assets. Debt issuance costs represents legal, consulting, and financial costs associated with debt financing. Debt discount and debt issuance cost related to term debt totaled $633,131, net of accumulated amortization at March 27, 2016. Unamortized debt issuance costs related to the DLOC and RLOC totaled $368,084 at March 27, 2016. Debt discount and debt issuance cost are amortized over the life of the debt and are recorded in interest expense using the effective interest method. The Company’s evaluation of the June 2015 debt refinancing concluded that the terms of the debt were not substantially modified.
  
For the three-month periods ended March 27, 2016 and March 29, 2015, interest expense was $1,444,940 and $432,223, respectively.
 
The current debt agreement contains various customary financial covenants generally based on the performance of the specific borrowing entity and other related entities. The more significant covenants consist of a minimum debt service coverage ratio and a maximum lease adjusted leverage ratio, both of which we are in compliance with as of March 27, 2016.
  
At March 27, 2016, the Company has six interest rate swap agreements to fix a portion of the interest rates on its variable rate debt. The swap agreements all qualify for hedge accounting. Under the swap agreements, the Company receives interest at the one -month LIBOR and pays a fixed rate. Since these swap agreements qualify for hedge accounting, the changes in fair value are recorded in other comprehensive income (loss), net of tax. See Note 1 and Note 13 for additional information pertaining to interest rate swaps.

The following summarizes the fair values of derivative instruments designated as cash flow hedges which were outstanding:

 
 
 
March 27, 2016
 
 
 
Notional amounts
 
Derivative assets
 
Derivative liabilities
Interest rate swaps
Rate
Expires
 
 
 
 
 
April 2012
1.4%
April 2019
$
7,047,619

 
 
$

 
$
82,875

 
October 2012
0.9%
October 2017
3,000,000
 
 
 
 
 
10,955
 
 
July 2013
1.4%
April 2018
7,333,333
 
 
 
 
 
70,855
 
 
May 2014
1.5%
April 2018
10,892,857
 
 
 
 
 
163,058
 
 
January 2015
1.8%
December 2019
20,690,476
 
 
 
 
 
830,482
 
 
August 2015
2.3%
June 2020
49,696,875
 
 
 
 
 
1,956,136
 
 
Total
 
 
$
98,661,160

 
 
$

 
$
3,114,361

 

 
 
 
December 27, 2015
 
 
 
Notional amounts
 
Derivative assets
 
Derivative liabilities
Interest rate swaps
Rate
Expires
 
 
 
 
April 2012
1.4%
April 2019
$
7,619,048

 
 
$

 
$
56,280

 
October 2012
0.9%
October 2017
3,214,286
 
 
 
 
 
3,027
 
 
July 2013
1.4%
April 2018
8,190,476
 
 
 
 
 
60,164
 
 
May 2014
1.5%
April 2018
11,428,571
 
 
 
 
 
122,716
 
 
January 2015
1.8%
December 2019
20,547,619
 
 
 
 

 
 
415,459

 
August 2015
2.3%
June 2020
49,696,875
 
 
 
 
 
867,609
 
 
Total
 
 
$
100,696,875

 
 
$

 
$
1,525,255

 
Stock-Based Compensation
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION

Restricted stock awards

In First Quarter 2016 restricted shares were granted to certain team members and board members at a weighted-average fair value of $2.66 per share and in first quarter 2015 no restricted shares were granted.  Restricted shares are granted with a per share purchase price at 100.0% of the fair market value on the date of grant. Based on the Stock Award Agreement, shares vest ratably over a 3 year or 1 year period or upon the 3 year anniversary of the granted shares, the vesting terms are determined by the Compensation Committee of the Board of Directors.  Unrecognized stock-based compensation expense of $421,967 at March 27, 2016 will be recognized over the remaining weighted-average vesting period of 1.9 years. The total fair value of shares vested during the three-month periods ended March 27, 2016 and March 29, 2015 was $59,631 and $15,436, respectively.  Under the Stock Incentive Plan, there are 393,056 shares available for future awards at March 27, 2016.

The following table presents the restricted shares transactions during the three months ended March 27, 2016:
 
Number of
Restricted
Stock Shares
Unvested, December 27, 2015
241,124

Granted
3,500

Vested
(30,945
)
Expired/Forfeited
(10,766
)
Unvested, March 27, 2016
202,913

 
The following table presents the restricted shares transactions during the three months ended March 29, 2015:
 
Number of
Restricted
Stock Shares
Unvested, December 28, 2014
164,867

Granted

Vested
(3,334
)
Expired/Forfeited
(1,917
)
Unvested, March 29, 2015
159,616


   
On July 30, 2010, DRH granted options for the purchase of 210,000 shares of common stock to the directors of the Company.  These options are fully vested and expire six years from issuance, July 30, 2016.  Once vested, the options can be exercised at a price of $2.50 per share. On August 13, 2015, 30,000 shares were exercised at a price of $2.50 per share The intrinsic value of options exercised is $6,300. At March 27, 2016, 180,000 shares of authorized common stock are reserved for issuance to provide for the exercise of these options. The intrinsic value of outstanding options is $0 and $338,100 as of March 27, 2016 and March 29, 2015, respectively.

Employee stock purchase plan

The Company also reserved 250,000 shares of common stock for issuance under the Employee Stock Purchase Plan (“ESPP”). The ESPP is available to team members subject to employment eligibility requirements. Participants may purchase common stock at 85.0% of the lesser of the start or end price for the offering period. The ESPP has four offering periods, each start/end dates coincide with the fiscal quarter and are awarded on the last day of the offering period. During the three-month periods ended March 27, 2016 and March 29, 2015, we issued 5,609 and 4,662 shares, respectively. Under the ESPP, there are 206,980 shares available for future awards at March 27, 2016.

Share Repurchase Program

In March 2015, the Board of Directors authorized a program to repurchase up to $1.0 million of the Company's common stock in open market transactions at market prices or otherwise. In April 2015, we repurchased $98,252 in outstanding shares, representing 24,500 shares. The weighted average purchase price per share was $4.01. Upon receipt, the repurchased shares were retired and restored to authorized but unissued shares of common stock.

Stock-Based Compensation
 
Stock-based compensation of $97,426 and $55,793 was recognized during the three-month periods ended March 27, 2016 and March 29, 2015, respectively, as compensation cost in the Consolidated Statements of Income and as additional paid-in capital on the Consolidated Statement of Stockholders' Equity to reflect the fair value of shares vested.
   
The Company has authorized 10,000,000 shares of preferred stock at a par value of $0.0001.  No preferred shares are issued or outstanding as of March 27, 2016.  Any preferences, rights, voting powers, restrictions, dividend limitations, qualifications, and terms and conditions of redemption shall be set forth and adopted by a Board of Directors' resolution prior to issuance of any series of preferred stock.
Income Taxes
INCOME TAXES
INCOME TAXES
 
The effective income tax rate for the three months ended March 27, 2016 and March 29, 2015 was (49.9)% and (35.9)%, respectively. The change in the effective income tax rate for March 27, 2016 as compared to the three months ended March 29, 2015 is primarily attributable to the increase in estimated tip tax credits for 2016. The effective income tax rate is negative due to the estimated tip tax credits being larger than the tax expense generated by operating income
Operating Leases
OPERATING LEASES
OPERATING LEASES
 
Base lease terms range from five to 24 years, generally include renewal options, and frequently require us to pay a proportionate share of real estate taxes, insurance, common area maintenance, and other operating costs. Some restaurant leases provide for contingent rental payments based on sales thresholds.
 
Total rent expense was $2.5 million and $1.9 million for the three-month periods ended March 27, 2016 and March 29, 2015, respectively.
 
Scheduled future minimum lease payments for each of the five years and thereafter for non-cancelable operating leases with initial or remaining lease terms in excess of one year at March 27, 2016 are summarized as follows: 
Year
Amount
Remainder of 2016
$
8,248,554

2017
10,932,225

2018
10,458,132

2019
9,614,494

2020
9,354,108

2021 and thereafter
45,528,165

Total
$
94,135,678

Commitments and Contingencies
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES
 
The Company’s ADA requires DRH to open 42 restaurants by April 1, 2021.   As of March 27, 2016 we have opened 27 of the 42 restaurants required by the ADA.  With the remaining 15 restaurants, we expect the Company will operate 77 BWW restaurants by 2020, exclusive of potential additional BWW restaurant acquisitions.  
  
The Company is required to pay BWLD royalties (5.0% of net sales) and advertising fund contributions (between 3.15% and 3.25% of net sales globally) for the term of the individual franchise agreements.  The Company incurred royalty fees of $2.2 million and $1.6 million for the three-month periods ended March 27, 2016 and March 29, 2015, respectively.  Advertising fund contribution expenses were $1.4 million and $1.0 million for the three-month periods ended March 27, 2016 and March 29, 2015, respectively.

The Company is required by its various BWLD franchise agreements to modernize the restaurants during the term of the agreements.  The individual agreements generally require improvements between the fifth and tenth year to meet the most current design model that BWLD has approved.  The modernization costs for a restaurant can range from approximately $50,000 to approximately $1.3 million depending on an individual restaurant's needs.
On December 18, 2015, a collective action was filed against AMC Wings, Inc., and the Company in the U.S. District Court for the Southern District of Illinois by plaintiffs, David, et. al. A Sure Wing, LLC, the seller of the 18 St. Louis BWW restaurants acquired by the Company on June 29, 2015, was also named as a defendant. Plaintiffs primarily allege that former and current tipped workers at the above-mentioned companies were assigned to perform tasks outside the scope of their tipped positions, in violation of Illinois and federal law. The defendant companies filed their answers to the complaint on February 22, 2016, and during the status hearing on March 18, 2016 the Court ruled on the sequencing of discovery and ordered the parties to draft a proposed joint scheduling order.  The Court adopted the parties’ joint scheduling order at the next status hearing on March 24, 2016.  On April 11, 2016, plaintiffs filed a motion for conditional certification pursuant to 29 U.S.C. §216(b).  Defendant companies’ opposition to that motion is due May 11, 2016.
At this stage in the process, plaintiffs have not specified the amount of their damages claim. The Company has filed an indemnity claim against A Sure Wing, LLC and has received a reciprocal indemnity claim from A Sure Wing, LLC. A Sure Wing, LLC and the Company have agreed to toll their respective indemnity claims pending resolution of the matter. This case is in the discovery phase and the plaintiffs have not specified the amount of damages, the Company is unable to reasonably estimate a possible loss or range of loss.
 
Additionally, the Company is subject to ordinary and routine legal proceedings, as well as demands, claims and threatened litigation, which arise in the ordinary course of its business.  The ultimate outcome of any litigation is uncertain.  While unfavorable outcomes could have adverse effects on the Company's business, results of operations, and financial condition, management believes that the Company is adequately insured and does not believe an unfavorable outcome of any pending or threatened proceedings is probable or reasonably possible.  Therefore, no separate reserve or disclosure has been established for these types of legal proceedings.
Earnings Per Share
EARNINGS PER SHARE
EARNINGS PER SHARE
 
The following is a reconciliation of basic and fully diluted earnings per common share for the three months ended March 27, 2016 and March 29, 2015:
 
 
Three months ended
 
 
March 27, 2016
 
March 29, 2015
Income available to common stockholders
 
$
430,405

 
$
262,642

 
 
 
 
 
Weighted-average shares outstanding
 
26,298,034

 
26,149,184

Effect of dilutive securities
 

 
99,240

Weighted-average shares outstanding - assuming dilution
 
26,298,034

 
26,248,424

 
 
 
 
 
Earnings per share
 
$
0.02

 
$
0.01

Earnings per share - assuming dilution
 
$
0.02

 
$
0.01


Potentially dilutive securities whose effect would have been antidilutive are excluded from the computation of diluted earnings per share.
Supplemental Cash Flows Information
SUPPLEMENTAL CASH FLOWS INFORMATION
SUPPLEMENTAL CASH FLOWS INFORMATION
 
Other Cash Flows Information
 
Cash paid for interest was $1.4 million and $419,674 during the three-month periods ended March 27, 2016 and March 29, 2015 respectively.
 
Cash paid for income taxes was $0 and $60,000 during the three-month periods ended March 27, 2016 and March 29, 2015, respectively.

Supplemental Schedule of Non-Cash Operating, Investing, and Financing Activities
 
Noncash investing activities for property and equipment not yet paid during the three months ended March 27, 2016 and March 29, 2015, was $1.8 million and $0.4 million, respectively.
Fair Value of Financial Instruments
FAIR VALUE OF FINANCIAL INSTRUMENTS
FAIR VALUE OF FINANCIAL INSTRUMENTS
 
The guidance for fair value measurements, FASB ASC 820, Fair Value Measurements and Disclosures, establishes the authoritative definition of fair value, sets out a framework for measuring fair value, and outlines the required disclosures regarding fair value measurements. Fair value is the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. We use a three-tier fair value hierarchy based upon observable and non-observable inputs as follows:
 
 
Level 1
Quoted market prices in active markets for identical assets and liabilities;
 
 
 
 
Level 2
Inputs, other than level 1 inputs, either directly or indirectly observable; and
 
 
 
 
Level 3
Unobservable inputs developed using internal estimates and assumptions (there is little or no market data) which reflect those that market participants would use.
 
As of March 27, 2016 and December 27, 2015, respectively, our financial instruments consisted of cash and cash equivalents; including money market funds, accounts receivable, accounts payable, and debt. The fair value of cash and cash equivalents, accounts receivable, and accounts payable approximate carrying value, due to their short-term nature.
  
The fair value of our interest rate swaps is determined based on valuation models, which utilize quoted interest rate curves to calculate the forward value and then discount the forward values to the present period. The Company measures the fair value using broker quotes which are generally based on market observable inputs including yield curves and the value associated with counterparty credit risk. Our interest rate swaps are classified as a Level 2 measurement as these securities are not actively traded in the market, but are observable based on transactions associated with bank loans with similar terms and maturities. See Note 1 and Note 6 for additional information pertaining to interest rates swaps.
 
As of March 27, 2016 and December 27, 2015, our total debt was approximately $122.1 million and $126.3 million, respectively, which approximated fair value because the applicable interest rates are adjusted frequently based on short-term market rates (Level 2).
 
There were no transfers between levels of the fair value hierarchy during the three months ended March 27, 2016 and the fiscal year ended December 27, 2015.

The following table presents the fair values for those assets and liabilities measured on a recurring basis as of March 27, 2016:
 
FAIR VALUE MEASUREMENTS
Description
 
Level 1
 
Level 2
 
Level 3
 
Asset/(Liability)
Total
Interest rate swaps
 
$

 
$
(3,114,361
)
 
$

 
$
(3,114,361
)
 
 
The following table presents the fair values for those assets and liabilities measured on a recurring basis as of December 27, 2015:
 
FAIR VALUE MEASUREMENTS
Description
 
Level 1
 
Level 2
 
Level 3
 
Asset/(Liability)
Total
Cash equivalents
 
$
2,000,000

 
$

 
$

 
$
2,000,000

Interest rate swaps
 

 
(1,525,255
)
 

 
(1,525,255
)
Total
 
$
2,000,000

 
$
(1,525,255
)
 
$

 
$
474,745

Accumulated Other Comprehensive Income (Loss)
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
 
The following table summarizes each component of Accumulated Other Comprehensive Income (loss):
 
 
Three Months Ended March 27, 2016
 
 
Interest Rate Swap
 
Investments
 
Total
Beginning balance
 
$
(1,006,667
)
 
$

 
$
(1,006,667
)
 
 
 
 
 
 
 
Loss recorded to other comprehensive income
 
(1,589,106
)
 

 
(1,589,106
)
Tax benefit
 
540,296

 

 
540,296

Other comprehensive loss
 
(1,048,810
)
 

 
(1,048,810
)
 
 
 
 
 
 
 
Accumulated OCL
 
$
(2,055,477
)
 
$

 
$
(2,055,477
)

 
 
Three Months Ended March 29, 2015
 
 
Interest Rate Swap
 
Investments
 
Total
Beginning balance
 
$
(171,352
)
 
$
(3,804
)
 
$
(175,156
)
 
 
 
 
 
 
 
Gain (loss) recorded to other comprehensive income
 
(475,564
)
 
5,763

 
(469,801
)
Tax income (expense)
 
161,691

 
(1,959
)
 
159,732

Other comprehensive income (loss)
 
(313,873
)
 
3,804

 
(310,069
)
 
 
 
 
 
 
 
Accumulated OCL
 
$
(485,225
)
 
$

 
$
(485,225
)
Segment Reporting
SEGMENT REPORTING
SEGMENT REPORTING

During the First Quarter 2016, the Company reorganized segment reporting from one reportable segment to two reportable segments, BWW and Bagger Dave's, due to differences that have developed in the economic characteristics between the two concepts. All prior period information was recast to reflect this change. The Company’s reportable segments are organized based on restaurant concept. Resources are allocated and performance is assessed for the concepts by the Company’s Chief Executive Officer, Chief Financial Officer and Chief Operating Officer whom the Company has determined to be its Chief Operating Decision Makers. See Note 1 for additional information.

Revenues for all segments include only transactions with customers and include no intersegment revenues. Excluded from net income from operations for BWW and Bagger Dave's are certain legal and corporate costs not directly related to the performance of the segments, interest and other expenses related to the Company’s credit agreements and derivative instruments, certain stock-based compensation expenses, certain bonus expense and certain insurance expenses managed centrally.
Segment activity is as follows:

 
Three months ended
 
March 27, 2016
 
March 29, 2015
Revenue from external customers:
 
 
 
BWW
$
43,143,252

 
$
31,852,089

Bagger Dave's
5,269,547

 
7,588,243

Total
$
48,412,799

 
$
39,440,332

 
 
 
 
Segment operating profit (loss):
 
 
 
BWW
$
5,285,645

 
$
4,606,331

Bagger Dave's
(612,260
)
 
(1,458,634
)
Total segment operating profit
$
4,673,385

 
$
3,147,697

Closure-related expenses
(345,011
)
 

Corporate expenses
(2,641,625
)
 
(2,539,193
)
Total consolidated operating profit
$
1,686,749

 
$
608,504

 
 
 
 
Interest expense
$
(1,444,940
)
 
$
(432,223
)
Other income
45,272

 
17,003

Net income before income taxes
$
287,081

 
$
193,284

 
 
 
 
 
March 27, 2016
 
December 27, 2015
Total assets
 
 
 
BWW
$
117,530,474

 
$
115,044,166

Bagger Dave's
22,262,803

 
21,886,470

Corporate
20,763,325

 
28,841,859

Total assets
$
160,556,602

 
$
165,772,495

Business and Summary of Significant Accounting Policies (Policies)
Basis of Presentation
 
The consolidated financial statements as of March 27, 2016 and December 27, 2015, and for the three-month periods ended March 27, 2016 and March 29, 2015, have been prepared by DRH and its wholly-owned subsidiaries (collectively, the "Company") pursuant to accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the SEC. The financial information as of March 27, 2016 and for the three-month periods ended March 27, 2016 and March 29, 2015 is unaudited, but, in the opinion of management, reflects all adjustments and accruals necessary for a fair presentation of the financial position, results of operations, and cash flows for the interim periods.
 
The consolidated financial information as of December 27, 2015 is derived from our audited consolidated financial statements and notes thereto for the fiscal year ended December 27, 2015, which is included in Item 8 in the Fiscal 2015 Annual Report on Form 10-K, and should be read in conjunction with such consolidated financial statements.
 
The results of operations for the three-month period ended March 27, 2016 are not necessarily indicative of the results of operations that may be achieved for the entire fiscal year ending December 25, 2016.
Segment Reporting
 
During the First Quarter 2016, the Company reorganized segment reporting from one reportable segment to two reportable segments, BWW and Bagger Dave's, due to differences that have developed in the economic characteristics between the two concepts. All prior period information was recast to reflect this change. The Company’s reportable segments are organized based on restaurant concept. Resources are allocated and performance is assessed for the concepts by the Company’s Chief Executive Officer, Chief Financial Officer and Chief Operating Officer whom the Company has determined to be its Chief Operating Decision Makers. See Note 15 for additional information.

Goodwill
 
Goodwill is not amortized and represents the excess of cost over the fair value of identified net assets of businesses acquired. Goodwill is subject to an annual impairment analysis or more frequently if indicators of impairment exist. At March 27, 2016 and December 27, 2015, we had goodwill of $50.1 million, that was assigned to our BWW operating segment.
 
The impairment analysis, if necessary, consists of a two-step process. The first step is to compare the fair value of the reporting unit to its carrying value, including goodwill. We estimate fair value using market information (market approach) and discounted cash flow projections (income approach). The income approach uses the reporting unit’s projection of estimated operating results and cash flows that is discounted using a weighted-average cost of capital that reflects market conditions. The projection uses management’s best estimates of projected revenue, costs and cash expenditures, including an estimate of new restaurant openings and related capital expenditures. Other significant estimates also include terminal growth rates and working capital requirements. We supplement our estimate of fair value under the income approach by using a market approach which estimates fair value by applying multiples to the reporting unit’s projected operating performance. The multiples are derived from comparable publicly traded companies with similar characteristics to the reporting unit. If the fair value of the reporting unit is less than its carrying value, the second step of the impairment analysis must be performed in order to determine the amount of impairment loss, if any. The second step compares the implied fair value of goodwill with the carrying amount of that goodwill. If the carrying amount of the goodwill exceeds its implied fair value, an impairment charge is recognized in an amount equal to that excess. As of December December 27, 2015, based on our quantitative analysis, goodwill was considered recoverable. At March 27, 2016, there were no impairment indicators warranting an analysis.
Impairment or Disposal of Long-Lived Assets

We review long-lived assets quarterly to determine if triggering events have occurred which would require a test to determine if the carrying amount of these assets may not be recoverable based on estimated future cash flows. Assets are reviewed at the lowest level for which cash flows can be identified, which is at the individual restaurant level. In the absence of extraordinary circumstances, restaurants are included in the impairment analysis after they have been open for two years. We evaluate the recoverability of a restaurant’s long-lived assets, including buildings, intangibles, leasehold improvements, furniture, fixtures, and equipment over the remaining life of the primary asset in the asset group, after considering the potential impact of planned operational improvements, marketing programs, and anticipated changes in the trade area. In determining future cash flows, significant estimates are made by management with respect to future operating results for each restaurant over the remaining life of the primary asset in the asset group. If assets are determined to be impaired, the impairment charge is measured by calculating the amount by which the asset carrying amount exceeds its fair value based on our estimate of discounted future cash flows. The determination of asset fair value is also subject to significant judgment. No impairment was recognized for quarter-ended March 27, 2016. As of December 27, 2015 based on impairment indicators and subsequent analysis the Company recorded a fixed asset impairment of $2.8 million related to four underperforming Bagger Dave's locations. We continue to monitor several other restaurants for potential impairment of long-lived assets while we continue to develop plans to improve operating results. As such, based on our current estimates of the future operating results of these restaurants, we believe that the assets at these restaurants are not impaired. As we periodically refine our estimated future operating results, changes in our estimates and assumptions may cause us to realize impairment charges in the future that could be material. For additional details refer to the 2015 10-K filed on March 11, 2015.

We account for exit or disposal activities, including restaurant closures, in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 420, Exit or Disposal Cost Obligations. Such costs include the cost of disposing of the assets as well as other facility-related expenses from previously closed restaurants. These costs are generally expensed as incurred. Additionally, at the date we cease using a property under an operating lease, we record a liability for the net present value of any remaining lease obligations, net of estimated sublease income. Any subsequent adjustments to that liability as a result of lease termination or changes in estimates of sublease income are recorded in the period incurred. During fiscal 2015, the Company decided to close 12 underperforming locations, eight in Indiana, three in Michigan and one in Florida. The Company closed the restaurants during the third and fourth quarters of 2015. In connection with the 2015 closures, the Company recorded a liability of $1.3 million, for the net present value of any remaining lease obligations, net of estimated sublease income. As of March 27, 2016, a liability of $830,361 remains on our Consolidated Balance Sheet and is classified as Other accrued liabilities and Other long-term liabilities. For additional details refer to the 2015 10-K filed on March 11, 2015.

Indefinite-Lived Intangible Assets

Liquor licenses, also a component of intangible assets, are deemed to have an indefinite life and, accordingly, are not amortized. Management reviews liquor license assets on an annual basis (at year-end) to determine whether carrying values have been impaired. We identify potential impairments for liquor licenses by comparing the fair value with its carrying amount. If the fair value exceeds the carrying amount, the liquor licenses are not impaired. If the carrying amount exceeds the fair value, an impairment loss is recorded for the difference.  If the fair value of the asset is less than the carrying amount, an impairment is recorded. No impairments were recognized for quarter-ended March 27, 2016 or fiscal year ended December 27, 2015.
Use of Estimates
 
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

Interest Rate Swap Agreements
 
The Company utilizes interest rate swap agreements with Citizens Bank, N.A. (“Citizens”) to fix interest rates on a portion of the Company’s portfolio of variable rate debt, which reduces exposure to interest rate fluctuations.  The Company does not use any other types of derivative financial instruments to hedge such exposures, nor does it use derivatives for speculative purposes. The Company’s interest rate swap agreements qualify for hedge accounting. As such, the Company records the change in the fair value of its swap agreements as a component of accumulated other comprehensive income (loss), net of tax. The Company records the fair value of its interest swaps on the Consolidated Balance Sheet in other long-term assets or other long-term liabilities depending on the fair value of the swaps. See Note 6 and Note 13 for additional information on the interest rate swap agreements.
Recent Accounting Pronouncements

In March 2016, the FASB issued Accounting Standards Update ("ASU") 2016-09, Topic 718: Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"). ASU 2016-09 simplifies several aspects of accounting for share-based payment award transactions, including income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. ASU 2016-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, with early adoption permitted. The Company is in the process of assessing the impact of adoption of ASU 2016-09 on its consolidated financial statements.

In February 2016, FASB issued ASU 2016-02, Leases ("ASU 2016-02"). ASU 2016-02 requires that lease arrangements longer than 12 months result in a lessee recognizing a lease asset and liability. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The updated guidance is effective for interim and annual periods beginning after December 15, 2018, and early adoption is permitted. We are currently evaluating the impact of the updated guidance on our consolidated financial statements.
 
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"), which supersedes nearly all existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP.  The standard is effective for annual periods beginning after December 15, 2017, and interim periods therein.  We are currently evaluating the impact of our pending adoption of ASU 2014-09, although based on the nature of our business we do not expect the standard will have a significant impact on our consolidated financial statements.  
 
We reviewed all other significant newly-issued accounting pronouncements and concluded that they either are not applicable to our operations or that no material effect is expected on our consolidated financial statements as a result of future adoption.

Recently Adopted Accounting Standards

In November 2015, the FASB issued ASU 2015-17, Topic 740: Balance Sheet Classification of Deferred Taxes (“ASU No. 2015-17”), which simplifies the presentation of deferred income taxes. ASU No. 2015-17 provides presentation requirements to classify deferred tax assets and liabilities as noncurrent in a classified statement of financial position. The Company adopted this standard as of December 27, 2015, with prospective application. The adoption of ASU No. 2015-17 had no impact on the Company’s Consolidated Statements of Income and Comprehensive Loss.

In April 2015, the FASB issued ASU No. 2015-03, Interest-Imputation of Interest, which updates guidance on the presentation of debt issuance costs. The guidance requires debt issuance costs to be presented as a direct deduction of debt balances on the statement of financial position, similar to the presentation of debt discounts. The guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. We retrospectively adopted this guidance in First Quarter 2016. This resulted in a reclassification of the December 27, 2015 Consolidated Balance Sheet of $345,317 from Intangible assets, net to Current portion of long-term debt and Long-term debt, $27,002 and $318,315, respectively.
 
Property and Equipment (Tables)
Property, Plant and Equipment
Property and equipment are comprised of the following assets:
 
 
March 27, 2016
 
December 27, 2015
Land
 
$
37,500

 
$
37,500

Building
 
2,339,219

 
2,339,219

Equipment
 
33,759,598

 
32,912,992

Furniture and fixtures
 
8,481,222

 
8,194,060

Leasehold improvements
 
73,272,456

 
72,148,545

Restaurant construction in progress
 
5,410,138

 
1,768,027

Total
 
123,300,133

 
117,400,343

Less accumulated depreciation
 
(40,964,711
)
 
(38,210,682
)
Property and equipment, net
 
$
82,335,422

 
$
79,189,661

At March 27, 2016 and December 27, 2015, $0.6 million and $0.9 million, respectively, of fixed and intangible assets for the closed locations are held for sale, which is recorded in Property and equipment on the Consolidated Balance Sheets. We anticipate auctioning the remaining assets held for sale in Second Quarter 2016. See Note 1 for additional information.
Intangible Assets (Tables)
Schedule of Finite-Lived Intangible Assets
Intangible assets are comprised of the following:
 
 
March 27, 2016
 
December 27, 2015
Amortized intangibles:
 
 
 
 
Franchise fees
 
$
1,278,142

 
$
1,278,142

Trademark
 
70,576

 
66,826

Non-compete agreement
 
76,560

 
76,560

Favorable lease
 
351,344

 
351,344

Loan fees - Revolving line of credit and DLOC
 
368,084

 
368,084

Total
 
2,144,706

 
2,140,956

Less accumulated amortization
 
(580,177
)
 
(519,858
)
Amortized intangibles, net
 
1,564,529

 
1,621,098

 
 
 
 
 
Unamortized intangibles:
 
 
 
 
Liquor licenses
 
1,957,317

 
2,017,618

Total intangibles, net
 
$
3,521,846

 
$
3,638,716

Other Accrued Liabilities (Tables)
Other Accrued Liabilities
OTHER ACCRUED LIABILITES
 
 
March 27, 2016
 
December 27, 2015
Sales tax payable
 
$
954,111

 
$
987,795

Accrued interest
 
481,549
 
 
495,365
 
Closure liability - current
 
823,264
 
 
1,008,707
 
Other
 
1,223,579
 
 
1,171,344
 
Total other accrued liabilities
 
$
3,482,503
 
 
$
3,663,211
 
Long-Term Debt (Tables)
 
 
March 27, 2016
 
December 27, 2015
Note payable - $120.0 million term loan; payable to Citizens with a senior lien on all the Company’s personal property and fixtures. Scheduled monthly principal payments are approximately $833,333 plus accrued interest through maturity in June 2020. Interest is charged based on one-month LIBOR plus an applicable margin, which ranges from 2.25% to 3.5%, depending on the lease adjusted leverage ratio defined in the terms of the agreement. The rate at March 27, 2016 was approximately 3.94%.

 
$
108,333,333

 
$
115,833,333

 
 
 
 
 
Note payable - $30.0 million development line of credit; payable to Citizens with a senior lien on all the Company’s personal property and fixtures. Payments are due monthly once fully drawn and matures in June 2020. Interest is charged based on one-month LIBOR plus an applicable margin, which ranges from 2.25% to 3.5%, depending on the lease adjusted leverage ratio defined in the terms of the agreement. The rate at March 27, 2016 was approximately 3.94%.
 
14,401,554

 
11,090,323

 
 
 
 
 
Unamortized discount and debt issuance costs
 
(633,131
)
 
(667,666
)
 
 
 
 
 
Total debt
 
122,101,756

 
126,255,990

 
 
 
 
 
Less current portion
 
(9,842,417
)
 
(9,891,825
)
 
 
 
 
 
Long-term debt, net of current portion
 
$
112,259,339

 
$
116,364,165

The following summarizes the fair values of derivative instruments designated as cash flow hedges which were outstanding:

 
 
 
March 27, 2016
 
 
 
Notional amounts
 
Derivative assets
 
Derivative liabilities
Interest rate swaps
Rate
Expires
 
 
 
 
 
April 2012
1.4%
April 2019
$
7,047,619

 
 
$

 
$
82,875

 
October 2012
0.9%
October 2017
3,000,000
 
 
 
 
 
10,955
 
 
July 2013
1.4%
April 2018
7,333,333
 
 
 
 
 
70,855
 
 
May 2014
1.5%
April 2018
10,892,857
 
 
 
 
 
163,058
 
 
January 2015
1.8%
December 2019
20,690,476
 
 
 
 
 
830,482
 
 
August 2015
2.3%
June 2020
49,696,875
 
 
 
 
 
1,956,136
 
 
Total
 
 
$
98,661,160

 
 
$

 
$
3,114,361

 

 
 
 
December 27, 2015
 
 
 
Notional amounts
 
Derivative assets
 
Derivative liabilities
Interest rate swaps
Rate
Expires
 
 
 
 
April 2012
1.4%
April 2019
$
7,619,048

 
 
$

 
$
56,280

 
October 2012
0.9%
October 2017
3,214,286
 
 
 
 
 
3,027
 
 
July 2013
1.4%
April 2018
8,190,476
 
 
 
 
 
60,164
 
 
May 2014
1.5%
April 2018
11,428,571
 
 
 
 
 
122,716
 
 
January 2015
1.8%
December 2019
20,547,619
 
 
 
 

 
 
415,459

 
August 2015
2.3%
June 2020
49,696,875
 
 
 
 
 
867,609
 
 
Total
 
 
$
100,696,875

 
 
$

 
$
1,525,255

 
Stock-Based Compensation (Tables)
Nonvested Restricted Stock Shares Activity
The following table presents the restricted shares transactions during the three months ended March 27, 2016:
 
Number of
Restricted
Stock Shares
Unvested, December 27, 2015
241,124

Granted
3,500

Vested
(30,945
)
Expired/Forfeited
(10,766
)
Unvested, March 27, 2016
202,913

 
The following table presents the restricted shares transactions during the three months ended March 29, 2015:
 
Number of
Restricted
Stock Shares
Unvested, December 28, 2014
164,867

Granted

Vested
(3,334
)
Expired/Forfeited
(1,917
)
Unvested, March 29, 2015
159,616

Operating Leases (Tables)
Schedule of Future Minimum Rental Payments for Operating Leases
Scheduled future minimum lease payments for each of the five years and thereafter for non-cancelable operating leases with initial or remaining lease terms in excess of one year at March 27, 2016 are summarized as follows: 
Year
Amount
Remainder of 2016
$
8,248,554

2017
10,932,225

2018
10,458,132

2019
9,614,494

2020
9,354,108

2021 and thereafter
45,528,165

Total
$
94,135,678

Earnings Per Share (Tables)
Schedule of Earnings Per Share, Basic and Diluted
The following is a reconciliation of basic and fully diluted earnings per common share for the three months ended March 27, 2016 and March 29, 2015:
 
 
Three months ended
 
 
March 27, 2016
 
March 29, 2015
Income available to common stockholders
 
$
430,405

 
$
262,642

 
 
 
 
 
Weighted-average shares outstanding
 
26,298,034

 
26,149,184

Effect of dilutive securities
 

 
99,240

Weighted-average shares outstanding - assuming dilution
 
26,298,034

 
26,248,424

 
 
 
 
 
Earnings per share
 
$
0.02

 
$
0.01

Earnings per share - assuming dilution
 
$
0.02

 
$
0.01


Potentially dilutive securities whose effect would have been antidilutive are excluded from the computation of diluted earnings per share.
Fair Value of Financial Instruments (Tables)
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis
The following table presents the fair values for those assets and liabilities measured on a recurring basis as of March 27, 2016:
 
FAIR VALUE MEASUREMENTS
Description
 
Level 1
 
Level 2
 
Level 3
 
Asset/(Liability)
Total
Interest rate swaps
 
$

 
$
(3,114,361
)
 
$

 
$
(3,114,361
)
 
 
The following table presents the fair values for those assets and liabilities measured on a recurring basis as of December 27, 2015:
 
FAIR VALUE MEASUREMENTS
Description
 
Level 1
 
Level 2
 
Level 3
 
Asset/(Liability)
Total
Cash equivalents
 
$
2,000,000

 
$

 
$

 
$
2,000,000

Interest rate swaps
 

 
(1,525,255
)
 

 
(1,525,255
)
Total
 
$
2,000,000

 
$
(1,525,255
)
 
$

 
$
474,745

Accumulated Other Comprehensive Income (Loss) (Tables)
Schedule of Accumulated Other Comprehensive Income (Loss)
The following table summarizes each component of Accumulated Other Comprehensive Income (loss):
 
 
Three Months Ended March 27, 2016
 
 
Interest Rate Swap
 
Investments
 
Total
Beginning balance
 
$
(1,006,667
)
 
$

 
$
(1,006,667
)
 
 
 
 
 
 
 
Loss recorded to other comprehensive income
 
(1,589,106
)
 

 
(1,589,106
)
Tax benefit
 
540,296

 

 
540,296

Other comprehensive loss
 
(1,048,810
)
 

 
(1,048,810
)
 
 
 
 
 
 
 
Accumulated OCL
 
$
(2,055,477
)
 
$

 
$
(2,055,477
)

 
 
Three Months Ended March 29, 2015
 
 
Interest Rate Swap
 
Investments
 
Total
Beginning balance
 
$
(171,352
)
 
$
(3,804
)
 
$
(175,156
)
 
 
 
 
 
 
 
Gain (loss) recorded to other comprehensive income
 
(475,564
)
 
5,763

 
(469,801
)
Tax income (expense)
 
161,691

 
(1,959
)
 
159,732

Other comprehensive income (loss)
 
(313,873
)
 
3,804

 
(310,069
)
 
 
 
 
 
 
 
Accumulated OCL
 
$
(485,225
)
 
$

 
$
(485,225
)
Segment Reporting (Tables)
Schedule of segment activity
Segment activity is as follows:

 
Three months ended
 
March 27, 2016
 
March 29, 2015
Revenue from external customers:
 
 
 
BWW
$
43,143,252

 
$
31,852,089

Bagger Dave's
5,269,547

 
7,588,243

Total
$
48,412,799

 
$
39,440,332

 
 
 
 
Segment operating profit (loss):
 
 
 
BWW
$
5,285,645

 
$
4,606,331

Bagger Dave's
(612,260
)
 
(1,458,634
)
Total segment operating profit
$
4,673,385

 
$
3,147,697

Closure-related expenses
(345,011
)
 

Corporate expenses
(2,641,625
)
 
(2,539,193
)
Total consolidated operating profit
$
1,686,749

 
$
608,504

 
 
 
 
Interest expense
$
(1,444,940
)
 
$
(432,223
)
Other income
45,272

 
17,003

Net income before income taxes
$
287,081

 
$
193,284

 
 
 
 
 
March 27, 2016
 
December 27, 2015
Total assets
 
 
 
BWW
$
117,530,474

 
$
115,044,166

Bagger Dave's
22,262,803

 
21,886,470

Corporate
20,763,325

 
28,841,859

Total assets
$
160,556,602

 
$
165,772,495

Business and Summary of Significant Accounting Policies (Details) (USD $)
3 Months Ended 12 Months Ended 3 Months Ended
Mar. 27, 2016
segment
restaurant
Mar. 29, 2015
Dec. 27, 2015
Mar. 27, 2016
Bagger Dave's
restaurant
Mar. 27, 2016
Bagger Dave's
Michigan
restaurant
Mar. 27, 2016
Bagger Dave's
Indiana
restaurant
Mar. 27, 2016
Bagger Dave's
Ohio
restaurant
Mar. 27, 2016
BWW
restaurant
Dec. 27, 2015
BWW
Mar. 27, 2016
BWW
Michigan
restaurant
Mar. 27, 2016
BWW
Indiana
restaurant
Mar. 27, 2016
BWW
Missouri
restaurant
Mar. 27, 2016
BWW
Florida
restaurant
Mar. 27, 2016
BWW
Illinois
restaurant
Dec. 27, 2015
Facility Closing
restaurant
Dec. 27, 2015
Facility Closing
Michigan
restaurant
Dec. 27, 2015
Facility Closing
Indiana
restaurant
Dec. 27, 2015
Facility Closing
Florida
restaurant
Mar. 27, 2016
Bagger Dave's
Dec. 27, 2015
Bagger Dave's
restaurant
Dec. 31, 2020
Exclusive of Potential Additional Restaurant Acquisitions
Scenario, Forecast
restaurant
Dec. 27, 2015
ASU 2015-03
Intangible Assets, Net
Dec. 27, 2015
ASU 2015-03
Long-term Debt, Current Maturities
Dec. 27, 2015
ASU 2015-03
Long-term Debt
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of restaurants
80 
 
 
19 
16 
63 
 
20 
15 
16 
 
 
 
 
 
 
77 
 
 
 
Number of reportable segments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Goodwill
$ 50,097,081 
 
$ 50,097,081 
 
 
 
 
$ 50,097,081 
$ 50,100,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset impairment loss
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,800,000 
 
 
 
 
Number of Restaurants Impaired
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of Restaurants Closed
 
 
 
 
 
 
 
 
 
 
 
 
 
 
12 
 
 
 
 
 
 
Restructuring Reserve
830,361 
 
1,300,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt issuance costs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ (345,317)
$ 27,002 
$ 318,315 
Property and Equipment (Details) (USD $)
Mar. 27, 2016
Dec. 27, 2015
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
$ 123,300,133 
$ 117,400,343 
Less accumulated depreciation
(40,964,711)
(38,210,682)
Property and equipment, net
82,335,422 
79,189,661 
fixed and intangible assets held for sale
600,000 
900,000 
Land
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
37,500 
37,500 
Building
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
2,339,219 
2,339,219 
Equipment
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
33,759,598 
32,912,992 
Furniture and fixtures
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
8,481,222 
8,194,060 
Leasehold improvements
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
73,272,456 
72,148,545 
Restaurant construction in progress
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
$ 5,410,138 
$ 1,768,027 
Intangible Assets (Details) (USD $)
3 Months Ended
Mar. 27, 2016
Mar. 29, 2015
Dec. 27, 2015
Amortized intangibles:
 
 
 
Franchise fees
$ 1,278,142 
 
$ 1,278,142 
Trademark
70,576 
 
66,826 
Non-compete agreement
76,560 
 
76,560 
Favorable lease
351,344 
 
351,344 
Loan fees - Revolving line of credit and DLOC
368,084 
 
368,084 
Total
2,144,706 
 
2,140,956 
Less accumulated amortization
(580,177)
 
(519,858)
Amortized intangibles, net
1,564,529 
 
1,621,098 
Unamortized intangibles:
 
 
 
Liquor licenses
1,957,317 
 
2,017,618 
Total intangibles, net
3,521,846 
 
3,638,716 
Amortization expense
$ 22,790 
$ 25,742 
 
Aggregate weighted-average amortization period
10 years 292 days 
 
 
Related Party Transactions (Details) (USD $)
3 Months Ended
Mar. 27, 2016
Mar. 29, 2015
Related Party Transactions [Abstract]
 
 
Professional fees
$ 41,682 
$ 138,620 
Other Accrued Liabilities (Details) (USD $)
Mar. 27, 2016
Dec. 27, 2015
Payables and Accruals [Abstract]
 
 
Sales tax payable
$ 954,111 
$ 987,795 
Accrued interest
481,549 
495,365 
Closure liability - current
823,264 
1,008,707 
Other
1,223,579 
1,171,344 
Accrued Liabilities, Current
$ 3,482,503 
$ 3,663,211 
Long-Term Debt (Details) (USD $)
Mar. 27, 2016
Dec. 27, 2015
Debt Instrument [Line Items]
 
 
Unamortized discount and debt issuance costs
$ (633,131)
$ (667,666)
Total
122,101,756 
126,255,990 
Less current portion
(9,842,417)
(9,891,825)
Long-term debt, net of current portion
112,259,339 
116,364,165 
Term Loan |
June 2020 Term Loan
 
 
Debt Instrument [Line Items]
 
 
Notes payable
108,333,333 
115,833,333 
Line of Credit |
June 2020 DLOC
 
 
Debt Instrument [Line Items]
 
 
Notes payable
$ 14,401,554 
$ 11,090,323 
Long-Term Debt (Additional Information) (Details) (USD $)
0 Months Ended 3 Months Ended 12 Months Ended 3 Months Ended 12 Months Ended
Jun. 29, 2015
Jun. 29, 2015
Term Loan
Jun. 29, 2015
Term Loan
Mar. 27, 2016
Term Loan
June 2020 Term Loan
Dec. 27, 2015
Term Loan
June 2020 Term Loan
Mar. 27, 2016
Line of Credit
June 2020 Term Loan
Mar. 27, 2016
Line of Credit
June 2020 DLOC
Dec. 27, 2015
Line of Credit
June 2020 DLOC
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
Maximum borrowing capacity
$ 155,000,000 
 
$ 120,000,000 
$ 120,000,000 
$ 120,000,000 
 
$ 30,000,000 
$ 30,000,000 
Scheduled monthly principal and interest paym?nts (in Dollars)
 
$ 833,333 
 
$ 833,333 
$ 833,333 
 
 
 
Interest rate range, low
 
2.25% 
 
2.25% 
2.25% 
 
2.25% 
2.25% 
Interest rate range, high
 
3.50% 
 
3.50% 
3.50% 
 
3.50% 
3.50% 
Int?r?st rat? at ?nd of p?riod
 
 
 
3.94% 
 
3.94% 
 
 
Long-Term Debt (Narrative) (Details) (USD $)
3 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended
Mar. 27, 2016
Mar. 29, 2015
Dec. 27, 2015
Jun. 29, 2015
Mar. 27, 2016
Interest Rate Swap
agreement
Jun. 29, 2015
Term Loan
Jun. 29, 2015
Term Loan
Jun. 29, 2015
Line of Credit
Development Line of Credit
Jun. 29, 2015
Line of Credit
Development Line of Credit
Jun. 29, 2015
Line of Credit
Revolving Credit Facility
Mar. 27, 2016
Line of Credit
Revolving Credit Facility
Jun. 29, 2015
Senior Secured Credit Facility
Revolving Credit Facility
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
Maximum borrowing capacity
 
 
 
$ 155,000,000 
 
 
$ 120,000,000 
 
$ 30,000,000 
 
 
$ 5,000,000 
Payments used to refinance existing outstanding debt
 
 
 
 
 
65,500,000 
 
 
 
 
 
 
Payments used to refinance and term out the outstanding balance of existing development line of credit loan
 
 
 
 
 
54,000,000 
 
 
 
 
 
 
Payments of fees and closing costs
 
 
 
 
 
500,000 
 
 
 
 
 
 
Debt term
 
 
 
 
 
5 years 
 
2 years 
 
2 years 
 
 
Debt payment term
 
 
 
 
 
12 months 
 
 
 
 
 
 
Scheduled monthly principal and interest paym?nts (in Dollars)
 
 
 
 
 
833,333 
 
 
 
 
 
 
Interest rate range, low
 
 
 
 
 
2.25% 
 
 
 
 
 
 
Interest rate range, high
 
 
 
 
 
3.50% 
 
 
 
 
 
 
Outstanding revolving line of credit
 
 
 
 
 
 
 
 
 
 
 
Interest expense
1,444,940 
432,223 
 
 
 
 
 
 
 
 
 
 
Number of interest rate swap agreements
 
 
 
 
 
 
 
 
 
 
 
Unamortized discount and debt issuance costs
633,131 
 
667,666 
 
 
 
 
 
 
 
 
 
Unamortized debt issuance costs
$ 368,084 
 
 
 
 
 
 
 
 
 
 
 
Long-Term Debt (Fair Value of derivative Instruments) (Details) (Cash Flow Hedging, USD $)
Mar. 27, 2016
Dec. 27, 2015
Derivative Instruments and Hedging Activities Disclosures [Line Items]
 
 
Notional amounts
$ 98,661,160 
$ 100,696,875 
Derivative assets
Derivative liabilities
3,114,361 
1,525,255 
April 2012
 
 
Derivative Instruments and Hedging Activities Disclosures [Line Items]
 
 
Rate
1.40% 
1.40% 
Notional amounts
7,047,619 
7,619,048 
Derivative assets
Derivative liabilities
82,875 
56,280 
October 2012
 
 
Derivative Instruments and Hedging Activities Disclosures [Line Items]
 
 
Rate
0.90% 
0.90% 
Notional amounts
3,000,000 
3,214,286 
Derivative assets
Derivative liabilities
10,955 
3,027 
July 2013
 
 
Derivative Instruments and Hedging Activities Disclosures [Line Items]
 
 
Rate
1.40% 
1.40% 
Notional amounts
7,333,333 
8,190,476 
Derivative assets
Derivative liabilities
70,855 
60,164 
May 2014
 
 
Derivative Instruments and Hedging Activities Disclosures [Line Items]
 
 
Rate
1.50% 
1.50% 
Notional amounts
10,892,857 
11,428,571 
Derivative assets
Derivative liabilities
163,058 
122,716 
January 2015
 
 
Derivative Instruments and Hedging Activities Disclosures [Line Items]
 
 
Rate
1.80% 
1.80% 
Notional amounts
20,690,476 
20,547,619 
Derivative assets
Derivative liabilities
830,482 
415,459 
August 2015
 
 
Derivative Instruments and Hedging Activities Disclosures [Line Items]
 
 
Rate
2.30% 
2.30% 
Notional amounts
49,696,875 
49,696,875 
Derivative assets
 
Derivative liabilities
$ 1,956,136 
 
Stock-Based Compensation (Narrative) (Details) (USD $)
1 Months Ended 3 Months Ended 3 Months Ended 0 Months Ended 1 Months Ended 3 Months Ended 3 Months Ended
Apr. 30, 2015
Mar. 27, 2016
Mar. 29, 2015
Mar. 31, 2015
Mar. 27, 2016
Additional Paid-in Capital
Mar. 29, 2015
Additional Paid-in Capital
Jul. 30, 2010
Director
Aug. 31, 2015
Director
Mar. 27, 2016
Director
Mar. 29, 2015
Director
Mar. 27, 2016
ESPP
offering_period
Mar. 29, 2015
ESPP
Dec. 27, 2015
ESPP
Mar. 27, 2016
ESPP
Maximum
Mar. 27, 2016
Restricted Stock
Mar. 29, 2015
Restricted Stock
Mar. 27, 2016
Restricted Stock
Stock Incentive Plan
Mar. 29, 2015
Restricted Stock
Stock Incentive Plan
Mar. 27, 2016
Restricted Stock
Stock Incentive Plan
Ratably over 3 years
Mar. 27, 2016
Restricted Stock
Stock Incentive Plan
One year period
Mar. 27, 2016
Restricted Stock
Stock Incentive Plan
3 Year anniversary
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average grant date fair value (dollars per share)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 2.66 
 
 
 
 
Number of restricted shares granted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3,500 
 
 
 
 
 
Purchase price, percentage
 
 
 
 
 
 
 
 
 
 
 
 
 
85.00% 
 
 
100.00% 
 
 
 
 
Vesting period
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3 years 
1 year 
3 years 
Unrecognized stock-based compensation expense
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 421,967 
 
 
 
 
Weighted-average vesting period
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1 year 318 days 
 
 
 
 
Total fair value of shares vested
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
59,631 
15,436 
 
 
 
Number of shares available for future awards
 
 
 
 
 
 
 
 
 
 
206,980 
 
 
 
 
 
393,056 
 
 
 
 
Number of options granted (in shares)
 
 
 
 
 
 
210,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expiration period
 
 
 
 
 
 
6 years 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Options, exercise price (in dollars per share)
 
 
 
 
 
 
$ 2.50 
$ 2.50 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of options exercised
 
 
 
 
 
 
 
30,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Intrinsic value of options exercised
 
 
 
 
 
 
 
6,300 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of shares reserved for future issuance
 
 
 
 
 
 
 
 
180,000 
 
 
 
250,000 
 
 
 
 
 
 
 
 
Intrinsic value of outstanding options
 
 
 
 
 
 
 
 
338,100 
 
 
 
 
 
 
 
 
 
 
 
Number of offering periods
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of shares issued under the ESPP
 
 
 
 
 
 
 
 
 
 
5,609 
4,662 
 
 
 
 
 
 
 
 
 
Stock repurchase authorized amount
 
 
 
1,000,000.0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amount of stock repurchased during period
98,252 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of shares repurchased during period
24,500 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average purchase price per share
$ 4.01 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share-based compensation
 
$ 97,426 
$ 55,793 
 
$ 97,426 
$ 55,793 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock, shares authorized
 
10,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock, par value (in dollars per share)
 
$ 0.0001 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock, shares issued
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock, shares outstanding
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-Based Compensation (Restricted Shares Transactions) (Details) (Restricted Stock)
3 Months Ended
Mar. 27, 2016
Mar. 29, 2015
Restricted Stock
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
 
 
Unvested, beginning of period (in shares)
241,124 
164,867 
Granted (in shares)
3,500 
Vested (in shares)
(30,945)
(3,334)
Expired/Forfeited (in shares)
(10,766)
(1,917)
Unvested, end of period (in shares)
202,913 
159,616 
(Details)
3 Months Ended
Mar. 27, 2016
Mar. 29, 2015
Income Tax Disclosure [Abstract]
 
 
Effective income tax rate
(49.90%)
(35.90%)
Operating Leases (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 27, 2016
Mar. 29, 2015
Operating Leased Assets [Line Items]
 
 
Total rent expense
$ 2.5 
$ 1.9 
Minimum
 
 
Operating Leased Assets [Line Items]
 
 
Lease terms
5 years 
 
Maximum
 
 
Operating Leased Assets [Line Items]
 
 
Lease terms
24 years 
 
Operating Leases (Future Minimum Lease Payments) (Details) (Open Restaurants, USD $)
Mar. 27, 2016
Open Restaurants
 
Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
 
Remainder of 2016
$ 8,248,554 
2017
10,932,225 
2018
10,458,132 
2019
9,614,494 
2020
9,354,108 
2021 and thereafter
45,528,165 
Total
$ 94,135,678 
Commitments and Contingencies (Details) (USD $)
3 Months Ended 3 Months Ended
Mar. 27, 2016
restaurant
Mar. 29, 2015
Mar. 27, 2016
Advertising Fund Contribution Expenses
Mar. 29, 2015
Advertising Fund Contribution Expenses
Mar. 27, 2016
Original Number of Restaurants Required
restaurant
Mar. 27, 2016
Open Restaurants
restaurant
Mar. 27, 2016
Additional Agreements
restaurant
Dec. 31, 2020
Exclusive of Potential Additional Restaurant Acquisitions
Scenario, Forecast
restaurant
Mar. 27, 2016
Potential Penalty Per Undeveloped Restaurant
Mar. 27, 2016
Minimum
Global
Mar. 27, 2016
Maximum
Global
Loss Contingencies [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Number of restaurants
80 
 
 
 
42 
27 
15 
77 
 
 
 
Royalty fees, percentage
5.00% 
 
 
 
 
 
 
 
 
 
 
Advertising fund contributions
 
 
 
 
 
 
 
 
 
3.15% 
3.25% 
Royalty fees
$ 2,200,000 
$ 1,600,000 
 
 
 
 
 
 
 
 
 
Advertising fund contribution expenses
 
 
1,400,000 
1,000,000 
 
 
 
 
 
 
 
Modernization costs for a restaurant, minimum
 
 
 
 
 
 
 
 
50,000 
 
 
Modernization costs for a restaurant, maximum
 
 
 
 
 
 
 
 
$ 1,300,000 
 
 
Earnings Per Share (Details) (USD $)
3 Months Ended
Mar. 27, 2016
Mar. 29, 2015
Earnings Per Share [Abstract]
 
 
Income available to common stockholders
$ 430,405 
$ 262,642 
Weighted-average shares outstanding
26,298,034 
26,149,184 
Effect of dilutive securities
99,240 
Weighted-average shares outstanding - assuming dilution
26,298,034 
26,248,424 
Earnings per share (in dollars per share)
$ 0.02 
$ 0.01 
Earnings per share - assuming dilution (in dollars per share)
$ 0.02 
$ 0.01 
Supplemental Cash Flows Information (Details) (USD $)
3 Months Ended
Mar. 27, 2016
Mar. 29, 2015
Supplemental Cash Flow Elements [Abstract]
 
 
Cash paid for interest
$ 1,400,000 
$ 419,674 
Cash paid for income taxes
60,000 
Property and Equipment
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment not yet paid
$ 1,800,000 
$ 400,000 
Fair Value of Financial Instruments (Details) (USD $)
3 Months Ended
Mar. 27, 2016
Mar. 29, 2015
Dec. 27, 2015
Fair Value Disclosures [Abstract]
 
 
 
Level 2 to level 1 transfers, assets
$ 0 
 
$ 0 
Level 2 to level 1 transfers, liabilities
 
Asset transfers into level 3
 
Liability transfers into level 3
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Long-term Debt
122,101,756 
 
126,255,990 
Interest rate swaps
(3,114,361)
 
 
Level 1
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Interest rate swaps
 
 
Level 2
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Interest rate swaps
(3,114,361)
 
 
Level 3
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Interest rate swaps
 
 
Fair Value, Measurements, Recurring
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Cash equivalents
 
 
2,000,000 
Interest rate swaps
 
 
(1,525,255)
Total
 
 
474,745 
Fair Value, Measurements, Recurring |
Level 1
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Cash equivalents
 
 
2,000,000 
Interest rate swaps
 
 
Total
 
 
2,000,000 
Fair Value, Measurements, Recurring |
Level 2
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Cash equivalents
 
 
Interest rate swaps
 
 
(1,525,255)
Total
 
 
(1,525,255)
Fair Value, Measurements, Recurring |
Level 3
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
Cash equivalents
 
 
Interest rate swaps
 
 
Total
 
 
$ 0 
Accumulated Other Comprehensive Income (Loss) (Details) (USD $)
3 Months Ended
Mar. 27, 2016
Mar. 29, 2015
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
Beginning balance
$ (1,006,667)
$ (175,156)
Loss recorded to other comprehensive income
(1,589,106)
(469,801)
Tax benefit
540,296 
159,732 
Total other comprehensive loss
(1,048,810)
(310,069)
Accumulated OCL
(2,055,477)
(485,225)
Interest Rate Swap
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
Beginning balance
(1,006,667)
(171,352)
Loss recorded to other comprehensive income
(1,589,106)
(475,564)
Tax benefit
540,296 
161,691 
Total other comprehensive loss
(1,048,810)
(313,873)
Accumulated OCL
(2,055,477)
(485,225)
Investments
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
Beginning balance
(3,804)
Loss recorded to other comprehensive income
5,763 
Tax benefit
(1,959)
Total other comprehensive loss
3,804 
Accumulated OCL
$ 0 
$ 0 
Segment Reporting (Details) (USD $)
3 Months Ended
Mar. 27, 2016
segment
Mar. 29, 2015
Dec. 27, 2015
Segment Reporting Information [Line Items]
 
 
 
Revenue
$ 48,412,799 
$ 39,440,332 
 
Corporate expenses
(46,726,050)
(38,831,828)
 
Total consolidated operating profit
1,686,749 
608,504 
 
Interest expense
(1,444,940)
(432,223)
 
Other income, net
45,272 
17,003 
 
Income before income taxes
287,081 
193,284 
 
Assets
160,556,602 
 
165,772,495 
Number of reportable segments
 
 
BWW
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Assets
117,530,474 
 
115,044,166 
Bagger Dave's
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Assets
22,262,803 
 
21,886,470 
Corporate, Non-Segment
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Assets
20,763,325 
 
28,841,859 
Operating Segments
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Revenue
48,412,799 
39,440,332 
 
Total segment operating profit
4,673,385 
3,147,697 
 
Closure-related expenses
(345,011)
 
Operating Segments |
BWW
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Revenue
43,143,252 
31,852,089 
 
Total segment operating profit
5,285,645 
4,606,331 
 
Operating Segments |
Bagger Dave's
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Revenue
5,269,547 
7,588,243 
 
Total segment operating profit
(612,260)
(1,458,634)
 
Corporate, Non-Segment
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Corporate expenses
$ (2,641,625)
$ (2,539,193)