FIESTA RESTAURANT GROUP, INC., 10-K filed on 2/19/2015
Annual Report
Document and Entity Information (USD $)
12 Months Ended
Dec. 28, 2014
Feb. 12, 2015
Jun. 29, 2014
Entity Information [Line Items]
 
 
 
Entity Current Reporting Status
Yes 
 
 
Entity Voluntary Filers
No 
 
 
Entity Well-known Seasoned Issuer
Yes 
 
 
Entity Public Float
 
 
$ 1,211,174,744 
Entity Registrant Name
FIESTA RESTAURANT GROUP, INC. 
 
 
Entity Central Index Key
0001534992 
 
 
Current Fiscal Year End Date
--12-28 
 
 
Entity Filer Category
Large Accelerated Filer 
 
 
Document Type
10-K 
 
 
Document Period End Date
Dec. 28, 2014 
 
 
Document Fiscal Year Focus
2014 
 
 
Document Fiscal Period Focus
FY 
 
 
Amendment Flag
false 
 
 
Entity Common Stock, Shares Outstanding
 
26,782,996 
 
Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Dec. 28, 2014
Dec. 29, 2013
Current assets:
 
 
Cash
$ 5,087 
$ 10,978 
Trade receivables
6,340 
6,011 
Inventories
2,719 
2,564 
Prepaid rent
2,894 
2,500 
Income tax receivable
4,974 
4,497 
Prepaid expenses and other current assets
3,166 
3,357 
Deferred income taxes
2,925 
3,018 
Total current assets
28,105 
32,925 
Property and equipment, net
191,371 
144,527 
Goodwill
123,484 
123,484 
Intangible assets, net
40 
121 
Deferred income taxes
11,055 
12,046 
Deferred financing costs, net
1,233 
1,530 
Other assets
2,668 
4,152 
Total assets
357,956 
318,785 
Current liabilities:
 
 
Current portion of long-term debt
61 
61 
Accounts payable
10,151 
10,802 
Accrued interest
127 
118 
Accrued payroll, related taxes and benefits
15,857 
14,296 
Accrued real estate taxes
5,044 
4,505 
Other liabilities
8,183 
8,305 
Total current liabilities
39,423 
38,087 
Long-term debt, net of current portion
67,264 
72,324 
Lease financing obligations
1,660 
1,657 
Deferred income--sale-leaseback of real estate
34,079 
35,873 
Other liabilities
15,943 
12,538 
Total liabilities
158,369 
160,479 
Commitments and contingencies (Note 14)
   
   
Stockholders' equity:
 
 
Common stock, par value $.01; authorized 100,000,000 shares, issued 26,782,945 and 26,710,111 shares, respectively, and outstanding 26,358,448 and 26,082,800 shares, respectively.
264 
261 
Additional paid-in capital
153,867 
148,765 
Retained earnings
45,456 
9,280 
Total stockholders' equity
199,587 
158,306 
Total liabilities and stockholders' equity
$ 357,956 
$ 318,785 
Consolidated Balance Sheets (Parenthetical) (USD $)
Dec. 28, 2014
Dec. 29, 2013
Common stock, par value
$ 0.01 
$ 0.01 
Common stock, shares authorized
100,000,000 
100,000,000 
Common stock, shares issued
26,782,945 
26,710,111 
Common stock, shares outstanding
26,358,448 
26,082,800 
Consolidated Statements of Operations (USD $)
In Thousands, except Share data, unless otherwise specified
12 Months Ended
Dec. 28, 2014
Dec. 29, 2013
Dec. 30, 2012
Revenues:
 
 
 
Restaurant sales
$ 608,540 
$ 548,980 
$ 507,351 
Franchise royalty revenue and fees
2,603 
2,357 
2,375 
Total revenues
611,143 
551,337 
509,726 
Costs and expenses:
 
 
 
Cost of sales
192,250 
176,123 
163,514 
Restaurant wages and related expenses (including stock-based compensation expense of $71, $2 and $11, respectively)
155,140 1
143,392 1
136,265 1
Restaurant rent expense
29,645 
26,849 
21,595 
Other restaurant operating expenses
78,921 
69,021 
63,813 
Advertising expense
19,493 
17,138 
16,791 
General and administrative (including stock-based compensation expense of $3,426, $2,296 and $2,025, respectively)
49,414 2
48,521 2
43,870 2
Depreciation and amortization
23,047 
20,375 
18,278 
Pre-opening costs
4,061 
2,767 
1,673 
Impairment and other lease charges
363 
199 
7,039 
Other (income) expense
(558)
(554)
(92)
Total operating expenses
551,776 
503,831 
472,746 
Income from operations
59,367 
47,506 
36,980 
Interest expense
2,228 
18,043 
24,424 
Loss on extinguishment of debt
16,411 
Income before income taxes
57,139 
13,052 
12,556 
Provision for income taxes
20,963 
3,795 
4,289 
Net income
$ 36,176 
$ 9,257 
$ 8,267 
Basic net income per share
$ 1.35 
$ 0.39 
$ 0.35 
Diluted net income per share
$ 1.35 
$ 0.39 
$ 0.35 
Basic weighted average common shares outstanding
26,293,714 
23,271,431 
22,890,018 
Diluted weighted average common shares outstanding
26,296,049 
23,271,431 
22,890,018 
Consolidated Statements of Operations (Parenthetical) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 28, 2014
Dec. 29, 2013
Dec. 30, 2012
Stock-based compensation
$ 3,500 
$ 2,300 
$ 2,000 
Restaurant Wages And Related Expenses [Member]
 
 
 
Stock-based compensation
71 
11 
General and Administrative Expense
 
 
 
Stock-based compensation
$ 3,426 
$ 2,296 
$ 2,025 
Consolidated Statements of Changes in Stockholders' Equity (USD $)
In Thousands, except Share data
Total
USD ($)
Common Stock [Member]
USD ($)
Additional Paid-in Capital [Member]
USD ($)
Accumulated Earnings (Deficit) [Member]
USD ($)
Shares [Member]
Stockholders' equity at Jan. 01, 2012
$ (4,672)
$ 227 
$ 3,345 
$ (8,244)
 
Shares beginning at Jan. 01, 2012
 
 
 
 
23,161,822 
Capital Contributions
5,075 
 
5,075 
 
 
Stock-based compensation
 
 
1,834 
 
 
Issuance of non-vested shares at spin-off
 
 
 
 
(434,397)
Vesting of restricted shares
 
 
 
 
20,816 
Net income
8,267 
 
 
8,267 
 
Stockholders' equity at Dec. 30, 2012
10,504 
227 
10,254 
23 
 
Shares ending at Dec. 30, 2012
 
 
 
 
22,748,241 
Capital Contributions
96 
 
96 
 
 
Stock-based compensation
 
 
2,298 
 
 
Vesting of restricted shares
 
 
 
 
Vesting of restricted shares
 
 
 
 
256,223 
Issuance of shares
135,286 
31 
135,255 
 
 
Issuance of shares
 
3,078,336 
 
 
3,078,336 
Vesting of restricted shares and related tax benefit
865 
 
862 
 
 
Net income
9,257 
 
 
9,257 
 
Stockholders' equity at Dec. 29, 2013
158,306 
261 
148,765 
9,280 
 
Shares ending at Dec. 29, 2013
26,082,800 
 
 
 
26,082,800 
Capital Contributions
(127)
 
(127)
 
 
Stock-based compensation
 
 
3,497 
 
 
Vesting of restricted shares
 
 
 
 
Vesting of restricted shares
 
 
 
 
275,648 
Vesting of restricted shares and related tax benefit
1,765 
 
1,762 
 
 
Share issuance costs
(30)
 
(30)
 
 
Net income
36,176 
 
 
36,176 
 
Stockholders' equity at Dec. 28, 2014
$ 199,587 
$ 264 
$ 153,867 
$ 45,456 
 
Shares ending at Dec. 28, 2014
26,358,448 
 
 
 
26,358,448 
Consolidated Statements of Cash Flows (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 28, 2014
Dec. 29, 2013
Dec. 30, 2012
Cash flows provided from operating activities:
 
 
 
Net income
$ 36,176 
$ 9,257 
$ 8,267 
Adjustments to reconcile net income to net cash provided from operating activities:
 
 
 
Loss (gain) on disposals of property and equipment
(369)
(208)
186 
Stock-based Compensation
3,497 
2,298 
1,834 
Impairment and other lease charges
363 
199 
7,039 
Loss on extinguishment of debt
16,411 
Depreciation and amortization
23,047 
20,375 
18,278 
Amortization of deferred financing costs
309 
1,487 
1,628 
Amortization of deferred gains from sale-leaseback transactions
(3,671)
(3,489)
(2,328)
Deferred income taxes
957 
(178)
(1,030)
Other
342 
Accounts receivable
(329)
(77)
(1,093)
Accounts payable
(529)
(1,817)
2,398 
Accrued payroll, related taxes and benefits
1,561 
(423)
2,565 
Accrued interest
(6,643)
(391)
Accrued real estate taxes
539 
1,139 
169 
Other liabilities - current
(122)
2,677 
(28)
Other liabilities - long term
3,441 
986 
728 
Income tax receivable/payable
(477)
(4,423)
522 
Other
(300)
(1,400)
(1,111)
Net cash provided from operating activities
64,106 
36,176 
37,975 
Capital expenditures:
 
 
 
New restaurant development
(57,102)
(32,610)
(23,614)
Restaurant remodeling
(7,588)
(3,089)
(8,673)
Other restaurant capital expenditures
(4,975)
(5,407)
(6,917)
Corporate and restaurant information systems
(4,414)
(5,919)
(1,792)
Total capital expenditures
(74,079)
(47,025)
(40,996)
Properties purchased for sale-leaseback
(4,438)
(2,082)
Proceeds from sale of other properties
1,729 
1,734 
2,426 
Proceeds from sale-leaseback transactions
5,692 
15,662 
7,934 
Net cash used in investing activities
(66,658)
(34,067)
(32,718)
Cash flows from financing activities:
 
 
 
Senior secured second lien note redemption
(200,000)
Proceeds from issuance stock, net of issuance costs
 
135,286 
Proceeds from issuance stock, net of issuance costs
(30)
 
 
Premium and other costs associated with debt redemption
(12,545)
Excess tax benefit from vesting of restricted shares
1,765 
865 
Borrowings from (payments to) former parent, net
500 
Capital contribution from former parent
2,500 
Borrowings on revolving credit facility
25,000 
81,000 
2,100 
Repayments on revolving credit facility
(30,000)
(10,000)
(2,100)
Principal payments on capital leases
(61)
(59)
(59)
Financing costs associated with issuance of debt
(1,196)
(288)
Settlement of lease financing obligations
(6,047)
Other financing costs
(13)
(15)
Net cash used in financing activities
(3,339)
(6,664)
(3,394)
Net increase (decrease) in cash
(5,891)
(4,555)
1,863 
Cash, beginning of year
10,978 
15,533 
13,670 
Cash, end of year
5,087 
10,978 
15,533 
Supplemental disclosures:
 
 
 
Interest paid on long-term debt (including capitalized interest of $268 in 2014 and $600 in 2013)
1,971 
23,707 
18,699 
Interest paid on lease financing obligations
139 
137 
4,207 
Accruals for capital expenditures
2,889 
3,009 
802 
Income tax payments, net
18,718 
7,204 
3,454 
Capital lease obligations incurred
496 
Non-cash reduction of lease financing obligations
1,377 
114,165 
Non-cash reduction of assets under lease financing obligations
965 
80,419 
Non-cash transfers of income tax assets and liabilities from Carrols
$ (127)
$ 96 
$ 2,575 
Consolidated Statements of Cash Flows Consolidated Statements of Cash Flows (Parenthetical) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 28, 2014
Dec. 29, 2013
Supplemental Cash Flow Information [Abstract]
 
 
Capitalized interest
$ 268 
$ 600 
Basis of Presentation
Basis of Presentation
Basis of Presentation
Business Description. Fiesta Restaurant Group, Inc. ("Fiesta Restaurant Group" or "Fiesta") owns, operates and franchises two fast-casual restaurant brands through its wholly-owned subsidiaries Pollo Operations, Inc., and its subsidiaries, and Pollo Franchise, Inc., (collectively “Pollo Tropical”) and Taco Cabana, Inc. and its subsidiaries (collectively “Taco Cabana”). Unless the context otherwise requires, Fiesta and its subsidiaries, Pollo Tropical and Taco Cabana, are collectively referred to as the “Company”. At December 28, 2014, the Company owned and operated 124 Pollo Tropical® restaurants, of which 107 were located in Florida, ten were located in Texas, five were located in Georgia and two were located in Tennessee, and franchised a total of 37 Pollo Tropical restaurants, 17 in Puerto Rico, one in Ecuador, one in Honduras, one in the Bahamas, two in Trinidad & Tobago, two in Venezuela, five in Panama, one in the Dominican Republic, two in Guatemala, and five on college campuses in Florida. At December 28, 2014, Fiesta also owned and operated 167 Taco Cabana® restaurants, of which 162 were located in Texas, three were located in Oklahoma and, under the Cabana Grill® logo, which is an elevated, non-24 hour format for Taco Cabana, one was located in Georgia and one was located in Florida, and franchised a total of seven Taco Cabana restaurants, including four in New Mexico and three non-traditional locations (two college campuses and one sports arena) in Texas.
Spin-Off from Carrols Restaurant Group, Inc. On May 7, 2012, Carrols Restaurant Group, Inc. ("Carrols Restaurant Group" or "Carrols") completed the spin-off of Fiesta into an independent public company, through the distribution of all of the outstanding shares of Fiesta Restaurant Group's common stock to the stockholders of Carrols Restaurant Group (the "Spin-off"). As a result of the Spin-off, since May 7, 2012 Fiesta Restaurant Group has been an independent public company whose common stock is traded on The NASDAQ Global Select Market under the symbol “FRGI.”     
Basis of Consolidation. The consolidated financial statements presented herein reflect the consolidated financial position, results of operations and cash flows of Fiesta and its wholly-owned subsidiaries. These consolidated financial statements have been prepared as if the Company was in existence for all periods presented. All intercompany transactions have been eliminated in consolidation.
Through the date of the Spin-off, these consolidated financial statements have been prepared on a stand-alone basis from the separate records maintained by Carrols and may not necessarily be indicative of the results of operations or cash flows that would have resulted had allocations and other related-party transactions been consummated with unrelated parties or had the Company been an independent, publicly traded company during all of the periods presented. The consolidated financial statements reflect the historical financial position, results of operations and cash flows of Fiesta as it has historically operated, in conformity with U.S. Generally Accepted Accounting Principles ("GAAP"). All intercompany transactions have been eliminated in consolidation.
In connection with the Spin-off, the board of directors of the Company authorized a 23,161.8 for one split of its outstanding common stock that was effective on April 19, 2012. Accordingly, all references to share and per share amounts related to common stock included in the consolidated financial statements and accompanying notes have been adjusted to reflect the stock split and change in the number of authorized shares. The stock split has been retroactively applied to the Company’s financial statements.
Fiscal Year. The Company uses a 52-53 week fiscal year ending on the Sunday closest to December 31. The fiscal years ended December 28, 2014, December 29, 2013 and December 30, 2012 each contained 52 weeks.
Allocations. Through the date of the consummation of the Spin-off, Carrols provided administrative support to the Company for executive management, information systems and certain accounting, legal and other administrative functions. The cost of these services were allocated to the Company based primarily on a pro-rata share of either the Company’s revenues, number of restaurants or number of employees. The allocations may not reflect the expense the Company would have incurred as an independent, publicly traded company for the periods presented.
Management believes that its allocations are reasonable and based on a systematic and rational method; however, they are not necessarily indicative of the actual financial results of the Company, including such expenses that would have been incurred by the Company had it been operating as a separate, stand-alone entity for the periods presented. In our opinion, the consolidated financial statements include all adjustments necessary for a fair presentation of its results of operations.
Use of Estimates. The preparation of the 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 dates of the financial statements. Estimates also affect the reported amounts of expenses during the reporting periods. Significant items subject to such estimates and assumptions include: allocations of Carrols' general and administrative expenses prior to the Spin-off, accrued occupancy costs, insurance liabilities, evaluation for impairment of goodwill and long-lived assets and lease accounting matters. Actual results could differ from those estimates.
Cash and Cash Equivalents. The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
Inventories. Inventories, primarily consisting of food and paper, are stated at the lower of cost (first-in, first-out) or market.
Property and Equipment. The Company capitalizes all direct costs incurred to construct and substantially improve its restaurants. These costs are depreciated and charged to expense based upon their property classification when placed in service. Property and equipment is recorded at cost. Application development stage costs for significant internally developed software projects are capitalized and depreciated. Repair and maintenance activities are expensed as incurred. Depreciation and amortization is provided using the straight-line method over the following estimated useful lives:
Buildings and improvements
5
to
30 years
Equipment
3
to
7 years
Computer hardware and software
3
to
7 years
Assets subject to capital lease
Shorter of useful life or lease term

Leasehold improvements, including new buildings constructed on leased land, are depreciated over the shorter of their estimated useful lives or the underlying lease term. In circumstances where an economic penalty would be presumed by the non-exercise of one or more renewal options under the lease, the Company includes those renewal option periods when determining the lease term. For significant leasehold improvements made during the latter part of the lease term, the Company amortizes those improvements over the shorter of their useful life or an extended lease term. The extended lease term would consider the exercise of renewal options if the value of the improvements would imply that an economic penalty would be incurred without the renewal of the option. Building costs incurred for new restaurants on leased land are depreciated over the lease term, which is generally a twenty-year period.
Goodwill. Goodwill represents the excess purchase price and related costs over the value assigned to the net tangible and identifiable intangible assets acquired by Carrols from its acquisitions of Pollo Tropical in 1998 and Taco Cabana in 2000. Goodwill is not amortized but is tested for impairment at least annually as of the last day of the fiscal year.
Long-Lived Assets. The Company assesses the recoverability of property and equipment and definite-lived intangible assets by determining whether the carrying value of these assets can be recovered over their respective remaining lives through undiscounted future operating cash flows. Impairment is reviewed whenever events or changes in circumstances indicate that the carrying amounts of these assets may not be fully recoverable.
Deferred Financing Costs. Financing costs incurred in obtaining long-term debt, credit facilities and lease financing obligations are capitalized and amortized over the life of the related obligation as interest expense using the effective interest method.
Leases.  All leases are reviewed for capital or operating classification at their inception. The majority of the Company's leases are operating leases. Many of the lease agreements contain rent holidays, rent escalation clauses and/or contingent rent provisions. Rent expense for leases that contain scheduled rent increases or rent holidays is recognized on a straight-line basis over the lease term, including any option periods included in the determination of the lease term. Contingent rentals are generally based upon a percentage of sales or a percentage of sales in excess of stipulated amounts and are not considered minimum rent payments but are recognized as rent expense when incurred.
Revenue Recognition. Revenues from the Company's owned and operated restaurants are recognized when payment is tendered at the time of sale. Franchise royalty revenues are based on a percent of gross sales and are recorded as income when earned. Franchise fees, which are associated with opening new franchised restaurants, are recognized as income when all required activities have been performed by the Company. Area development fees, which are associated with opening new franchised restaurants in a given market, are recognized as income over the term of the related agreement.
Income Taxes. Deferred income tax assets and liabilities are based on the difference between the financial statement and tax bases of assets and liabilities as measured by the tax rates that are anticipated to be in effect when those differences reverse. The deferred tax provision generally represents the net change in deferred tax assets and liabilities during the period. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is established when it is necessary to reduce deferred tax assets to amounts for which realization is more likely than not. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.
Advertising Costs. All advertising costs are expensed as incurred.
Cost of Sales. The Company includes the cost of food, beverage and paper, net of any discounts, in cost of sales.
Pre-opening Costs. The Company's pre-opening costs are generally incurred beginning four to six months prior to a restaurant opening and generally include restaurant employee wages and related expenses, travel expenditures, recruiting, training, promotional costs associated with the restaurant opening and rent, including any non-cash rent expense recognized during the construction period.
Insurance.  The Company is insured for workers' compensation, general liability and medical insurance claims under policies where it pays all claims, subject to stop-loss limitations both for individual claims and claims in the aggregate. During 2012, the Company was insured under policies covering both Carrols and the Company. During 2014 and 2013, the Company was insured under separate policies. Losses are accrued based upon estimates of the aggregate liability for claims based on the Company's experience and certain actuarial methods used to measure such estimates. The Company does not discount any of its self-insurance obligations.
 Fair Value of Financial Instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. In determining fair value, the accounting standards establish a three level hierarchy for inputs used in measuring fair value as follows: Level 1 inputs are quoted prices in active markets for identical assets or liabilities; Level 2 inputs are observable for the asset or liability, either directly or indirectly, including quoted prices in active markets for similar assets or liabilities; and Level 3 inputs are unobservable and reflect our own assumptions. The following methods were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate the fair value:
Current Assets and Liabilities. The carrying values reported on the balance sheet of cash, accounts receivable and accounts payable approximate fair value because of the short maturity of those financial instruments.
Revolving Credit Borrowings. The fair value of outstanding revolving credit borrowings under our senior credit facility, which is considered Level 2, is based on current LIBOR rates and at December 28, 2014, was approximately $66.0 million.
See Note 4 for discussion of the fair value measurement of non-financial assets.
Gift cards. The Company sells gift cards to its customers in its restaurants and through select third parties. The Company recognizes revenue from gift cards upon redemption by the customer. The gift cards have no stated expiration dates and are subject to escheatment rights in certain states. Revenues from unredeemed gift cards are not material to the Company's financial statements.
Recent Accounting Pronouncements. In April 2014, the Financial Accounting Standards Board issued ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, which raises the threshold for a disposal to qualify as a discontinued operation and requires new disclosures of both discontinued operations and certain other disposals that do not meet the definition of a discontinued operation. For the Company, the guidance is effective for the interim and annual periods beginning December 29, 2014. The ASU is applied prospectively; however, early adoption is permitted for disposals (or classifications as held for sale) that have not been reported in financial statements previously issued or available for issue. The Company has early adopted this standard which did not have a material impact on the Company's financial statements.
In May 2014, the Financial Accounting Standards Board issued ASU 606, Revenue Recognition - Revenue from Contracts with Customers, which amends the guidance in former ASC 605, Revenue Recognition, and provides for either a full retrospective adoption in which the standard is applied to all of the periods presented or a modified retrospective adoption in which the cumulative effect of initially applying the standard is recognized at the date of initial application. The new standard provides accounting guidance for all revenue arising from contracts with customers and affects all entities that enter into contracts to provide goods or services to their customers unless the contracts are in the scope of other US GAAP requirements. The guidance also provides a model for the measurement and recognition of gains and losses on the sale of certain nonfinancial assets, such as property and equipment, including real estate. The Company is currently evaluating the impact of the provisions of ASC 606; however, the Company expects the provisions to primarily impact certain franchise revenues and does not expect the standard to have a material effect on its financial statements. For the Company, the new standard is effective for interim and annual periods beginning after December 15, 2016.
Property and Equipment
Property, Plant and Equipment Disclosure [Text Block]
Property and Equipment
Property and equipment consisted of the following:
 
December 28, 2014
 
December 29, 2013
Land
$
19,455

 
$
15,277

Owned buildings
14,863

 
13,813

Leasehold improvements (1)
168,719

 
130,623

Equipment
159,596

 
136,088

Assets subject to capital leases
1,647

 
1,647

 
364,280

 
297,448

Less accumulated depreciation and amortization
(172,909
)
 
(152,921
)
 
$
191,371

 
$
144,527


(1) Leasehold improvements include the cost of new buildings constructed on leased land.
Assets subject to capital leases primarily pertain to buildings leased for certain restaurant locations and certain office equipment and had accumulated amortization at December 28, 2014 and December 29, 2013 of $0.7 million and $0.5 million, respectively. At December 28, 2014 and December 29, 2013, land of $0.7 million and $0.7 million, respectively and owned buildings of $0.8 million and $0.8 million, respectively were subject to lease financing obligations accounted for under the lease financing method. See Note 9—Lease Financing Obligations. Accumulated depreciation pertaining to owned buildings subject to lease financing obligations at December 28, 2014 and December 29, 2013 was $0.3 million and $0.3 million, respectively.
Depreciation and amortization expense for all property and equipment for the years ended December 28, 2014, December 29, 2013 and December 30, 2012 was $23.0 million, $20.3 million and $18.2 million, respectively.
Goodwill
Goodwill Disclosure [Text Block]
Goodwill
The Company is required to review goodwill for impairment annually or more frequently when events and circumstances indicate that the carrying amount may be impaired. If the determined fair value of goodwill is less than the related carrying amount, an impairment loss is recognized. The Company performs its annual impairment assessment as of the last day of the fiscal year and has determined its reporting units to be its operating segments, Pollo Tropical and Taco Cabana.
In performing its goodwill impairment test, the Company compared the net book values of its reporting units to their estimated fair values, the latter determined by employing a discounted cash flow analysis, which was corroborated with other value indicators where available, such as comparable company earnings multiples.
There have been no changes in goodwill or goodwill impairment losses recorded during the year ended December 28, 2014 or the year ended December 29, 2013. Goodwill balances are summarized below: 
 
Pollo
Tropical
 
Taco
Cabana
 
Total
Balance, December 28, 2014 and December 29, 2013
$
56,307

 
$
67,177

 
$
123,484

Impairment of Long-Lived Assets and Other Lease Charges
Impairment of Long Lived Assets and Other Lease Charges [Text Block]
Impairment of Long-Lived Assets and Other Lease Charges
The Company reviews its long-lived assets, principally property and equipment, for impairment at the restaurant level. In addition to considering management’s plans, known regulatory or governmental actions and damage due to acts of God (hurricanes, tornadoes, etc.), the Company considers a triggering event to have occurred related to a specific restaurant if the restaurant’s cash flows for the last twelve months are less than a minimum threshold or if consistent levels of cash flows for the remaining lease period are less than the carrying value of the restaurant’s assets. If an indicator of impairment exists for any of its assets, an estimate of undiscounted future cash flows over the life of the primary asset for each restaurant is compared to that long-lived asset’s carrying value. If the carrying value is greater than the undiscounted cash flow, the Company then determines the fair value of the asset and if an asset is determined to be impaired, the loss is measured by the excess of the carrying amount of the asset over its fair value. For closed restaurant locations, the Company reviews the future minimum lease payments and related ancillary costs from the date of the restaurant closure to the end of the remaining lease term and records a lease charge for the lease liabilities to be incurred, net of any estimated sublease recoveries.
The Company determined the fair value of restaurant equipment, for those restaurants reviewed for impairment, based on current economic conditions and the Company’s history of using these assets in the operation of its business. For those restaurants reviewed for impairment where the Company owns the land and building, the Company also utilized third-party information such as a broker market price opinion to determine the fair value of the property. These fair value asset measurements rely on significant unobservable inputs and are considered Level 3 in the fair value hierarchy. The Level 3 assets measured at fair value associated with impairment charges recorded during the year ending December 28, 2014 totaled less than $0.1 million.
Impairment on long-lived assets for the Company’s segments and other lease charges recorded were as follows:
         
 
Year Ended
 
December 28, 2014
 
December 29, 2013
 
December 30, 2012
Pollo Tropical
$
254

 
$
(116
)
 
$
6,035

Taco Cabana
109

 
315

 
1,004

 
$
363

 
$
199

 
$
7,039


Impairment and other lease charges in 2014 included a $0.3 million impairment charge representing the write-down of the carrying value to fair value of certain assets as a result of a management decision to relocate a Pollo Tropical restaurant before the end of its lease term to a superior site in the same trade area and $0.1 million in impairment charges for additional assets acquired at previously impaired Taco Cabana locations.
During the year ended December 29, 2013, the Company recorded lease charge recoveries, net of other lease charges, of $0.2 million, related to previously closed locations. The Company also recorded an impairment charge of $0.4 million related to a Taco Cabana restaurant during the year ended December 29, 2013.
During the year ended December 30, 2012, the Company recorded other lease charges, net of recoveries, of $1.5 million and impairment charges of $4.1 million associated with the closure of the Company’s five Pollo Tropical restaurants in New Jersey in the first quarter of 2012. The remaining charges recorded in 2012 primarily consist of an impairment charge of $0.5 million related to a Pollo Tropical restaurant, $1.0 million related to two Taco Cabana restaurants and a recovery of $0.2 million related to a non-operating Pollo Tropical restaurant.
Other Liabilities
Other Liabilities Disclosure [Text Block]
Other Liabilities
Other liabilities, current, consisted of the following:
 
December 28, 2014
 
December 29, 2013
Accrued workers' compensation and general liability claims
$
3,996

 
$
3,484

Sales and property taxes
1,933

 
1,358

Accrued occupancy costs
508

 
543

Other
1,746

 
2,920

 
$
8,183

 
$
8,305


Other liabilities, long-term, consisted of the following:
 
December 28, 2014
 
December 29, 2013
Accrued occupancy costs
$
12,254

 
$
9,973

Accrued workers’ compensation and general liability claims
977

 
729

Deferred compensation
1,102

 
593

Other
1,610

 
1,243

 
$
15,943

 
$
12,538


Accrued occupancy costs include obligations pertaining to closed restaurant locations and accruals to expense operating lease rental payments on a straight-line basis over the lease term.
The following table presents the activity in the closed-store reserve, of which $1.0 million and $1.1 million are included in long-term accrued occupancy costs above at December 28, 2014 and December 29, 2013, respectively, with the remainder in other current liabilities:
 
 
Year Ended
 
 December 28, 2014
 
December 29, 2013
Balance, beginning of period
$
1,439

 
$
2,432

Provisions for restaurant closures

 

Additional lease charges, net of (recoveries)
5

 
(197
)
Payments, net
(321
)
 
(937
)
Other adjustments
128

 
141

Balance, end of period
$
1,251

 
$
1,439

Leases
Leases of Lessee Disclosure [Text Block]
Leases
The Company utilizes land and buildings in its operations under various lease agreements. The Company does not consider any one of these individual leases material to the Company's operations. Initial lease terms are generally for twenty years and, in many cases, provide for renewal options and in most cases rent escalations. Certain leases require contingent rent, determined as a percentage of sales as defined by the terms of the applicable lease agreement. For most locations, the Company is obligated for occupancy related costs including payment of property taxes, insurance and utilities.
During the years ended December 28, 2014, December 29, 2013 and December 30, 2012 the Company sold two, six and five restaurant properties in each year, respectively, in sale-leaseback transactions for net proceeds of $5.7 million, $15.7 million and $7.9 million, respectively. These leases have been classified as operating leases and generally contain a twenty-year initial term plus renewal options.
Deferred gains on sale-leaseback transactions of $1.9 million, $4.0 million and $34.3 million were recognized during the years ended December 28, 2014, December 29, 2013, and December 30, 2012, respectively and are being amortized over the term of the related leases. The amount recognized in 2012 includes $32.1 million resulting from the qualification for sale treatment of certain sale-leaseback transactions upon the Spin-off. (See Note 9 for further discussion.) The amortization of deferred gains on sale-leaseback transactions was $3.7 million, $3.5 million and $2.3 million for the years ended December 28, 2014, December 29, 2013 and December 30, 2012, respectively.
Minimum rent commitments due under capital and non-cancelable operating leases at December 28, 2014 were as follows:
 
Capital
 
Operating
2015
$
224

 
$
34,954

2016
220

 
34,873

2017
220

 
34,048

2018
220

 
33,086

2019
220

 
32,275

Thereafter
1,743

 
252,483

Total minimum lease payments (1)
2,847

 
$
421,719

Less amount representing interest
(1,522
)
 
 
Total obligations under capital leases
1,325

 
 
Less current portion
(61
)
 
 
Long-term debt under capital leases
$
1,264

 
 
(1) Minimum operating lease payments have not been reduced by minimum sublease rentals of $5.6 million due in the future under noncancelable subleases.
Total rent expense on operating leases, including contingent rentals, was as follows:
 
Year Ended
 
December 28, 2014
 
December 29, 2013
 
December 30, 2012
Minimum rent on real property, excluding rent included in pre-opening costs
$
29,309

 
$
26,571

 
$
21,349

Additional rent based on percentage of sales
336

 
278

 
246

Restaurant rent expense
29,645

 
26,849

 
21,595

Rent included in pre-opening costs
1,421

 
842

 
411

Administrative and equipment rent
1,042

 
1,004

 
781

 
$
32,108

 
$
28,695

 
$
22,787

Long-term Debt
Long-term Debt
Long-term Debt
Long term debt at December 28, 2014 and December 29, 2013 consisted of the following:
 
December 28,
2014
 
December 29,
2013
Revolving credit facility
$
66,000

 
$
71,000

Capital leases
1,325

 
1,385

 
67,325

 
72,385

Less: current portion of long-term debt
(61
)
 
(61
)
 
$
67,264

 
$
72,324


Senior Credit Facility. In December 2013, the Company terminated its former senior secured revolving credit facility, referred to as the “former senior credit facility”, and entered into a new senior secured revolving credit facility with a syndicate of lenders, which we refer to as the "senior credit facility". The senior credit facility provides for aggregate revolving credit borrowings of up to $150 million (including $15 million available for letters of credit) and matures on December 11, 2018. The senior credit facility also provides for potential incremental increases of up to $50 million to the revolving credit borrowings available under the senior credit facility. On December 28, 2014, there were $66.0 million in outstanding revolving credit borrowings under our senior credit facility.
Borrowings under the senior credit facility bear interest at a per annum rate, at our option, equal to either (all terms as defined in the senior credit facility):
1) the Alternate Base Rate plus the applicable margin of 0.50% to 1.50% based on our Adjusted Leverage Ratio (with a margin of 0.50% as of December 28, 2014), or
2) the LIBOR Rate plus the applicable margin of 1.50% to 2.50% based on our Adjusted Leverage Ratio (with a margin of 1.50% at December 28, 2014).
In addition, the senior credit facility requires the Company to pay (i) a commitment fee based on the applicable Commitment Fee margin of 0.25% to 0.45%, based on our Adjusted Leverage Ratio (with a margin of 0.25% at December 28, 2014) and the unused portion of the facility and (ii) a letter of credit fee based on the applicable LIBOR margin and the dollar amount of outstanding letters of credit.
All obligations under the Company's senior credit facility are guaranteed by all of the Company's material domestic subsidiaries. In general, the Company's obligations under the senior credit facility and its subsidiaries’ obligations under the guarantees are secured by a first priority lien and security interest on substantially all of its assets and the assets of its material subsidiaries (including a pledge of all of the capital stock and equity interests of its material subsidiaries), other than certain specified assets, including real property owned by the Company or its subsidiaries.
The outstanding borrowings under the Company's senior credit facility are prepayable without penalty (other than customary breakage costs). The senior credit facility requires the Company to comply with customary affirmative, negative and financial covenants, including, without limitation, those limiting the Company's and its subsidiaries’ ability to (i) incur indebtedness, (ii) incur liens, (iii) loan, advance, or make acquisitions and other investments or other commitments to construct, acquire or develop new restaurants (subject to certain exceptions), (iv) pay dividends, (v) redeem and repurchase equity interests, (vi) conduct asset and restaurant sales and other dispositions (subject to certain exceptions), (vii) conduct transactions with affiliates and (viii) change its business. In addition, the senior credit facility requires the Company to maintain certain financial ratios, including a Fixed Charge Coverage Ratio and an Adjusted Leverage Ratio (all as defined under the senior credit facility).
The Company's senior credit facility contains customary default provisions, including without limitation, a cross default provision pursuant to which it is an event of default under this facility if there is a default under any of the Company's indebtedness having an outstanding principal amount of $5.0 million or more which results in the acceleration of such indebtedness prior to its stated maturity or is caused by a failure to pay principal when due.
As of December 28, 2014, the Company was in compliance with the covenants under its senior credit facility. After reserving $8.8 million for letters of credit issued under the senior credit facility, $75.2 million was available for borrowing at December 28, 2014.
Former Senior Credit Facility. The Company entered into the first lien senior secured credit facility providing for aggregate revolving credit borrowings of up to $25.0 million (including $10.0 million available for letters of credit) on August 5, 2011. The facility also provided for incremental increases of up to $5.0 million, in the aggregate, to the revolving credit borrowings available under the former senior credit facility, and matured on February 5, 2016. The former senior secured credit facility was terminated on December 11, 2013 and replaced with the new senior credit facility discussed above.
Borrowings under the former senior credit facility bore interest at a per annum rate, at the Company’s option, of either (all terms as defined in the former senior credit facility):
1) the Alternate Base Rate plus the applicable margin of 2.00% to 2.75% based on the Company’s Adjusted Leverage Ratio, or
2) the LIBOR Rate plus the applicable margin of 3.00% to 3.75% based on the Company’s Adjusted Leverage Ratio.
Repurchase of Notes. On November 12, 2013, the Company commenced a tender offer and consent solicitation for all of its outstanding $200.0 million in aggregate principal amount of 8.875% Senior Secured Second Lien Notes due 2016 (the "Notes"). The principal amount of Notes repurchased in the tender offer totaled $122.7 million. On December 11, 2013, the Company irrevocably called for redemption the remaining $77.3 million principal amount of Notes that were not validly tendered and accepted for payment in the tender offer.
The Notes were issued on August 5, 2011 pursuant to an indenture dated as of August 5, 2011 governing such Notes. The Notes matured and were payable on August 15, 2016. Interest was payable semi-annually on February 15 and August 15. The Notes were guaranteed by all of the Company’s subsidiaries and were secured by second-priority liens on substantially all of the Company’s and its subsidiaries’ assets (including a pledge of all of the capital stock and equity interests of its material subsidiaries).
The Company recognized a loss on extinguishment of debt of $16.4 million in the fourth quarter of 2013 related to the repurchase and redemption of the Notes. The loss on extinguishment of debt includes the write-off of $3.9 million in deferred financing costs related to the Notes and $12.5 million of debt redemption premiums, consent payments, additional interest and other fees related to the redemption of the Notes.
At December 28, 2014, principal payments required on borrowings under the senior credit facility were $66.0 million in 2018. The weighted average interest rate on the borrowings under the senior credit facility was 1.79% and 2.25% at December 28, 2014 and December 29, 2013, respectively. Interest expense on the Company's long-term debt, excluding lease financing obligations, was $2.1 million, $17.9 million and $19.9 million for the years ended December 28, 2014, December 29, 2013, and December 30, 2012, respectively.
Lease Financing Obligations
Lease Financing Obligations [Text Block]
Lease Financing Obligations
The Company entered into sale-leaseback transactions in various years that did not qualify for sale-leaseback accounting due to certain forms of continuing involvement and, as a result, the leases were classified as financing transactions in the Company’s consolidated financial statements.
Under the financing method, the assets remain on the consolidated balance sheet and the net proceeds received by the Company from these transactions are recorded as a lease financing liability. Payments under these leases are applied as payments of imputed interest and deemed principal on the underlying financing obligations.
These leases generally provide for an initial term of 20 years plus renewal options. The rent payable under such leases includes a minimum rent provision and in some cases, includes rent based on a percentage of sales. These leases also require payment of property taxes, insurance and utilities.
During the second quarter of 2012, the Company exercised its purchase options under the leases for five restaurant properties previously accounted for as lease financing obligations and purchased these properties from the lessor. As a result, the Company reduced its lease financing obligations by $6.0 million during the year ended December 30, 2012. The Company also recorded a loss of $0.1 million included in interest expense representing the net amount by which the purchase price of the restaurant properties acquired exceeded the balance of the respective lease financing obligations.
For certain of the Company’s historical sale-leaseback transactions, Carrols has guaranteed the lease payments on an unsecured basis or is the primary lessee on the leases associated with certain of the Company’s sale-leaseback transactions. Prior to the Spin-off, ASC 840-40 “Sale-Leaseback Transactions” required the Company to classify these leases as lease financing transactions in the Company’s consolidated financial statements because the guarantee from a related party constituted continuing involvement and caused the sale to not qualify for sale-leaseback accounting.
At the time of the Spin-off, these sale-leaseback transactions qualified for sale-leaseback accounting (and the treatment of such related leases as operating leases) due to the cure or elimination of the provisions that previously precluded sale-leaseback accounting in the Company's financial statements. As a result of the qualification for sale-leaseback accounting during the second quarter of 2012, the Company removed the associated lease financing obligations, property and equipment, and deferred financing costs from its balance sheet, and recognized deferred gains on sale-leaseback transactions related to the qualification of $32.1 million that will be amortized as a reduction of rent expense over the individual remaining lease terms. This resulted in a decrease in lease financing obligations of $114.2 million, a decrease in assets under lease financing obligations of $80.4 million, and a decrease of $1.6 million in deferred financing fees.
In 2013, the Company removed an additional lease financing obligation and the related property and equipment and deferred financing costs from its balance sheet and recognized a deferred gain of $0.4 million on the sale-leaseback transaction related to the expiration of a provision that previously precluded sale-leaseback accounting.
At December 28, 2014, payments required on all lease financing obligations were as follows:
2015
$
140

2016
141

2017
143

2018
144

2019
146

Thereafter, through 2023
2,223

Total minimum lease payments
2,937

Less: Interest implicit in obligations
(1,277
)
Total lease financing obligations
$
1,660

The interest rate on lease financing obligations was 8.6% at December 28, 2014. Interest expense associated with lease financing obligations was $0.1 million, $0.1 million and $4.5 million for the years ended December 28, 2014, December 29, 2013, and December 30, 2012, respectively.
Income Taxes
Income Tax Disclosure [Text Block]
Income Taxes
The Company’s income tax provision was comprised of the following:
    
 
Year Ended
 
December 28, 2014
 
December 29, 2013
 
December 30, 2012
Current:
 
 
 
 
 
Federal
$
17,335

 
$
2,550

 
$
4,197

Foreign
380

 
375

 
365

State
2,291

 
1,048

 
757

 
20,006

 
3,973

 
5,319

Deferred:
 
 
 
 
 
Federal
417

 
136

 
(1,405
)
State
46

 
(11
)
 
230


463

 
125

 
(1,175
)
Valuation allowance
494

 
(303
)
 
145

 
$
20,963

 
$
3,795

 
$
4,289


Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for income tax purposes. The components of deferred income tax assets and liabilities at December 28, 2014 and December 29, 2013 were as follows:
 
 
December 28, 2014
 
December 29, 2013
Current deferred income tax assets (liabilities):
 
 
 
 
  Inventory and other reserves
 
$
(186
)
 
$
(88
)
  Accrued vacation benefits
 
1,428

 
1,392

  Other accruals
 
1,894

 
1,714

Current deferred income tax assets
 
3,136

 
3,018

  Less: Valuation allowance
 
(211
)
 

Total current deferred income tax assets
 
2,925

 
3,018

Long term deferred income tax assets (liabilities):
 
 
 
 
  Deferred income on sale-leaseback of certain real estate
 
12,512

 
13,048

  Lease financing obligations
 
138

 
126

  Property and equipment depreciation
 
(5,144
)
 
(3,423
)
  Amortization of other intangibles, net
 
(3,164
)
 
(3,136
)
  Occupancy costs
 
4,479

 
3,645

  Tax credit carryforwards
 
1,010

 
516

  Other
 
2,023

 
1,786

Long-term net deferred income tax assets
 
11,854

 
12,562

  Less: Valuation allowance
 
(799
)
 
(516
)
Total long-term deferred income tax assets
 
11,055

 
12,046

Carrying value of net deferred income tax assets
 
$
13,980

 
$
15,064


The Company establishes a valuation allowance to reduce the carrying amount of deferred income tax assets when it is more likely than not that it will not realize some portion or all of the tax benefit of its deferred tax assets. The Company evaluates whether its deferred income tax assets are probable of realization on a quarterly basis. In performing this analysis, the Company considers all available evidence including historical operating results, the estimated timing of future reversals of existing taxable temporary differences and estimated future taxable income exclusive of reversing temporary differences and carryforwards. At December 28, 2014 and December 29, 2013, the Company had a valuation allowance of $1,010 and $516 respectively, against net deferred income tax assets due to foreign income tax credit carryforwards where it was determined to be more likely than not that the deferred income tax asset amounts would not be realized. The valuation allowance increased $494 in 2014 primarily due to foreign tax credit carryforwards. The valuation allowance decreased $303 in 2013 primarily as the result of the expiration of foreign tax credits. The estimation of future taxable income for federal and state purposes and the Company's ability to realize deferred income tax assets can significantly change based on future events and operating results.
The Company's effective tax rate was 36.7%, 29.1%, and 34.2% for the years ended December 28, 2014, December 29, 2013 and December 30, 2012, respectively. A reconciliation of the statutory federal income tax provision to the effective tax provision was as follows:
 
Year Ended
 
December 28, 2014
 
December 29, 2013
 
December 30, 2012
Statutory federal income tax provision
$
19,999

 
$
4,568

 
$
4,395

State income taxes, net of federal benefit
1,453

 
666

 
520

Change in valuation allowance
494

 
(303
)
 
145

Increase in deferred tax assets at Spin-off

 

 
(182
)
Non-deductible expenses
293

 
334

 
94

Foreign taxes
380

 
654

 
365

Employment tax credits
(1,174
)
 
(1,490
)
 
(202
)
Foreign tax credits
(380
)
 
(375
)
 
(365
)
Other
(102
)
 
(259
)
 
(481
)
 
$
20,963

 
$
3,795

 
$
4,289


The Company recognizes interest and/or penalties related to uncertain tax positions in income tax expense. As of December 28, 2014 and December 29, 2013, the Company had no unrecognized tax benefits and no accrued interest related to uncertain tax positions.
The tax years 2009-2013 remain open to examination by the taxing jurisdictions to which the Company is subject. Although it is not reasonably possible to estimate the amount by which unrecognized tax benefits may increase within the next twelve months due to uncertainties regarding the timing of any examinations, the Company does not expect unrecognized tax benefits to significantly change in the next twelve months.
Stockholders' Equity
Stockholders' Equity Note Disclosure [Text Block]
Stockholders' Equity
Issuance of stock
On November 20, 2013, the Company sold 3,078,336 shares of Fiesta's common stock in an underwritten public offering at a price of $46.00 per share (excluding underwriting discounts and commissions) pursuant to a Registration Statement on Form S-3 (Registration No. 333-192254). The aggregate net proceeds to the Company from the offering were approximately $135.3 million, reflecting gross proceeds of $141.6 million, net of underwriting fees of approximately $5.7 million and other offering costs of approximately $0.7 million. The Company used the proceeds from the offering to repurchase its outstanding Notes tendered pursuant to a tender offer, as discussed in Note 8. The Company used the remaining proceeds from the offering and $81.0 million in borrowings under its senior credit facility discussed in Note 8 to redeem the Notes not tendered in the tender offer.
Equity compensation
Prior to the Spin-off, certain of the Company's employees participated in the Carrols Restaurant Group, Inc. 2006 Stock Incentive Plan, as amended (the "Carrols Plan"). In conjunction with the Spin-off, the Company established the Fiesta Restaurant Group, Inc. 2012 Stock Incentive Plan (the "Fiesta Plan") in order to be able to compensate its employees and directors by issuing stock options, stock appreciation rights, or stock awards to them under this plan. The aggregate number of shares of stock authorized for distribution under the Fiesta Plan is 3,300,000. As of December 28, 2014, there were 2,302,033 shares available for future grants under the Fiesta Plan.
For the period from May 7, 2012 through December 29, 2013, the consolidated statement of operations includes expenses related to the Company's employees' and directors' participation in both the Carrols Plan and the Fiesta Plan. For the period from January 1, 2012 through the Spin-off, the consolidated statement of operations includes expenses related to the Company's employees' and directors' participation in the Carrols Plan.
Effective as of the completion of the Spin-off, all holders of Carrols non-vested stock on April 26, 2012, the record date of the Spin-off, received one share of Fiesta Restaurant Group non-vested stock for every one share of Carrols non-vested stock held, with terms and conditions substantially similar to the terms and conditions applicable to the Carrols non-vested stock. In 2012, a total of 434,397 shares were converted to non-vested shares with a weighted average grant date fair value of $11.10 per share.
During the years ended December 28, 2014, December 29,2013 and December 30, 2012, the Company granted in the aggregate 80,290, 161,546 and 369,256 non-vested restricted shares, respectively, under the Fiesta Plan to certain employees and directors, including 165,563 non-vested restricted shares granted to the Company's Chief Executive Officer on June 8, 2012. Shares granted to employees during the years ended December 28, 2014, December 29, 2013 and December 30, 2012 vest and become non-forfeitable over a four year vesting period, or for certain grants, at the end of a four year vesting period. Shares granted to directors during the years ended December 28, 2014, December 29, 2013 and December 30, 2012 generally vest and become non-forfeitable over vesting periods ranging from one to five years. The weighted average fair value at the grant date for restricted non-vested shares issued during the years ended December 28, 2014, December 29, 2013 and December 30, 2012 was $44.22, $21.35 and $14.00, respectively. The grant date fair value of each non-vested share award was determined based on the closing price of the Company's stock on the date of grant.
During the year ended December 28, 2014, the Company granted 24,252 restricted stock units under the Fiesta Plan to certain employees. Certain of the restricted stock units vest and become non-forfeitable over a four year vesting period and certain of the restricted units vest and become non-forfeitable at the end of a four year vesting period. The weighted average fair value at grant date for the restricted stock units issued to employees during the year ended December 28, 2014 was $45.04. The grant date fair value of each restricted stock unit award was determined based on the closing price of the Company's stock on the date of grant.
Stock-based compensation expense is measured at the grant date based on the fair value of the award and is recognized as expense over the applicable requisite service period of the award (the vesting period) using the straight-line method. Stock-based compensation expense for the years ended December 28, 2014, December 29, 2013 and December 30, 2012 was $3.5 million, $2.3 million and $2.0 million, respectively. Included in the year ended December 30, 2012 is $0.4 million of expense related to the accelerated vesting of the non-vested shares of the former Chairman of the Company's board of directors upon his departure from the Company's board of directors in the first quarter of 2012. As of December 28, 2014, the total unrecognized stock-based compensation expense relating to non-vested shares and restricted stock units was approximately $6.3 million and the remaining weighted average vesting period for non-vested shares and restricted stock units was 1.8 years.
A summary of all non-vested shares and restricted stock units activity for the year ended December 28, 2014 was as follows:
 
Non-Vested Shares
 
Restricted Stock Units
 
 
 
Weighted
 
 
 
Weighted
 
 
 
Average
 
 
 
Average
 
 
 
Grant Date
 
 
 
Grant Date
 
Shares
 
Price
 
Units
 
Price
Non-vested at December 29, 2013
627,311

 
$
14.81

 

 
$

Granted
80,290

 
44.22

 
24,252

 
45.04

Vested
(275,485
)
 
14.50

 
(163
)
 
45.04

Forfeited
(7,619
)
 
18.64

 
(3,306
)
 
45.04

Non-vested at December 28, 2014
424,497

 
$
20.50

 
20,783

 
$
45.04


The fair value of the shares vested during the years ended December 28, 2014, December 29, 2013, and December 30, 2012 was $12.8 million, $6.3 million and $0.3 million, respectively. These amounts include shares held by Fiesta and Carrols employees.
Business Segment Information
Business Segment Information
Business Segment Information
The Company is engaged in the fast-casual restaurant industry, with two restaurant concepts (each of which is an operating segment): Pollo Tropical and Taco Cabana. Pollo Tropical is a fast-casual restaurant brand offering a wide variety of freshly prepared Caribbean inspired food, while our Taco Cabana restaurants offer a broad selection of hand-made, freshly prepared and authentic Mexican food.
The accounting policies of each segment are the same as those described in the summary of significant accounting policies discussed in Note 1. The Company reports more than one measure of segment profit or loss to the chief operating decision maker for the purposes of allocating resources to the segments and assessing their performance. The primary measures of segment profit or loss used to assess performance and allocate resources are income before taxes and Adjusted EBITDA, which is defined as earnings attributable to the applicable operating segment before interest, loss on extinguishment of debt, income taxes, depreciation and amortization, impairment and other lease charges, stock-based compensation expense and other income and expense. Although the chief operating decision maker uses Adjusted EBITDA as a measure of segment profitability, in accordance with Accounting Standards Codification 280, Segment Reporting, the following table includes segment income before taxes, which is the measure of segment profit or loss determined in accordance with the measurement principles that are most consistent with the principles used in measuring the corresponding amounts in the consolidated financial statements.
The “Other” column includes corporate related items not allocated to reportable segments and consists primarily of corporate owned property and equipment, a current income tax receivable, miscellaneous prepaid costs, capitalized costs associated with the issuance of indebtedness, corporate cash accounts, and the loss on extinguishment of debt discussed in Note 8.
Year Ended
 
Pollo Tropical
 
Taco Cabana
 
Other
 
Consolidated
December 28, 2014:
 
 
 
 
 
 
 
 
Restaurant sales
 
$
305,404

 
$
303,136

 
$

 
$
608,540

Franchise revenue
 
2,072

 
531

 

 
2,603

Cost of sales
 
100,468

 
91,782

 

 
192,250

Restaurant wages and related expenses (1)
 
67,487

 
87,653

 

 
155,140

Restaurant rent expense
 
12,473

 
17,172

 

 
29,645

Other restaurant operating expenses
 
38,331

 
40,590

 

 
78,921

Advertising expense
 
7,714

 
11,779

 

 
19,493

General and administrative expense (2)
 
26,672

 
22,742

 

 
49,414

Depreciation and amortization
 
11,596

 
11,451

 

 
23,047

Pre-opening costs
 
3,385

 
676

 

 
4,061

Impairment and other lease charges
 
254

 
109

 

 
363

Other (income) expense
 

 
(558
)
 

 
(558
)
Interest expense
 
1,035

 
1,193

 

 
2,228

Income before taxes
 
38,061

 
19,078

 

 
57,139

Capital expenditures
 
52,355

 
17,969

 
3,755

 
74,079

December 29, 2013:
 
 
 
 
 
 
 
 
Restaurant sales
 
$
257,837

 
$
291,143

 
$

 
$
548,980

Franchise revenue
 
1,865

 
492

 

 
2,357

Cost of sales
 
85,532

 
90,591

 

 
176,123

Restaurant wages and related expenses (1)
 
57,893

 
85,499

 

 
143,392

Restaurant rent expense
 
10,110

 
16,739

 

 
26,849

Other restaurant operating expenses
 
30,790

 
38,231

 

 
69,021

Advertising expense
 
5,726

 
11,412

 

 
17,138

General and administrative expense (2)
 
24,966

 
23,555

 

 
48,521

Depreciation and amortization
 
9,248

 
11,127

 

 
20,375

Pre-opening costs
 
2,047

 
720

 

 
2,767

Impairment and other lease charges
 
(116
)
 
315

 

 
199

Other (income) expense
 
(497
)
 
(57
)
 

 
(554
)
Interest expense
 
7,954

 
10,089

 

 
18,043

Income (loss) before taxes (3)
 
26,049

 
3,414

 
(16,411
)
 
13,052

Capital expenditures
 
24,996

 
16,609

 
5,420

 
47,025

December 30, 2012:
 
 
 
 
 
 
 
 
Restaurant sales
 
$
227,428

 
$
279,923

 
$

 
$
507,351

Franchise revenue
 
1,915

 
460

 

 
2,375

Cost of sales
 
75,388

 
88,126

 

 
163,514

Restaurant wages and related expenses (1)
 
53,624

 
82,641

 

 
136,265

Restaurant rent expense
 
7,688

 
13,907

 

 
21,595

Other restaurant operating expenses
 
26,825

 
36,988

 

 
63,813

Advertising expense
 
5,723

 
11,068

 

 
16,791

General and administrative expense (2)
 
21,358

 
22,512

 

 
43,870

Depreciation and amortization
 
8,153

 
10,100

 
25

 
18,278

Pre-opening costs
 
1,090

 
583

 

 
1,673

Impairment and other lease charges
 
6,035

 
1,004

 

 
7,039

Other (income) expense
 
(92
)
 

 

 
(92
)
Interest expense
 
10,501

 
13,923

 

 
24,424

Income (loss) before taxes
 
13,051

 
(468
)
 
(27
)
 
12,556

Capital expenditures
 
17,482

 
22,355

 
1,159

 
40,996

Identifiable Assets:
 
 
 
 
 
 
 
 
December 28, 2014
 
$
177,923

 
$
167,729

 
$
12,304

 
$
357,956

December 29, 2013
 
140,797

 
169,367

 
8,621

 
318,785

December 30, 2012
 
128,593

 
167,348

 
7,788

 
303,729


(1) Includes stock-based compensation expense of $71, $2 and $11 for the years ended December 28, 2014, December 29, 2013 and December 30, 2012, respectively.
(2) Includes stock-based compensation expense of $3,426, $2,296 and $2,025 for the years ended December 28, 2014, December 29, 2013 and December 30, 2012, respectively.
(3) "Other" income (loss) before taxes for the year ended December 29, 2013 includes the loss on extinguishment of debt discussed in Note 8.
Net Income (Loss) per Share
Earnings Per Share [Text Block]
Net Income per Share
We compute basic net income per share by dividing net income applicable to common shares by the weighted average number of common shares outstanding during each period. Our non-vested restricted shares contain a non-forfeitable right to receive dividends on a one-to-one per share ratio to common shares and are thus considered participating securities. The impact of the participating securities is included in the computation of basic net income per share pursuant to the two-class method. The two-class method of computing earnings per share is an earnings allocation formula that determines earnings attributable to common shares and participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. Net income per common share was computed by dividing undistributed earnings allocated to common shareholders by the weighted average number of common shares outstanding for the period. In applying the two-class method, undistributed earnings are allocated to both common shares and non-vested restricted shares based on the weighted average shares outstanding during the period.
Diluted earnings per share reflects the potential dilution that could occur if our restricted stock units were converted into
common shares. We compute diluted earnings per share by adjusting the basic weighted average number of common shares by
the dilutive effect of the restricted stock units, determined using the treasury stock method.
For 2012, in determining the weighted average number of shares outstanding for basic income per share, the 23.2 million shares distributed from Carrols on May 7, 2012 were assumed to be outstanding for the period from January 2, 2012 through May 6, 2012.
       
The computation of basic and diluted net income per share is as follows:
 
  
Year Ended
 
  
December 28, 2014
 
December 29, 2013
 
December 30, 2012
Basic and diluted net income per share:
  
 
 
 
 
 
Net income
  
$
36,176

 
$
9,257

 
$
8,267

Less: income allocated to participating securities
  
647

 
264

 
247

Net income available to common stockholders
  
$
35,529

 
$
8,993

 
$
8,020

 
 
 
 
 
 
 
Weighted average common shares, basic
  
26,293,714

 
23,271,431

 
22,890,018

Restricted stock units
 
2,335

 

 

Weighted average common shares, diluted
 
26,296,049

 
23,271,431

 
22,890,018

 
 
 
 
 
 
 
Basic net income per common share
  
$
1.35

 
$
0.39

 
$
0.35

Diluted net income per common share
 
$
1.35

 
$
0.39

 
$
0.35

Commitments and Contingencies
Commitments and Contingencies
Commitments and Contingencies
Lease Assignments. As of December 28, 2014, the Company has assigned five leases with lease terms expiring on various dates through 2029 to various parties. Although the Company is a not a guarantor under these leases, it remains secondarily liable as a surety for these leases. The maximum potential liability for future rental payments the Company could be required to make under these leases at December 28, 2014 was $2.7 million. The obligations under these leases will generally continue to decrease over time as the operating leases expire. The Company does not believe it is probable that it would be required to make any lease payments resulting from its secondary liability for these leases.
Legal Matters. The Company is a party to legal proceedings incidental to the conduct of business, including the matter described below. The Company records accruals for outstanding legal matters when it believes it is probable that a loss will be incurred and the amount can be reasonably estimated. The Company evaluates, on a quarterly basis, developments in legal matters that could affect the amount of any accrual and developments that would make a loss contingency both probable and reasonably estimable. If a loss contingency is not both probable and estimable, the Company does not establish an accrued liability.
On September 29, 2014, Daisy, Inc. ("Daisy"), an automotive repair shop in Cape Coral, Florida, filed a putative class action suit against Fiesta Restaurant Group, Inc. in the United States District Court for the Middle District of Florida. The suit claims that Fiesta allegedly engaged in unlawful activity in violation of the Telephone Consumer Protection Act, § 227 et seq. (the "TCPA"). Daisy alleges that it received three unlawful faxes and does not identify any other purported class members. Each violation under the TCPA provides for $500 in statutory damages ($1,500 if a willful violation is shown). Plaintiff Daisy seeks statutory damages, damages for willful violations, attorneys' fees, costs and injunctive relief, and to certify a class. Neither the Complaint nor any other pleading quantifies Daisy's or the putative class' damages or provides greater specificity as to the size and nature of the purported class. While the Company is vigorously defending against any liability, there can be no assurance that it will be successful in its defense or that a negative outcome would not have a material adverse effect on the Company. The amount of any loss related to this matter cannot be reasonably estimated at this time. The Company does not have insurance coverage for this claim.
The Company is also a party to various other litigation matters incidental to the conduct of business. The Company does not believe that the outcome of any of these matters will have a material effect on its consolidated financial statements.
Retirement Plans Retirement Plans
Compensation and Employee Benefit Plans [Text Block]
Retirement Plans
Fiesta offers the Company's salaried employees the option to participate in the Fiesta Corporation Retirement Savings Plan (the “Retirement Plan”). The Retirement Plan includes a savings option pursuant to section 401(k) of the Internal Revenue Code in addition to a post-tax savings option. Fiesta may elect to contribute to the Retirement Plan on an annual basis. For 2014 and 2013 Fiesta's contribution, if any, is equal to 50% of the employee's contribution to a maximum Fiesta contribution of $0.5 per participating employee annually for any plan year that Fiesta participates in an employee match. Under the Retirement Plan, Fiesta contributions begin to vest after 1 year and fully vest after 5 years of service. A year of service is defined as a plan year during which an employee completes at least 1,000 hours of service. Participating employees may contribute up to 50% of their salary annually to either of the savings options, subject to other limitations. The employees have various investment options available under a trust established by the Retirement Plan. Contributions made by Fiesta to the Retirement Plan for the Company's employees were $0.2 million and $0.2 million in aggregate for the years ended December 28, 2014 and December 29, 2013, respectively.
Fiesta also has a Deferred Compensation Plan which permits employees not eligible to participate in the Retirement Plan because they have been excluded as “highly compensated” employees (as so defined in the Retirement Plan) to voluntarily defer portions of their base salary and annual bonus. All amounts deferred by the participants earn interest at 8% per annum. There is no Company matching on any portion of the funds. At December 28, 2014 and December 29, 2013, a total of $1.1 million and $0.6 million, respectively, was deferred by the Company's employees under the Retirement Plan, including accrued interest.
Selected Quarterly Financial and Earningd Data (Unaudited) Selected Quarterly Financial and Earnings Data (Unaudited)
Quarterly Financial Information [Text Block]
Selected Quarterly Financial and Earnings Data (Unaudited)
 
Year Ended December 28, 2014
 
 
First Quarter
 
Second Quarter
 
Third Quarter
 
Fourth Quarter
 
Revenue
$
145,436

 
$
154,185

 
$
155,298

 
$
156,224

 
Income from operations
14,735

 
15,663

 
15,373

 
13,596

 
Net income
8,719

 
9,314

 
9,155

 
8,988

 
Basic net income per share
$
0.33

 
$
0.35

 
$
0.34

 
$
0.34

 
Diluted net income per share
$
0.33

 
$
0.35

 
$
0.34

 
$
0.34

 
 
 
 
 
 
 
 
 
 
 
Year Ended December 29, 2013
 
 
First Quarter
 
Second Quarter
 
Third Quarter
 
Fourth Quarter
 
Revenue
$
133,624

 
$
140,880

 
$
140,678

 
$
136,155

 
Income from operations
11,499

 
12,947

 
12,095

 
10,965

 
Net income (loss)
4,799

 
4,969

 
5,042

 
(5,553
)
(1
)
Basic net income (loss) per share
$
0.20

 
$
0.21

 
$
0.21

 
$
(0.22
)
 
Diluted net income (loss) per share
$
0.20

 
$
0.21

 
$
0.21

 
$
(0.22
)
 

(1) The Company recognized a loss on extinguishment of debt of $16.4 million in the fourth quarter of 2013 (See Note 8).
Schedule II--Valuation and Qualifying Accounts Schedule II
Schedule of Valuation and Qualifying Accounts Disclosure [Text Block]
 
 
Column B
 
Column C
 
Column D
 
Column E
 
 
Balance at
 
Charged to
Charged to
 
 
 
Balance
 
 
beginning
 
costs and
other
 
 
 
at end of
Description
 
of period
 
expenses
accounts
 
Deduction
 
period
Year Ended December 28, 2014:
 
 
 
 
 
 
 
 
 
Deferred income tax valuation allowance
 
$
516

 
$
494

$

 
$

 
$
1,010

Year Ended December 29, 2013:
 
 
 
 
 
 
 
 
 
Deferred income tax valuation allowance
 
819

 
(303
)

 

 
516

Year Ended December 30, 2012:
 
 
 
 
 
 
 
 
 
Deferred income tax valuation allowance
 
674

 
145


 

 
819

Basis of Presentation Accounting Policies (Policies)
The Company is required to review goodwill for impairment annually or more frequently when events and circumstances indicate that the carrying amount may be impaired. If the determined fair value of goodwill is less than the related carrying amount, an impairment loss is recognized. The Company performs its annual impairment assessment as of the last day of the fiscal year and has determined its reporting units to be its operating segments, Pollo Tropical and Taco Cabana.
In performing its goodwill impairment test, the Company compared the net book values of its reporting units to their estimated fair values, the latter determined by employing a discounted cash flow analysis, which was corroborated with other value indicators where available, such as comparable company earnings multiples.
The Company reviews its long-lived assets, principally property and equipment, for impairment at the restaurant level. In addition to considering management’s plans, known regulatory or governmental actions and damage due to acts of God (hurricanes, tornadoes, etc.), the Company considers a triggering event to have occurred related to a specific restaurant if the restaurant’s cash flows for the last twelve months are less than a minimum threshold or if consistent levels of cash flows for the remaining lease period are less than the carrying value of the restaurant’s assets. If an indicator of impairment exists for any of its assets, an estimate of undiscounted future cash flows over the life of the primary asset for each restaurant is compared to that long-lived asset’s carrying value. If the carrying value is greater than the undiscounted cash flow, the Company then determines the fair value of the asset and if an asset is determined to be impaired, the loss is measured by the excess of the carrying amount of the asset over its fair value. For closed restaurant locations, the Company reviews the future minimum lease payments and related ancillary costs from the date of the restaurant closure to the end of the remaining lease term and records a lease charge for the lease liabilities to be incurred, net of any estimated sublease recoveries.
The Company determined the fair value of restaurant equipment, for those restaurants reviewed for impairment, based on current economic conditions and the Company’s history of using these assets in the operation of its business. For those restaurants reviewed for impairment where the Company owns the land and building, the Company also utilized third-party information such as a broker market price opinion to determine the fair value of the property. These fair value asset measurements rely on significant unobservable inputs and are considered Level 3 in the fair value hierarchy. The Level 3 assets measured at fair value associated with impairment charges recorded during the year ending December 28, 2014 totaled less than $0.1 million.
Basis of Consolidation. The consolidated financial statements presented herein reflect the consolidated financial position, results of operations and cash flows of Fiesta and its wholly-owned subsidiaries. These consolidated financial statements have been prepared as if the Company was in existence for all periods presented. All intercompany transactions have been eliminated in consolidation.
Through the date of the Spin-off, these consolidated financial statements have been prepared on a stand-alone basis from the separate records maintained by Carrols and may not necessarily be indicative of the results of operations or cash flows that would have resulted had allocations and other related-party transactions been consummated with unrelated parties or had the Company been an independent, publicly traded company during all of the periods presented. The consolidated financial statements reflect the historical financial position, results of operations and cash flows of Fiesta as it has historically operated, in conformity with U.S. Generally Accepted Accounting Principles ("GAAP"). All intercompany transactions have been eliminated in consolidation.
In connection with the Spin-off, the board of directors of the Company authorized a 23,161.8 for one split of its outstanding common stock that was effective on April 19, 2012. Accordingly, all references to share and per share amounts related to common stock included in the consolidated financial statements and accompanying notes have been adjusted to reflect the stock split and change in the number of authorized shares. The stock split has been retroactively applied to the Company’s financial statements.
Fiscal Year. The Company uses a 52-53 week fiscal year ending on the Sunday closest to December 31. The fiscal years ended December 28, 2014, December 29, 2013 and December 30, 2012 each contained 52 weeks.
Allocations. Through the date of the consummation of the Spin-off, Carrols provided administrative support to the Company for executive management, information systems and certain accounting, legal and other administrative functions. The cost of these services were allocated to the Company based primarily on a pro-rata share of either the Company’s revenues, number of restaurants or number of employees. The allocations may not reflect the expense the Company would have incurred as an independent, publicly traded company for the periods presented.
Use of Estimates. The preparation of the 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 dates of the financial statements. Estimates also affect the reported amounts of expenses during the reporting periods. Significant items subject to such estimates and assumptions include: allocations of Carrols' general and administrative expenses prior to the Spin-off, accrued occupancy costs, insurance liabilities, evaluation for impairment of goodwill and long-lived assets and lease accounting matters. Actual results could differ from those estimates.
Cash and Cash Equivalents. The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
Inventories. Inventories, primarily consisting of food and paper, are stated at the lower of cost (first-in, first-out) or market.
Property and Equipment. The Company capitalizes all direct costs incurred to construct and substantially improve its restaurants. These costs are depreciated and charged to expense based upon their property classification when placed in service. Property and equipment is recorded at cost. Application development stage costs for significant internally developed software projects are capitalized and depreciated. Repair and maintenance activities are expensed as incurred. Depreciation and amortization is provided using the straight-line method over the following estimated useful lives:
Buildings and improvements
5
to
30 years
Equipment
3
to
7 years
Computer hardware and software
3
to
7 years
Assets subject to capital lease
Shorter of useful life or lease term

Leasehold improvements, including new buildings constructed on leased land, are depreciated over the shorter of their estimated useful lives or the underlying lease term. In circumstances where an economic penalty would be presumed by the non-exercise of one or more renewal options under the lease, the Company includes those renewal option periods when determining the lease term. For significant leasehold improvements made during the latter part of the lease term, the Company amortizes those improvements over the shorter of their useful life or an extended lease term. The extended lease term would consider the exercise of renewal options if the value of the improvements would imply that an economic penalty would be incurred without the renewal of the option. Building costs incurred for new restaurants on leased land are depreciated over the lease term, which is generally a twenty-year period.
Deferred Financing Costs. Financing costs incurred in obtaining long-term debt, credit facilities and lease financing obligations are capitalized and amortized over the life of the related obligation as interest expense using the effective interest method.
Leases.  All leases are reviewed for capital or operating classification at their inception. The majority of the Company's leases are operating leases. Many of the lease agreements contain rent holidays, rent escalation clauses and/or contingent rent provisions. Rent expense for leases that contain scheduled rent increases or rent holidays is recognized on a straight-line basis over the lease term, including any option periods included in the determination of the lease term. Contingent rentals are generally based upon a percentage of sales or a percentage of sales in excess of stipulated amounts and are not considered minimum rent payments but are recognized as rent expense when incurred.
Revenue Recognition. Revenues from the Company's owned and operated restaurants are recognized when payment is tendered at the time of sale. Franchise royalty revenues are based on a percent of gross sales and are recorded as income when earned. Franchise fees, which are associated with opening new franchised restaurants, are recognized as income when all required activities have been performed by the Company. Area development fees, which are associated with opening new franchised restaurants in a given market, are recognized as income over the term of the related agreement.
Income Taxes. Deferred income tax assets and liabilities are based on the difference between the financial statement and tax bases of assets and liabilities as measured by the tax rates that are anticipated to be in effect when those differences reverse. The deferred tax provision generally represents the net change in deferred tax assets and liabilities during the period. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is established when it is necessary to reduce deferred tax assets to amounts for which realization is more likely than not. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.
Advertising Costs. All advertising costs are expensed as incurred.
Cost of Sales. The Company includes the cost of food, beverage and paper, net of any discounts, in cost of sales.
Pre-opening Costs. The Company's pre-opening costs are generally incurred beginning four to six months prior to a restaurant opening and generally include restaurant employee wages and related expenses, travel expenditures, recruiting, training, promotional costs associated with the restaurant opening and rent, including any non-cash rent expense recognized during the construction period.
Insurance.  The Company is insured for workers' compensation, general liability and medical insurance claims under policies where it pays all claims, subject to stop-loss limitations both for individual claims and claims in the aggregate. During 2012, the Company was insured under policies covering both Carrols and the Company. During 2014 and 2013, the Company was insured under separate policies. Losses are accrued based upon estimates of the aggregate liability for claims based on the Company's experience and certain actuarial methods used to measure such estimates. The Company does not discount any of its self-insurance obligations.
 Fair Value of Financial Instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. In determining fair value, the accounting standards establish a three level hierarchy for inputs used in measuring fair value as follows: Level 1 inputs are quoted prices in active markets for identical assets or liabilities; Level 2 inputs are observable for the asset or liability, either directly or indirectly, including quoted prices in active markets for similar assets or liabilities; and Level 3 inputs are unobservable and reflect our own assumptions. The following methods were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate the fair value:
Current Assets and Liabilities. The carrying values reported on the balance sheet of cash, accounts receivable and accounts payable approximate fair value because of the short maturity of those financial instruments.
Revolving Credit Borrowings. The fair value of outstanding revolving credit borrowings under our senior credit facility, which is considered Level 2, is based on current LIBOR rates and at December 28, 2014, was approximately $66.0 million.
See Note 4 for discussion of the fair value measurement of non-financial assets.
Gift cards. The Company sells gift cards to its customers in its restaurants and through select third parties. The Company recognizes revenue from gift cards upon redemption by the customer. The gift cards have no stated expiration dates and are subject to escheatment rights in certain states. Revenues from unredeemed gift cards are not material to the Company's financial statements.
Recent Accounting Pronouncements. In April 2014, the Financial Accounting Standards Board issued ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, which raises the threshold for a disposal to qualify as a discontinued operation and requires new disclosures of both discontinued operations and certain other disposals that do not meet the definition of a discontinued operation. For the Company, the guidance is effective for the interim and annual periods beginning December 29, 2014. The ASU is applied prospectively; however, early adoption is permitted for disposals (or classifications as held for sale) that have not been reported in financial statements previously issued or available for issue. The Company has early adopted this standard which did not have a material impact on the Company's financial statements.
In May 2014, the Financial Accounting Standards Board issued ASU 606, Revenue Recognition - Revenue from Contracts with Customers, which amends the guidance in former ASC 605, Revenue Recognition, and provides for either a full retrospective adoption in which the standard is applied to all of the periods presented or a modified retrospective adoption in which the cumulative effect of initially applying the standard is recognized at the date of initial application. The new standard provides accounting guidance for all revenue arising from contracts with customers and affects all entities that enter into contracts to provide goods or services to their customers unless the contracts are in the scope of other US GAAP requirements. The guidance also provides a model for the measurement and recognition of gains and losses on the sale of certain nonfinancial assets, such as property and equipment, including real estate. The Company is currently evaluating the impact of the provisions of ASC 606; however, the Company expects the provisions to primarily impact certain franchise revenues and does not expect the standard to have a material effect on its financial statements. For the Company, the new standard is effective for interim and annual periods beginning after December 15, 2016.
Goodwill Goodwill Policy (Policies)
Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block]
The Company is required to review goodwill for impairment annually or more frequently when events and circumstances indicate that the carrying amount may be impaired. If the determined fair value of goodwill is less than the related carrying amount, an impairment loss is recognized. The Company performs its annual impairment assessment as of the last day of the fiscal year and has determined its reporting units to be its operating segments, Pollo Tropical and Taco Cabana.
In performing its goodwill impairment test, the Company compared the net book values of its reporting units to their estimated fair values, the latter determined by employing a discounted cash flow analysis, which was corroborated with other value indicators where available, such as comparable company earnings multiples.
Impairment of Long-Lived Assets and Other Lease Charges Impairment Accounting Policy (Policies)
Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block]
The Company reviews its long-lived assets, principally property and equipment, for impairment at the restaurant level. In addition to considering management’s plans, known regulatory or governmental actions and damage due to acts of God (hurricanes, tornadoes, etc.), the Company considers a triggering event to have occurred related to a specific restaurant if the restaurant’s cash flows for the last twelve months are less than a minimum threshold or if consistent levels of cash flows for the remaining lease period are less than the carrying value of the restaurant’s assets. If an indicator of impairment exists for any of its assets, an estimate of undiscounted future cash flows over the life of the primary asset for each restaurant is compared to that long-lived asset’s carrying value. If the carrying value is greater than the undiscounted cash flow, the Company then determines the fair value of the asset and if an asset is determined to be impaired, the loss is measured by the excess of the carrying amount of the asset over its fair value. For closed restaurant locations, the Company reviews the future minimum lease payments and related ancillary costs from the date of the restaurant closure to the end of the remaining lease term and records a lease charge for the lease liabilities to be incurred, net of any estimated sublease recoveries.
The Company determined the fair value of restaurant equipment, for those restaurants reviewed for impairment, based on current economic conditions and the Company’s history of using these assets in the operation of its business. For those restaurants reviewed for impairment where the Company owns the land and building, the Company also utilized third-party information such as a broker market price opinion to determine the fair value of the property. These fair value asset measurements rely on significant unobservable inputs and are considered Level 3 in the fair value hierarchy. The Level 3 assets measured at fair value associated with impairment charges recorded during the year ending December 28, 2014 totaled less than $0.1 million.
Lease Financing Obligations (Policies)
Lease Financing Obligations [Policy Text Block]
The Company entered into sale-leaseback transactions in various years that did not qualify for sale-leaseback accounting due to certain forms of continuing involvement and, as a result, the leases were classified as financing transactions in the Company’s consolidated financial statements.
Under the financing method, the assets remain on the consolidated balance sheet and the net proceeds received by the Company from these transactions are recorded as a lease financing liability. Payments under these leases are applied as payments of imputed interest and deemed principal on the underlying financing obligations.
These leases generally provide for an initial term of 20 years plus renewal options. The rent payable under such leases includes a minimum rent provision and in some cases, includes rent based on a percentage of sales. These leases also require payment of property taxes, insurance and utilities.
Income Taxes Income Taxes (Policies)
Income Tax, Policy [Policy Text Block]
Income Taxes. Deferred income tax assets and liabilities are based on the difference between the financial statement and tax bases of assets and liabilities as measured by the tax rates that are anticipated to be in effect when those differences reverse. The deferred tax provision generally represents the net change in deferred tax assets and liabilities during the period. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is established when it is necessary to reduce deferred tax assets to amounts for which realization is more likely than not. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.
Business Segment Information Business Segment Policy (Policies)
Segment Reporting, Policy [Policy Text Block]
The Company is engaged in the fast-casual restaurant industry, with two restaurant concepts (each of which is an operating segment): Pollo Tropical and Taco Cabana. Pollo Tropical is a fast-casual restaurant brand offering a wide variety of freshly prepared Caribbean inspired food, while our Taco Cabana restaurants offer a broad selection of hand-made, freshly prepared and authentic Mexican food.
The accounting policies of each segment are the same as those described in the summary of significant accounting policies discussed in Note 1. The Company reports more than one measure of segment profit or loss to the chief operating decision maker for the purposes of allocating resources to the segments and assessing their performance. The primary measures of segment profit or loss used to assess performance and allocate resources are income before taxes and Adjusted EBITDA, which is defined as earnings attributable to the applicable operating segment before interest, loss on extinguishment of debt, income taxes, depreciation and amortization, impairment and other lease charges, stock-based compensation expense and other income and expense. Although the chief operating decision maker uses Adjusted EBITDA as a measure of segment profitability, in accordance with Accounting Standards Codification 280, Segment Reporting, the following table includes segment income before taxes, which is the measure of segment profit or loss determined in accordance with the measurement principles that are most consistent with the principles used in measuring the corresponding amounts in the consolidated financial statements.
Net Income (Loss) per Share (Policies)
Earnings Per Share, Policy [Policy Text Block]
We compute basic net income per share by dividing net income applicable to common shares by the weighted average number of common shares outstanding during each period. Our non-vested restricted shares contain a non-forfeitable right to receive dividends on a one-to-one per share ratio to common shares and are thus considered participating securities. The impact of the participating securities is included in the computation of basic net income per share pursuant to the two-class method. The two-class method of computing earnings per share is an earnings allocation formula that determines earnings attributable to common shares and participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. Net income per common share was computed by dividing undistributed earnings allocated to common shareholders by the weighted average number of common shares outstanding for the period. In applying the two-class method, undistributed earnings are allocated to both common shares and non-vested restricted shares based on the weighted average shares outstanding during the period.
Basis of Presentation Basis of Presentation (Tables)
Property, Plant and Equipment Useful Lives [Table Text Block]
Depreciation and amortization is provided using the straight-line method over the following estimated useful lives:
Buildings and improvements
5
to
30 years
Equipment
3
to
7 years
Computer hardware and software
3
to
7 years
Assets subject to capital lease
Shorter of useful life or lease term
Property and Equipment Property and Equipment (Tables)
Property, Plant and Equipment [Table Text Block]
Property and equipment consisted of the following:
 
December 28, 2014
 
December 29, 2013
Land
$
19,455

 
$
15,277

Owned buildings
14,863

 
13,813

Leasehold improvements (1)
168,719

 
130,623

Equipment
159,596

 
136,088

Assets subject to capital leases
1,647

 
1,647

 
364,280

 
297,448

Less accumulated depreciation and amortization
(172,909
)
 
(152,921
)
 
$
191,371

 
$
144,527

Goodwill (Tables)
Schedule of Intangible Assets and Goodwill [Table Text Block]
Goodwill balances are summarized below: 
 
Pollo
Tropical
 
Taco
Cabana
 
Total
Balance, December 28, 2014 and December 29, 2013
$
56,307

 
$
67,177

 
$
123,484

Impairment of Long-Lived Assets and Other Lease Charges Impairment by segment (Tables)
Impairment of long lived assets and other lease charge [Table Text Block]
Impairment on long-lived assets for the Company’s segments and other lease charges recorded were as follows:
         
 
Year Ended
 
December 28, 2014
 
December 29, 2013
 
December 30, 2012
Pollo Tropical
$
254

 
$
(116
)
 
$
6,035

Taco Cabana
109

 
315

 
1,004

 
$
363

 
$
199

 
$
7,039

Other Liabilities (Tables)
Other liabilities, current, consisted of the following:
 
December 28, 2014
 
December 29, 2013
Accrued workers' compensation and general liability claims
$
3,996

 
$
3,484

Sales and property taxes
1,933

 
1,358

Accrued occupancy costs
508

 
543

Other
1,746

 
2,920

 
$
8,183

 
$
8,305

Other liabilities, long-term, consisted of the following:
 
December 28, 2014
 
December 29, 2013
Accrued occupancy costs
$
12,254

 
$
9,973

Accrued workers’ compensation and general liability claims
977

 
729

Deferred compensation
1,102

 
593

Other
1,610

 
1,243

 
$
15,943

 
$
12,538

The following table presents the activity in the closed-store reserve, of which $1.0 million and $1.1 million are included in long-term accrued occupancy costs above at December 28, 2014 and December 29, 2013, respectively, with the remainder in other current liabilities:
 
 
Year Ended
 
 December 28, 2014
 
December 29, 2013
Balance, beginning of period
$
1,439

 
$
2,432

Provisions for restaurant closures

 

Additional lease charges, net of (recoveries)
5

 
(197
)
Payments, net
(321
)
 
(937
)
Other adjustments
128

 
141

Balance, end of period
$
1,251

 
$
1,439

Leases (Tables)
Minimum rent commitments due under capital and non-cancelable operating leases at December 28, 2014 were as follows:
 
Capital
 
Operating
2015
$
224

 
$
34,954

2016
220

 
34,873

2017
220

 
34,048

2018
220

 
33,086

2019
220

 
32,275

Thereafter
1,743

 
252,483

Total minimum lease payments (1)
2,847

 
$
421,719

Less amount representing interest
(1,522
)
 
 
Total obligations under capital leases
1,325

 
 
Less current portion
(61
)
 
 
Long-term debt under capital leases
$
1,264

 
 
(1) Minimum operating lease payments have not been reduced by minimum sublease rentals of $5.6 million due in the future under noncancelable subleases.
Total rent expense on operating leases, including contingent rentals, was as follows:
 
Year Ended
 
December 28, 2014
 
December 29, 2013
 
December 30, 2012
Minimum rent on real property, excluding rent included in pre-opening costs
$
29,309

 
$
26,571

 
$