bbq-20220703

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended July 3, 2022

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-39053

BBQ HOLDINGS, INC.

(Exact Name of Registrant as Specified in its Charter)


Minnesota						83-4222776
State or Other Jurisdiction of Incorporation or Organization						I.R.S. Employer Identification No.

12701 Whitewater Drive, Suite 100 Minnetonka, MN						55343
Address of Principal Executive Offices						Zip Code

Registrant’s Telephone Number, Including Area Code (952) 294-1300

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	BBQ	The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☐

Accelerated Filer ☒

Non-accelerated Filer ☐

Smaller Reporting Company ☒

Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x

As of August 8, 2022, 10,760,055 shares of the registrant’s Common Stock were outstanding.

BBQ HOLDINGS, INC.

TABLE OF CONTENTS


		Page
PART I	FINANCIAL INFORMATION

Item 1	Condensed Consolidated Financial Statements (unaudited)

	Condensed Consolidated Balance Sheets as of July 3, 2022 and January 2, 2022	3

	Condensed Consolidated Statements of Operations for the Three and Six Months Ended July 3, 2022 and July 4, 2021	4

	Condensed Consolidated Statements of Changes in Shareholders’ Equity for the Three and Six Months Ended July 3, 202 2 and July 4, 2021	5

	Condensed Consolidated Statements of Cash Flows for the Six Months Ended July 3, 2022 and July 4, 2021	6

	Notes to Condensed Consolidated Financial Statements	7

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19

Item 3	Quantitative and Qualitative Disclosures About Market Risk	28

Item 4	Controls and Procedures	28

PART II	OTHER INFORMATION

Item 1	Legal Proceedings	28

Item 1A	Risk Factors	28

Item 6	EXHIBITS	29

	SIGNATURES	31

	CERTIFICATIONS

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (unaudited)

BBQ HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

(Unaudited)


ASSETS
Current assets:	July 3, 2022		January 2, 2022
Cash and cash equivalents	$	20,624	$	40,309
Restricted cash	679		1,152
Accounts receivable, net of allowance for doubtful accounts of $336,000 and $270,000, respectively	3,816		5,476
Inventories	4,322		3,316
Prepaid expenses and other current assets	3,939		3,919
Total current assets	33,380		54,172

Property, equipment and leasehold improvements, net	47,621		39,943

Other assets:
Operating lease right-of-use assets	97,696		78,843
Goodwill	21,184		3,037
Intangible assets, net	30,383		23,444
Deferred tax asset, net	2,881		3,692
Other assets	1,460		1,292
Total assets	$	234,605	$	204,423

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:
Accounts payable	$	5,681	$	7,661
Current portion of operating lease liabilities	14,344		11,904
Current portion of long-term debt and finance lease liabilities	1,957		1,621
Accrued compensation and benefits	7,418		7,121
Gift card liability	8,087		11,257
Other current liabilities	8,248		8,510
Total current liabilities	45,735		48,074

Long-term liabilities:
Operating lease liabilities, less current portion	93,531		77,729
Finance lease liabilities, less current portion	261		79
Long-term debt, less current portion	22,419		13,197
Other liabilities	1,314		997
Total liabilities	163,260		140,076

Shareholders’ equity:
Common stock, $.01 par value, 100,000 shares authorized, 10,760 and 10,495 shares issued and outstanding at July 3, 2022 and January 2, 2022, respectively	108		105
Additional paid-in capital	22,900		21,782
Retained earnings	48,337		43,391
Total shareholders’ equity	71,345		65,278
Non-controlling interest	—		(931)
Total equity	71,345		64,347
Total liabilities and equity	$	234,605	$	204,423

See accompanying notes to condensed consolidated financial statements.

- 3 -

Table of Contents

BBQ HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(Unaudited)


	Three Months Ended				Six Months Ended
	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Revenue:
Restaurant sales, net	$	74,625	$	41,205	$	133,356	$	74,808
Franchise royalty and fee revenue	3,900		2,946		7,507		5,320
Franchisee national advertising fund contributions	547		421		1,037		749
Licensing and other revenue	866		948		2,222		1,962
Total revenue	79,938		45,520		144,122		82,839

Costs and expenses:
Food and beverage costs	22,820		11,932		41,177		21,989
Labor and benefits costs	24,348		12,429		43,734		22,683
Operating expenses	19,675		11,594		36,914		21,843
Depreciation and amortization expenses	2,238		1,433		4,661		2,985
General and administrative expenses	5,745		4,544		11,036		8,582
National advertising fund expenses	547		421		1,037		749
Asset impairment, estimated lease termination charges and other closing costs, net	16		25		425		37
Pre-opening expenses	86		92		151		120
Loss (gain) on disposal of property, net	(30)		143		14		135
Total costs and expenses	75,445		42,613		139,149		79,123

Income from operations	4,493		2,907		4,973		3,716

Other income (expense):
Interest expense	(167)		(261)		(287)		(315)
Interest income	2		74		10		98
Gain upon debt extinguishment	—		14,109		—		14,109
Gain on bargain purchase	159		—		197		—
Other gain	667

SEC Form 10-Q filed by BBQ Holdings Inc.