0001771515-21-000042 | 10-Q | XBRL Viewer | Grocery Outlet Holding Corp

Print Document View Excel Document

Cover Page - shares	3 Months Ended
Cover Page - shares	Apr. 03, 2021	May 06, 2021
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Apr. 03, 2021
Document Transition Report	false
Entity File Number	001-38950
Entity Registrant Name	Grocery Outlet Holding Corp.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	47-1874201
Entity Address, Address Line One	5650 Hollis Street
Entity Address, City or Town	Emeryville
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	94608
City Area Code	510
Local Phone Number	845-1999
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	GO
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		95,707,461
Entity Central Index Key	0001771515
Current Fiscal Year End Date	--01-01
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q1
Amendment Flag	false

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Apr. 03, 2021	Jan. 02, 2021
Current assets:
Cash and cash equivalents	$ 95,292	$ 105,326
Independent operator receivables and current portion of independent operator notes, net of allowance $1,176 and $985	5,925	5,443
Other accounts receivable, net of allowance $94 and $39	2,645	5,950
Merchandise inventories	243,270	245,157
Prepaid expenses and other current assets	17,519	20,081
Total current assets	364,651	381,957
Independent operator notes, net of allowance $7,827 and $7,124	20,688	27,440
Property and equipment, net	458,313	433,652
Operating lease right-of-use assets	849,654	835,397
Intangible assets, net	47,765	48,226
Goodwill	747,943	747,943
Deferred income tax assets, net	2,500	3,529
Other assets	7,223	7,480
Total assets	2,498,737	2,485,624
Current liabilities:
Trade accounts payable	109,841	114,278
Accrued expenses	36,079	35,699
Accrued compensation	9,399	26,447
Current lease liabilities	35,382	48,675
Income and other taxes payable	6,353	7,547
Total current liabilities	197,054	232,646
Long-term debt, net	449,743	449,233
Long-term lease liabilities	903,854	881,438
Total liabilities	1,550,651	1,563,317
Commitments and Contingencies
Stockholders’ equity:
Voting common stock, par value $0.001 per share, 500,000,000 shares authorized; 95,501,473 and 94,854,336 shares issued and outstanding, respectively	96	95
Additional paid-in capital	793,933	787,047
Retained earnings	154,057	135,165
Total stockholders’ equity	948,086	922,307
Total liabilities and stockholders’ equity	$ 2,498,737	$ 2,485,624

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Apr. 03, 2021	Jan. 02, 2021
Statement of Financial Position [Abstract]
Accounts and financing receivable, allowance for credit loss, current	$ 1,176	$ 985
Allowance for doubtful other receivables, current	94	39
Financing receivable, allowance for credit loss, noncurrent	$ 7,827	$ 7,124
Common stock, par (in usd per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	500,000,000	500,000,000
Common stock, issued (in shares)	95,501,473	94,854,336
Common stock, outstanding (in shares)	95,501,473	94,854,336

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Apr. 03, 2021	Mar. 28, 2020
Statement of Comprehensive Income [Abstract]
Net sales	$ 752,466	$ 760,308
Cost of sales	520,539	523,282
Gross profit	231,927	237,026
Operating expenses:
Selling, general and administrative	188,598	186,931
Depreciation and amortization	15,543	12,945
Share-based compensation	3,939	20,277
Total operating expenses	208,080	220,153
Income from operations	23,847	16,873
Other expenses:
Interest expense, net	3,906	5,834
Debt extinguishment and modification costs	0	198
Total other expenses	3,906	6,032
Income before income taxes	19,941	10,841
Income tax expense (benefit)	1,049	(1,801)
Net Income	18,892	12,642
Comprehensive income	$ 18,892	$ 12,642
Basic earnings per share (in usd per share)	$ 0.20	$ 0.14
Diluted earnings per share (in usd per share)	$ 0.19	$ 0.13
Weighted average shares outstanding:
Basic (in shares)	95,195	89,481
Diluted (in shares)	99,570	94,869

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Cumulative Effect, Period of Adoption, Adjustment	Voting Common	Voting Common Voting Common	Additional Paid-In Capital	Retained Earnings	Retained Earnings Cumulative Effect, Period of Adoption, Adjustment
Beginning balance (in shares) at Dec. 28, 2019				89,005,062
Beginning balance at Dec. 28, 2019	$ 745,384	$ 439		$ 89	$ 717,282	$ 28,013	$ 439
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise and vest of share-based awards (in shares)				902,132
Exercise and vesting of share-based awards	6,033			$ 1	6,032
Share-based compensation expense	20,277				20,277
Dividends paid	(147)				(147)
Net income	12,642					12,642
Comprehensive income	12,642					12,642
Ending balance (in shares) at Mar. 28, 2020				89,907,194
Ending balance at Mar. 28, 2020	784,628			$ 90	743,444	41,094
Beginning balance (in shares) at Jan. 02, 2021			94,854,336
Beginning balance at Jan. 02, 2021	922,307		$ 95		787,047	135,165
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise and vest of share-based awards (in shares)			647,137
Exercise and vesting of share-based awards	2,953		$ 1		2,952
Share-based compensation expense	3,939				3,939
Dividends paid	(5)				(5)
Net income	18,892					18,892
Comprehensive income	18,892					18,892
Ending balance (in shares) at Apr. 03, 2021			95,501,473
Ending balance at Apr. 03, 2021	$ 948,086		$ 96		$ 793,933	$ 154,057

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 45
-Paragraph 1A
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=121641772&loc=SL7669619-108580

Reference 2: http://www.xbrl.org/2003/role/exampleRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 31
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8924-108599

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 11
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=109234566&loc=d3e22694-107794

Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 220
-Section S99
-Paragraph 1
-Subparagraph (SX 210.9-04(22))
-URI http://asc.fasb.org/extlink&oid=120399700&loc=SL114874048-224260

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 11
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=109234566&loc=d3e22694-107794

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (f)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=109222650&loc=SL51721683-107760

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=109234566&loc=d3e22595-107794

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 45
-Paragraph 1B
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=121641772&loc=SL7669625-108580

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8736-108599

Reference 11: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 220
-Section S99
-Paragraph 1
-Subparagraph (SX 210.7-04(18))
-URI http://asc.fasb.org/extlink&oid=120400993&loc=SL114874131-224263

Reference 12: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SX 210.5-03(20))
-URI http://asc.fasb.org/extlink&oid=120395209&loc=SL114868664-224227

Reference 13: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 230
-SubTopic 10
-Section 45
-Paragraph 28
-URI http://asc.fasb.org/extlink&oid=121586364&loc=d3e3602-108585

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 1
-Subparagraph (b)(2)
-URI http://asc.fasb.org/extlink&oid=109234566&loc=d3e22499-107794

Reference 15: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 9
-URI http://asc.fasb.org/extlink&oid=109234566&loc=d3e22663-107794

Reference 16: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
-Paragraph 28
-Subparagraph (f)
-URI http://asc.fasb.org/extlink&oid=75031198&loc=d3e14064-108612

Reference 17: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 30
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8906-108599

Reference 18: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=109234566&loc=d3e22583-107794

Reference 19: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(g)(1)(ii))
-URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

Reference 20: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 260
-SubTopic 10
-Section 45
-Paragraph 60B
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=121326447&loc=SL5780133-109256

Reference 21: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 323
-SubTopic 10
-Section 50
-Paragraph 3
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=114001798&loc=d3e33918-111571

Reference 22: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599

Reference 23: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=109234566&loc=d3e22658-107794

+ Details

- Definition

Total of all stockholders' equity (deficit) items, net of receivables from officers, directors, owners, and affiliates of the entity which are attributable to the parent. The amount of the economic entity's stockholders' equity attributable to the parent excludes the amount of stockholders' equity which is allocable to that ownership interest in subsidiary equity which is not attributable to the parent (noncontrolling interest, minority interest). This excludes temporary equity and is sometimes called permanent equity.

+ References + Details

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Apr. 03, 2021	Mar. 28, 2020
Cash flows from operating activities:
Net income	$ 18,892	$ 12,642
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property and equipment	14,221	11,788
Amortization of intangible and other assets	1,923	1,782
Amortization of debt issuance costs and debt discounts	628	502
Debt extinguishment and modification costs	0	198
Share-based compensation	3,939	20,277
Provision for accounts receivable	955	848
Deferred income taxes	1,029	(1,801)
Other	477	1,055
Changes in operating assets and liabilities:
Independent operator and other accounts receivable	2,482	(3,219)
Merchandise inventories	1,887	31,073
Prepaid expenses and other current assets	2,562	847
Income and other taxes payable	(1,194)	722
Trade accounts payable, accrued compensation and other accrued expenses	(16,458)	(14,412)
Changes in operating lease assets and liabilities, net	(4,930)	5,518
Net cash provided by operating activities	26,413	67,820
Cash flows from investing activities:
Advances to independent operators	(2,659)	(1,485)
Repayments of advances from independent operators	1,188	1,136
Purchases of property and equipment	(36,570)	(28,173)
Proceeds from sales of assets	17	79
Intangible assets and licenses	(1,140)	(1,350)
Net cash used in investing activities	(39,164)	(29,793)
Cash flows from financing activities:
Proceeds from exercise of stock options	2,953	6,033
Proceeds from revolving credit facility loan	0	90,000
Principal payments on term loans	0	(187)
Principal payments on other borrowings	(231)	(191)
Dividends paid	(5)	(147)
Debt issuance costs paid	0	(700)
Net cash provided by financing activities	2,717	94,808
Net increase (decrease) in cash and cash equivalents	(10,034)	132,835
Cash and cash equivalents at beginning of period	105,326	28,101
Cash and cash equivalents at end of period	$ 95,292	$ 160,936

Organization and Summary of Significant Accounting Policies

3 Months Ended

Apr. 03, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Summary of Significant Account Policies

Organization and Summary of Significant Accounting Policies

Description of Business — Based in Emeryville, California, and incorporated in Delaware in 2014, Grocery Outlet Holding Corp. (together with its wholly owned subsidiaries, collectively, "Grocery Outlet," "we," or the "Company") is a high-growth, extreme value retailer of quality, name-brand consumables and fresh products sold through a network of independently operated stores. As of April 3, 2021, we had 389 stores throughout California, Washington, Oregon, Pennsylvania, Idaho and Nevada.

Secondary Public Offerings — On February 3, 2020, certain of our selling stockholders completed a secondary public offering of shares of our common stock. We did not receive any of the proceeds from the sale of these shares by the selling stockholders. We incurred related offering costs of $1.1 million which we recognized in selling, general and administrative expenses ("SG&A") during the first quarter of fiscal 2020. We received $1.4 million in cash (excluding withholding taxes) in connection with the exercise of 191,470 options by certain stockholders participating in this secondary public offering.

On April 27, 2020, certain of our selling stockholders completed another secondary public offering of shares of our common stock. We did not receive any of the proceeds from the sale of these shares by the selling stockholders. We incurred related offering costs of $1.0 million which we recognized in SG&A during the second quarter of fiscal 2020. We received $1.6 million in cash (excluding withholding taxes) in connection with the exercise of 269,000 options by certain stockholders participating in this secondary public offering.

On May 28, 2020, the stockholder affiliated with our former private equity sponsor, Hellman and Friedman LLC, distributed the remainder of its holdings representing 9.6 million shares of our common stock to its equity holders. We did not receive any proceeds or incur any material costs related to this distribution.

Basis of Presentation — The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and the applicable rules and regulations of the U.S. Securities and Exchange Commission (the "SEC") for interim reporting. Certain information and note disclosures included in our annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended January 2, 2021 filed with the SEC on March 2, 2021. The condensed consolidated balance sheet as of January 2, 2021 included herein has been derived from those audited consolidated financial statements.

Our unaudited condensed consolidated financial statements include the accounts of Grocery Outlet Holding Corp. and its wholly owned subsidiaries. All intercompany balances and transactions were eliminated. In the opinion of management, these condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results for the periods presented. The interim results of operations and cash flows are not necessarily indicative of those results and cash flows expected for any future interim or annual period.

Use of Estimates — The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results can differ from these estimates depending upon certain risks and uncertainties. Changes in these estimates are recorded when known.

Segment Reporting — We manage our business as one operating segment. All of our sales were made to customers located in the United States and all property and equipment is located in the United States.

Merchandise Inventories — Merchandise inventories are valued at the lower of cost or net realizable value. Cost is determined by the weighted-average cost method for warehouse inventories and the retail inventory method for store inventories. We provide for estimated inventory losses between physical inventory counts based on historical averages. This provision is adjusted periodically to reflect the actual shrink results of the physical inventory counts.

Leases — We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use assets, current lease liabilities, and long-term lease liabilities on our condensed consolidated balance sheets. Finance leases are included in other assets, current lease liabilities, and long-term lease liabilities on our condensed consolidated balance sheets. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease over the same term. Right-of-use assets and liabilities are recognized at commencement date based on the present value of the lease payments over the lease term,

reduced by landlord incentives. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate, which is estimated to approximate the interest rate on a collateralized basis with similar terms and payments based on the information available at the commencement date, to determine the present value of our lease payments. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. Amortization of finance lease right-of-use assets, interest expense on finance lease liabilities and operating and financing cash flows for finance leases are immaterial.

We have lease agreements with retail facilities for store locations, distribution centers, office space and equipment with lease and non-lease components, which are accounted for separately. Leases with an initial term of 12 months or less are not recorded on the balance sheet; lease expense for these leases is recognized on a straight-line basis over the lease term. The short-term lease expense is reflective of the short-term lease commitments on a go-forward basis. We sublease certain real estate to unrelated third parties under non-cancelable leases and the sublease portfolio consists of operating leases for retail stores.

Fair Value Measurements — Fair value is defined as the exchange price, or exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The fair value of financial instruments is categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is measured using inputs from the three levels of the fair value hierarchy, which are described as follows:

Level 1 — Quoted prices in active markets for identical assets or liabilities

Level 2 — Quoted prices for similar assets and liabilities in active markets or inputs that are observable

Level 3 — Unobservable inputs in which there is little or no market data, which requires us to develop our own assumptions when pricing the financial instruments, such as cash flow modeling assumptions

The assets’ or liabilities’ fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The fair value framework requires that we maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

There were no assets or liabilities measured at fair value on a recurring basis as of April 3, 2021 or January 2, 2021. Generally, assets are recorded at fair value on a nonrecurring basis as a result of impairment charges. There were no transfers of assets or liabilities between levels within the fair value hierarchy as of April 3, 2021 or January 2, 2021.

Our financial assets and liabilities are carried at cost, which generally approximates their fair value, as described below:

Cash and cash equivalents, independent operator ("IO") receivables, other accounts receivable and accounts payable — The carrying value of such financial instruments approximates their fair value due to factors such as their short-term nature or their variable interest rates.

IO notes receivable (net) — The carrying value of such financial instruments approximates their fair value due to the effect of the related allowance for expected credit losses.

Notes payable and term loans — The carrying value of such financial instruments approximates their fair value since the stated interest rates approximates market rates for loans with similar terms for borrowers with similar credit profiles. However, in accordance with Accounting Standards Codification (“ASC”) Topic 825, Financial Instruments, the fair values of our term loans as of April 3, 2021 and January 2, 2021 are disclosed in the below table.

The following table sets forth by level within the fair value hierarchy the carrying amounts and estimated fair values of our significant financial liabilities that are not recorded at fair value on the condensed consolidated balance sheets (amounts in thousands):


	April 3, 2021				January 2, 2021
	Carrying Amount (1)		Estimated Fair Value (2)		Carrying Amount (1)		Estimated Fair Value (2)
Financial Liabilities:
Term loans (Level 2)	$	458,822	$	458,850	$	458,757	$	460,000

_______________________

(1)The carrying amounts as of both April 3, 2021 and January 2, 2021 are net of unamortized debt discounts of $1.2 million.

(2)The estimated fair value of our term loans was determined based on the average quoted bid-ask prices for the term loans in an over-the-counter market on the last trading day of the periods presented.

Revenue Recognition

Net Sales — We recognize revenue from the sale of products at the point of sale, net of any taxes or deposits collected and remitted to governmental authorities. Our performance obligations are satisfied upon the transfer of goods to the customer, at the point of sale, and payment from customers is also due at the time of sale. Discounts provided to customers by us are recognized at the time of sale as a reduction in sales as the products are sold. Discounts provided by IOs are not recognized as a reduction in sales as these are provided solely by the IO who bears the incremental costs arising from the discount. We do not accept manufacturer coupons.

We do not have any material contract assets or receivables from contracts with customers, any revenue recognized in the current year from performance obligations satisfied in previous periods, any performance obligations, or any material costs to obtain or fulfill a contract as of April 3, 2021 and January 2, 2021.

Gift Cards — We record a deferred revenue liability when a Grocery Outlet gift card is sold. Revenue related to gift cards is recognized as the gift cards are redeemed, which is when we have satisfied our performance obligation. While gift cards are generally redeemed within 12 months, some are never fully redeemed. We reduce the liability and recognize revenue for the unused portion of the gift cards (“breakage”) under the proportional method, where recognition of breakage income is based upon the historical run-off rate of unredeemed gift cards. Our gift card deferred revenue liability was $2.4 million and $3.2 million as of April 3, 2021 and January 2, 2021, respectively. Breakage amounts were immaterial for the 13 weeks ended April 3, 2021 and March 28, 2020.

Disaggregated Revenues — The following table presents sales revenue by type of product for the periods indicated (amounts in thousands):


	13 Weeks Ended
	April 3, 2021		March 28, 2020
Perishable (1)	$	261,418	$	253,448
Non-perishable (2)	491,048		506,860
Total sales	$	752,466	$	760,308

_______________________

(1) Perishable departments include dairy and deli; produce and floral; and fresh meat and seafood.

(2) Non-perishable departments include grocery; general merchandise; health and beauty care; frozen foods; and beer and wine.

Variable Interest Entities — In accordance with the variable interest entities sub-section of ASC Topic 810, Consolidation, we assess at each reporting period whether we, or any consolidated entity, are considered the primary beneficiary of a variable interest entity (“VIE”) and therefore required to consolidate the financial results of the VIE in our consolidated financial statements. Determining whether to consolidate a VIE may require judgment in assessing (i) whether an entity is a VIE, and (ii) if a reporting entity is a VIE’s primary beneficiary. A reporting entity is determined to be a VIE’s primary beneficiary if it has the power to direct the activities that most significantly impact a VIE’s economic performance and the obligation to absorb losses or rights to receive benefits that could potentially be significant to a VIE.

We had 385, 375 and 350 stores operated by IOs as of April 3, 2021, January 2, 2021 and March 28, 2020, respectively. We have agreements in place with each IO. The IO orders merchandise exclusively from us which is provided to the IO on consignment. Under the Independent Operator Agreement (the "Operator Agreement"), the IO may select a majority of merchandise that we consign to the IO, which the IO chooses from our merchandise order guide according to the IO's knowledge and experience with local customer purchasing trends, preferences, historical sales and similar factors. The Operator Agreement gives the IO discretion to adjust our initial prices if the overall effect of all price changes at any time comports with the reputation of our Grocery Outlet retail stores for selling quality, name-brand consumables and fresh products and other merchandise at extreme discounts. IOs are required to furnish initial working capital and to acquire certain store and safety assets. The IO is also required to hire, train and employ a properly trained workforce sufficient in number to enable the IO to fulfill its obligations under the Operator Agreement. Additionally, the IO is responsible for expenses required for business operations, including all labor costs, utilities, credit card processing fees, supplies, taxes, fines, levies and other expenses. Either party may terminate the Operator Agreement without cause upon 75 days’ notice.

As consignor of all merchandise to each IO, the aggregate net sales proceeds from merchandise sales belongs to us. Sales related to IO stores were $739.6 million and $745.5 million for the 13 weeks ended April 3, 2021 and March 28, 2020, respectively. We, in turn, pay IOs a commission based on a share of the gross profit of the store. Inventories and related sales proceeds are our property, and we are responsible for store rent and related occupancy costs. IO commissions were expensed and included in SG&A. IO commissions were $112.7 million and $114.4 million for the 13 weeks ended April 3, 2021 and March 28, 2020, respectively. IO commissions of $6.9 million and $6.0 million were included in accrued expenses as of April 3, 2021 and January 2, 2021, respectively.

IOs may fund their initial store investment from existing capital, a third-party loan or most commonly through a loan from us, as further discussed in Note 2. As collateral for IO obligations and performance, the Operator Agreements grant us the security interests in the assets owned by the IOs related to the respective store. Since the total investment at risk associated with each IO is not sufficient to permit each IO to finance its activities without additional subordinated financial support, the IOs are VIEs which we have variable interests in. To determine if we are the primary beneficiary of these VIEs, we evaluate whether we have (i) the power to direct the activities that most significantly impact the IO’s economic performance and (ii) the obligation to absorb losses or the right to receive benefits of the IO that could potentially be significant to the IO. Our evaluation includes identification of significant activities and an assessment of its ability to direct those activities.

Activities that most significantly impact the IO's economic performance relate to sales and labor. Sales activities that significantly impact the IO's economic performance include determining what merchandise the IO will order and sell and the price of such merchandise, both of which the IO controls. The IO is also responsible for all of their own labor. Labor activities that significantly impact the IO’s economic performance include hiring, training, supervising, directing, compensating (including wages, salaries and employee benefits) and terminating all of the employees of the IO, activities which the IO controls. Accordingly, the IO has the power to direct the activities that most significantly impact the IO's economic performance. Furthermore, the mutual termination rights associated with the Operator Agreements illustrate the lack of ultimate control over the IO.

Our maximum exposure to the IOs is generally limited to the gross operator notes and receivables due from these entities, which was $35.6 million and $41.0 million as of April 3, 2021 and January 2, 2021, respectively. See Note 2 for additional information.

Recently Adopted Accounting Standards

ASU No. 2019-12 — In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12 simplifies accounting guidance for certain tax matters including franchise taxes, certain transactions that result in a step-up in tax basis of goodwill, and enacted changes in tax laws in interim periods. In addition, it eliminates a company’s need to evaluate certain exceptions relating to the incremental approach for intra-period tax allocation, accounting for basis differences when there are ownership changes in foreign investments, and interim period income tax accounting for year-to-date losses that exceed anticipated losses. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. We adopted ASU 2019-12 beginning in the first quarter of fiscal 2021. The adoption of ASU 2019-12 did not have a material impact on our condensed consolidated financial statements.

Recently Issued Accounting Pronouncements

Independent Operator Notes and Receivables

3 Months Ended

Apr. 03, 2021

Receivables [Abstract]

Independent Operator Notes and Receivables

The amounts included in IO notes and accounts receivable consist primarily of funds we loaned to IOs, net of estimated uncollectible amounts. IO notes are payable on demand and typically bear interest at rates between 3.00% and 9.95%. Accrued interest receivable on IO notes is included within the “independent operator receivables and current portion of independent operator notes, net of allowance” line item on the condensed consolidated balance sheets and was $0.3 million and $0.4 million as of April 3, 2021 and January 2, 2021, respectively. There were no IO notes that were past due or on a non-accrual status due to delinquency as of April 3, 2021 or January 2, 2021. Notes and receivables of our IOs participating in our TCAP, as defined below, are not considered to be past due or on a non-accrual status due to delinquency and are excluded from such measures.

IO notes and receivables are financial assets which are measured and carried at amortized cost. An allowance for expected credit losses is deducted from (for expected losses) or added to (for expected recoveries) the amortized cost basis of these assets to arrive at the net carrying amount expected to be collected for such assets.

The allowance is estimated using an expected loss framework, which includes information about past events, current conditions, and reasonable and supportable forecasts that impact the collectibility of the reported amounts of the assets over their lifetime. The allowance is evaluated on a collective basis for assets with shared risk characteristics and credit quality indicators. The primary shared risk characteristic and credit quality indicator pools that we use as a basis for collective evaluation include:

•TCAP — Includes the notes and receivables of IOs with stores that have been open for more than 18 months that are participating in our Temporary Commission Adjustment Program (“TCAP”) as of the end of each reporting period. TCAP allows us to provide a greater commission to participating IOs who require assistance in meeting their working capital needs for various reasons, such as new or increased competition or differences in IO skills and experience.

•Non-TCAP — Includes the notes and receivables of IOs with stores that have been open for more than 18 months that are not participating in TCAP as of the end of each reporting period.

•New store — Includes the notes and receivables of IOs with stores that have been open for less than 18 months as of the end of each reporting period.

Assets without such shared risk characteristics or credit quality indicators, such as assets with unique circumstances or with delinquencies and historical losses in excess of their TCAP, non-TCAP or new store peers are evaluated on an individual basis.

Amounts due from IOs and the related allowances as of April 3, 2021 and January 2, 2021 consisted of the following (amounts in thousands):


			Allowance						Current Portion		Long-term Portion
	Gross		Current Portion		Long-term Portion		Net
April 3, 2021
Independent operator notes	$	30,625	$	(524)	$	(7,827)	$	22,274	$	1,586	$	20,688
Independent operator receivables	4,991		(652)		—		4,339		4,339		—
Total	$	35,616	$	(1,176)	$	(7,827)	$	26,613	$	5,925	$	20,688


			Allowance						Current Portion		Long-term Portion
	Gross		Current Portion		Long-term Portion		Net
January 2, 2021
Independent operator notes	$	37,238	$	(514)	$	(7,124)	$	29,600	$	2,160	$	27,440
Independent operator receivables	3,754		(471)		—		3,283		3,283		—
Total	$	40,992	$	(985)	$	(7,124)	$	32,883	$	5,443	$	27,440

A summary of activity in the IO notes and receivable allowance was as follows (amounts in thousands):


	13 Weeks Ended
	April 3, 2021		March 28, 2020
Beginning balance	$	8,109	$	10,371
Provision for independent operator notes and receivables	900		848
Cumulative effect of accounting change	—		(439)
Write-off of provision for independent operator notes and receivables	(6)		(188)
Ending Balance	$	9,003	$	10,592

The following table presents the amortized cost basis of IO notes by year of origination and credit quality indicator as of April 3, 2021 (amounts in thousands):


Credit Quality Indicator	2021 (YTD)		2020		2019		2018		2017		Prior		Total
TCAP	$	247	$	1,321	$	2,053	$	1,381	$	380	$	—	$	5,382
Non-TCAP	1,148		2,785		5,185		3,675		1,728		682		15,203
New store	1,690		7,063		1,287		—		—		—		10,040
Total	$	3,085	$	11,169	$	8,525	$	5,056	$	2,108	$	682	$	30,625

Long-Term Debt

3 Months Ended

Apr. 03, 2021

Debt Disclosure [Abstract]

Long-Term Debt

Long-term Debt

Long-term debt consisted of the following (amounts in thousands):


	April 3, 2021		January 2, 2021
First Lien Credit Agreement:
Term loan	$	460,000	$	460,000


Long-term debt, gross	460,000		460,000
Less: Unamortized debt discounts and debt issuance costs	(10,257)		(10,767)


Long-term debt, net	$	449,743	$	449,233

First Lien Credit Agreement

On October 22, 2018, GOBP Holdings, Inc ("GOBP Holdings"), our wholly owned subsidiary, together with another of our wholly owned subsidiaries, entered into a first lien credit agreement (the “First Lien Credit Agreement”) with a syndicate of lenders for a $725.0 million senior term loan and a revolving credit facility for an amount up to $100.0 million, with a sub-commitment for a $35.0 million letter of credit and a sub-commitment for $20.0 million of swingline loans. Borrowings under the First Lien Credit Agreement are secured by substantially all the assets of the borrower subsidiary and its guarantors. The term loan proceeds were primarily used for retiring our prior first lien credit agreement and paying cash dividends related to our 2018 recapitalization. As of April 3, 2021, we had standby letters of credit outstanding totaling $3.5 million under the First Lien Credit Agreement.

Term Loans

The First Lien Credit Agreement permits voluntary prepayment on borrowings without premium or penalty. In connection with the closing of our IPO, we prepaid $248.0 million of principal and $3.8 million of interest on the outstanding term loan under the First Lien Credit Agreement on June 24, 2019 and elected to apply the prepayment against the remaining principal installments in the direct order of maturity. No further principal payment on the term loan will be due until the maturity date of this term loan. The terms of the First Lien Credit Agreement include mandatory prepayment requirements on the term loan if certain conditions are met (as described in the First Lien Credit Agreement).

First Incremental Agreement — On July 23, 2019, GOBP Holdings together with another of our wholly owned subsidiaries entered into an incremental agreement (the "First Incremental Agreement") to amend the First Lien Credit Agreement. The First Incremental Agreement refinanced the term loan outstanding under the First Lien Credit Agreement with a replacement $475.2 million senior secured term loan (the "First Replacement Term Loan") with an applicable margin of 3.50% or 3.25% for Eurodollar loans and 2.50% or 2.25% for base rate loans, in each case depending on the public corporate family rating of GOBP Holdings. The First Replacement Term Loan was to mature on October 22, 2025,

which was the same maturity date as the prior term loan under the First Lien Credit Agreement. On October 23, 2019, we prepaid $15.0 million of principal on the First Replacement Term Loan.

Second Incremental Agreement — On January 24, 2020, GOBP Holdings together with another of our wholly owned subsidiaries, entered into a second incremental agreement (the "Second Incremental Agreement") which amended the First Incremental Agreement. The Second Incremental Agreement refinanced the First Replacement Term loan under the First Incremental Agreement with a replacement $460.0 million senior secured term loan (the "Second Replacement Term Loan") with an applicable margin of 2.75% for Eurodollar loans and 1.75% for base rate loans, in each case depending on the public corporate family rating of GOBP Holdings, and made certain other corresponding technical changes and updates to the First Incremental Agreement. The interest rate on the Second Replacement Term Loan was 2.86% as of April 3, 2021. The Second Replacement Term Loan matures on October 22, 2025, which is the same maturity date as prior term loans under the First Lien Credit Agreement and First Incremental Agreement. We wrote off debt issuance costs of $0.1 million and incurred debt modification costs of $0.1 million during the first quarter of fiscal 2020 in connection with this refinance.

Other than as described above, the Second Replacement Term Loan has the same terms as provided under the original First Lien Credit Agreement and the First Incremental Agreement. Additionally, the parties to the Second Incremental Agreement continue to have the same obligations set forth in the original First Lien Credit Agreement and the First Incremental Agreement (collectively, the "First Lien Credit Agreement").

Revolving Credit Facility

We are required to pay a quarterly commitment fee ranging from 0.25% to 0.50% on the daily unused amount of the commitment under the revolving credit facility based upon the leverage ratio defined in the agreement and certain criteria specified in the agreement. We are also required to pay fronting fees and other customary fees for letters of credit issued under the revolving credit facility. The interest rate for the revolving credit facility is determined based on a formula using certain market rates. No amounts were outstanding under the revolving credit facility as of April 3, 2021 and January 2, 2021.

On March 19, 2020, we borrowed $90.0 million under the revolving credit facility of our First Lien Credit Agreement (the "Revolving Credit Facility Loan"), the proceeds of which were to be used as reserve funding for working capital needs as a precautionary measure in light of the economic uncertainty surrounding the COVID-19 pandemic. On May 26, 2020, we repaid the Revolving Credit Facility Loan in full. As of April 3, 2021, we had $96.5 million of borrowing capacity available under the revolving credit facility.

Debt Covenants

The First Lien Credit Agreement contains certain customary representations and warranties, subject to limitations and exceptions, and affirmative and customary covenants. The First Lien Credit Agreement has the ability to restrict us from entering into certain types of transactions and making certain types of payments including dividends and stock repurchase and other similar distributions, with certain exceptions. Additionally, the revolving credit facility under our First Lien Credit Agreement is subject to a first lien secured leverage ratio (as defined in the First Lien Credit Agreement) of 7.00 to 1.00.

As of April 3, 2021, we were in compliance with all applicable financial covenant requirements for our First Lien Credit Agreement.

Schedule of Principal Maturities

Principal maturities of debt as of April 3, 2021 are as follows (amounts in thousands):


Remainder of fiscal 2021	$	—
Fiscal 2022	—
Fiscal 2023	—
Fiscal 2024	—
Fiscal 2025	460,000
Thereafter	—
Total	$	460,000

Interest Expense

Interest expense, net, consisted of the following (amounts in thousands):


	13 Weeks Ended
	April 3, 2021		March 28, 2020
Interest on loans	$	3,564	$	5,790
Amortization of debt issuance costs	563		556
Interest on finance leases	93		111
Other	3		6
Interest income	(317)		(629)
Interest expense, net	$	3,906	$	5,834

Debt Extinguishment and Modification Costs

Debt extinguishment and modification costs consisted of the following (amounts in thousands):


	13 Weeks Ended
	April 3, 2021		March 28, 2020
Write off of debt issuance costs	$	—	$	74
Debt modification costs	—		124

Debt extinguishment and modification costs	$	—	$	198

Share-based Awards

3 Months Ended

Apr. 03, 2021

Share-based Payment Arrangement [Abstract]

Share-based Awards

For a discussion of our share-based incentive plans, refer to NOTE 7 —Share-based Awards of our Annual Report on Form 10-K for the fiscal year ended January 2, 2021 filed with the SEC on March 2, 2021.

Grant Activity

The following table summarizes stock option activity under all equity incentive plans during the 13 weeks ended April 3, 2021:


	Time-Based Stock Options			Performance-Based Stock Options
	Number of Options	Weighted-Average Exercise Price		Number of Options	Weighted-Average Exercise Price
Options outstanding as of January 2, 2021	3,864,772	$	12.42	2,325,580	$	4.54

Exercised	(207,946)	7.35		(321,009)	4.23
Forfeitures	(11,538)	17.94		—	—
Options outstanding as of April 3, 2021	3,645,288	$	12.69	2,004,571	$	4.59
Options vested and exercisable as of April 3, 2021	2,144,243	$	7.51	2,004,571	$	4.59

The following table summarizes restricted stock unit ("RSU") activity under all equity incentive plans during the 13 weeks ended April 3, 2021:


	Number of Shares	Weighted-Average Grant Date Fair Value
Unvested balance as of January 2, 2021	341,842	$	35.16
Granted	319,638	35.45
Vested	(96,138)	36.91
Forfeitures	(5,838)	33.57
Unvested balance as of April 3, 2021	559,504	$	35.04

The following table summarizes performance-based restricted stock unit ("PSU") activity under the 2019 Plan during the 13 weeks ended April 3, 2021:


	Number of Shares	Weighted-Average Grant Date Fair Value
Unvested balance as of January 2, 2021	407,462	$	36.90
Granted (1)	319,606	35.45


Forfeitures	(1,396)	36.88
Unvested balance as of April 3, 2021 (2)	725,672	$	36.26

_______________________

(1)Represents initial grant of PSUs based on performance target level achievement of 100%.

(2)An additional 454,961 PSUs could potentially be included if the maximum performance level is reached.

Share-Based Compensation Expense

We recognize compensation expense for stock options, RSUs and PSUs by amortizing the grant date fair value on a straight-line basis over the expected vesting period to the extent we determine the vesting of the grant is probable. We recognize share-based award forfeitures in the period such forfeitures occur.

Share-based compensation expense consisted of the following (amounts in thousands):


	13 Weeks Ended
	April 3, 2021		March 28, 2020
Time-based stock options	$	722	$	759
Performance-based stock options	—		18,498
RSUs	1,496		873
PSUs	1,716		—
Dividends (1)	5		147
Share-based compensation expense	$	3,939	$	20,277

_______________________

(1)Represents cash dividends paid on vested share-based awards as a result of dividends declared in connection with recapitalizations that occurred in fiscal 2018 and 2016.

Income Taxes

3 Months Ended

Apr. 03, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Our income tax expense (benefit) and effective income tax rate were as follows (amounts in thousands, except percentages):


	13 Weeks Ended
	April 3, 2021			March 28, 2020
Income tax expense (benefit)	$	1,049		$	(1,801)
Effective income tax rate	5.3		%	(16.6)		%

The change from a net income tax benefit of $1.8 million for the 13 weeks ended March 28, 2020 to a net income tax expense of $1.0 million for the 13 weeks ended April 3, 2021 was primarily driven by higher pretax income during the 13 weeks ended April 3, 2021 as well as a reduction in excess tax benefits, related to the exercise of stock options and vesting of RSUs as compared to the same period in fiscal 2020.

The Company's tax provision for interim periods is determined using an estimated annual effective tax rate, adjusted for discrete events arising in each respective quarter. During each interim period, the Company updates the estimated annual effective tax rate. Our effective income tax rate for the 13 weeks ended April 3, 2021 was lower than the U.S. statutory income tax rate of 21% primarily due to excess tax benefits related to the exercise of stock options and vesting of RSUs. The increase in our effective income tax rate for the 13 weeks ended April 3, 2021 compared to the corresponding period in fiscal 2020 was primarily due to the above mentioned higher pretax income and the reduction in discrete items related to the exercise of stock options and vesting of employee RSUs.

Our policy is to recognize interest and penalties associated with uncertain tax benefits as part of the income tax provision and include accrued interest and penalties with the related income tax liability on our condensed consolidated balance sheets. To date, we have not recognized any interest and penalties in our condensed consolidated statements of operations and comprehensive income, nor have we accrued for or made payments for interest and penalties. We had no unrecognized tax benefits as of April 3, 2021 and January 2, 2021, respectively, and do not anticipate any changes to our uncertain tax positions within the next 12 months.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References + Details

Related Party Transactions	3 Months Ended
Related Party Transactions	Apr. 03, 2021
Related Party Transactions [Abstract]
Related Party Transactions	Related Party Transactions Related Party Leases We leased property from entities affiliated with certain of our non-controlling stockholders for 15 store locations and one warehouse location as of both April 3, 2021 and March 28, 2020. Affiliated entities received aggregate lease payments from us of $1.5 million for each of the 13 weeks ended April 3, 2021 and March 28, 2020, respectively. We had total prepaid rent for these properties of $0.5 million as of April 3, 2021 and zero as of January 2, 2021. Independent Operator Notes and Receivables We offer interest-bearing notes to IOs and the gross operating notes and receivables due from these IOs was $35.6 million and $41.0 million as of April 3, 2021 and January 2, 2021, respectively. See Note 2 for additional information.

Commitments and Contingencies	3 Months Ended
Commitments and Contingencies	Apr. 03, 2021
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies We are involved from time to time in claims, proceedings and litigation arising in the normal course of business. We do not believe the impact of such litigation will have a material adverse effect on our condensed consolidated financial statements taken as a whole.

Earnings Per Share

3 Months Ended

Apr. 03, 2021

Earnings Per Share [Abstract]

Earnings Per Share

The following table sets forth the calculation of basic and diluted earnings per share (amounts in thousands, except per share data):


	13 Weeks Ended
	April 3, 2021		March 28, 2020
Numerator
Net income and comprehensive income	$	18,892	$	12,642
Denominator
Weighted-average shares outstanding — basic	95,195		89,481
Effect of dilutive stock options	4,252		5,323
Effect of dilutive RSUs	123		65
Weighted-average shares outstanding — diluted (1) (2)	99,570		94,869
Earnings per share :
Basic	$	0.20	$	0.14
Diluted	$	0.19	$	0.13

_______________________

(1)On April 27, 2020 in conjunction with a secondary offering, certain performance criteria were achieved resulting in the vesting of 1.7 million unvested performance-based stock options, and accordingly, these vested performance-based stock options were included in the diluted weighted-average shares outstanding beginning in the second quarter of fiscal 2020.

(2)We are required to include in diluted weighted-average shares outstanding contingently issuable shares that would be issued assuming the end of our reporting period was the end of the relevant PSU award contingency period. No PSUs were included in diluted weighted-average shares outstanding for the 13 weeks ended April 3, 2021.

The following weighted-average common stock equivalents were excluded from the calculation of diluted earnings per share because their effect would have been anti-dilutive (amounts in thousands):

13 Weeks Ended

April 3,
2021

March 28,
2020

RSUs

Organization and Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Apr. 03, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Presentation	The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and the applicable rules and regulations of the U.S. Securities and Exchange Commission (the "SEC") for interim reporting. Certain information and note disclosures included in our annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended January 2, 2021 filed with the SEC on March 2, 2021. The condensed consolidated balance sheet as of January 2, 2021 included herein has been derived from those audited consolidated financial statements.
Consolidation	Our unaudited condensed consolidated financial statements include the accounts of Grocery Outlet Holding Corp. and its wholly owned subsidiaries. All intercompany balances and transactions were eliminated. In the opinion of management, these condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results for the periods presented.
Use of Estimates	The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results can differ from these estimates depending upon certain risks and uncertainties. Changes in these estimates are recorded when known.
Segment Reporting	We manage our business as one operating segment. All of our sales were made to customers located in the United States and all property and equipment is located in the United States.
Merchandise Inventories	Merchandise inventories are valued at the lower of cost or net realizable value. Cost is determined by the weighted-average cost method for warehouse inventories and the retail inventory method for store inventories. We provide for estimated inventory losses between physical inventory counts based on historical averages. This provision is adjusted periodically to reflect the actual shrink results of the physical inventory counts.
Leases	We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use assets, current lease liabilities, and long-term lease liabilities on our condensed consolidated balance sheets. Finance leases are included in other assets, current lease liabilities, and long-term lease liabilities on our condensed consolidated balance sheets. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease over the same term. Right-of-use assets and liabilities are recognized at commencement date based on the present value of the lease payments over the lease term, reduced by landlord incentives. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate, which is estimated to approximate the interest rate on a collateralized basis with similar terms and payments based on the information available at the commencement date, to determine the present value of our lease payments. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. Amortization of finance lease right-of-use assets, interest expense on finance lease liabilities and operating and financing cash flows for finance leases are immaterial. We have lease agreements with retail facilities for store locations, distribution centers, office space and equipment with lease and non-lease components, which are accounted for separately. Leases with an initial term of 12 months or less are not recorded on the balance sheet; lease expense for these leases is recognized on a straight-line basis over the lease term. The short-term lease expense is reflective of the short-term lease commitments on a go-forward basis. We sublease certain real estate to unrelated third parties under non-cancelable leases and the sublease portfolio consists of operating leases for retail stores.
Fair Value Measurements	Fair value is defined as the exchange price, or exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The fair value of financial instruments is categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is measured using inputs from the three levels of the fair value hierarchy, which are described as follows: Level 1 — Quoted prices in active markets for identical assets or liabilities Level 2 — Quoted prices for similar assets and liabilities in active markets or inputs that are observable Level 3 — Unobservable inputs in which there is little or no market data, which requires us to develop our own assumptions when pricing the financial instruments, such as cash flow modeling assumptions The assets’ or liabilities’ fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The fair value framework requires that we maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There were no assets or liabilities measured at fair value on a recurring basis as of April 3, 2021 or January 2, 2021. Generally, assets are recorded at fair value on a nonrecurring basis as a result of impairment charges. There were no transfers of assets or liabilities between levels within the fair value hierarchy as of April 3, 2021 or January 2, 2021. Our financial assets and liabilities are carried at cost, which generally approximates their fair value, as described below: Cash and cash equivalents, independent operator ("IO") receivables, other accounts receivable and accounts payable — The carrying value of such financial instruments approximates their fair value due to factors such as their short-term nature or their variable interest rates. IO notes receivable (net) — The carrying value of such financial instruments approximates their fair value due to the effect of the related allowance for expected credit losses. Notes payable and term loans — The carrying value of such financial instruments approximates their fair value since the stated interest rates approximates market rates for loans with similar terms for borrowers with similar credit profiles. However, in accordance with Accounting Standards Codification (“ASC”) Topic 825, Financial Instruments, the fair values of our term loans as of April 3, 2021 and January 2, 2021 are disclosed in the below table.
Revenue Recognition	Net Sales — We recognize revenue from the sale of products at the point of sale, net of any taxes or deposits collected and remitted to governmental authorities. Our performance obligations are satisfied upon the transfer of goods to the customer, at the point of sale, and payment from customers is also due at the time of sale. Discounts provided to customers by us are recognized at the time of sale as a reduction in sales as the products are sold. Discounts provided by IOs are not recognized as a reduction in sales as these are provided solely by the IO who bears the incremental costs arising from the discount. We do not accept manufacturer coupons. We do not have any material contract assets or receivables from contracts with customers, any revenue recognized in the current year from performance obligations satisfied in previous periods, any performance obligations, or any material costs to obtain or fulfill a contract as of April 3, 2021 and January 2, 2021. Gift Cards — We record a deferred revenue liability when a Grocery Outlet gift card is sold. Revenue related to gift cards is recognized as the gift cards are redeemed, which is when we have satisfied our performance obligation. While gift cards are generally redeemed within 12 months, some are never fully redeemed. We reduce the liability and recognize revenue for the unused portion of the gift cards (“breakage”) under the proportional method, where recognition of breakage income is based upon the historical run-off rate of unredeemed gift cards.
Variable interest Entities	In accordance with the variable interest entities sub-section of ASC Topic 810, Consolidation, we assess at each reporting period whether we, or any consolidated entity, are considered the primary beneficiary of a variable interest entity (“VIE”) and therefore required to consolidate the financial results of the VIE in our consolidated financial statements. Determining whether to consolidate a VIE may require judgment in assessing (i) whether an entity is a VIE, and (ii) if a reporting entity is a VIE’s primary beneficiary. A reporting entity is determined to be a VIE’s primary beneficiary if it has the power to direct the activities that most significantly impact a VIE’s economic performance and the obligation to absorb losses or rights to receive benefits that could potentially be significant to a VIE. We had 385, 375 and 350 stores operated by IOs as of April 3, 2021, January 2, 2021 and March 28, 2020, respectively. We have agreements in place with each IO. The IO orders merchandise exclusively from us which is provided to the IO on consignment. Under the Independent Operator Agreement (the "Operator Agreement"), the IO may select a majority of merchandise that we consign to the IO, which the IO chooses from our merchandise order guide according to the IO's knowledge and experience with local customer purchasing trends, preferences, historical sales and similar factors. The Operator Agreement gives the IO discretion to adjust our initial prices if the overall effect of all price changes at any time comports with the reputation of our Grocery Outlet retail stores for selling quality, name-brand consumables and fresh products and other merchandise at extreme discounts. IOs are required to furnish initial working capital and to acquire certain store and safety assets. The IO is also required to hire, train and employ a properly trained workforce sufficient in number to enable the IO to fulfill its obligations under the Operator Agreement. Additionally, the IO is responsible for expenses required for business operations, including all labor costs, utilities, credit card processing fees, supplies, taxes, fines, levies and other expenses. Either party may terminate the Operator Agreement without cause upon 75 days’ notice. As consignor of all merchandise to each IO, the aggregate net sales proceeds from merchandise sales belongs to us. Sales related to IO stores were $739.6 million and $745.5 million for the 13 weeks ended April 3, 2021 and March 28, 2020, respectively. We, in turn, pay IOs a commission based on a share of the gross profit of the store. Inventories and related sales proceeds are our property, and we are responsible for store rent and related occupancy costs. IO commissions were expensed and included in SG&A. IO commissions were $112.7 million and $114.4 million for the 13 weeks ended April 3, 2021 and March 28, 2020, respectively. IO commissions of $6.9 million and $6.0 million were included in accrued expenses as of April 3, 2021 and January 2, 2021, respectively. IOs may fund their initial store investment from existing capital, a third-party loan or most commonly through a loan from us, as further discussed in Note 2. As collateral for IO obligations and performance, the Operator Agreements grant us the security interests in the assets owned by the IOs related to the respective store. Since the total investment at risk associated with each IO is not sufficient to permit each IO to finance its activities without additional subordinated financial support, the IOs are VIEs which we have variable interests in. To determine if we are the primary beneficiary of these VIEs, we evaluate whether we have (i) the power to direct the activities that most significantly impact the IO’s economic performance and (ii) the obligation to absorb losses or the right to receive benefits of the IO that could potentially be significant to the IO. Our evaluation includes identification of significant activities and an assessment of its ability to direct those activities. Activities that most significantly impact the IO's economic performance relate to sales and labor. Sales activities that significantly impact the IO's economic performance include determining what merchandise the IO will order and sell and the price of such merchandise, both of which the IO controls. The IO is also responsible for all of their own labor. Labor activities that significantly impact the IO’s economic performance include hiring, training, supervising, directing, compensating (including wages, salaries and employee benefits) and terminating all of the employees of the IO, activities which the IO controls. Accordingly, the IO has the power to direct the activities that most significantly impact the IO's economic performance. Furthermore, the mutual termination rights associated with the Operator Agreements illustrate the lack of ultimate control over the IO. Our maximum exposure to the IOs is generally limited to the gross operator notes and receivables due from these entities
Recently Adopted Accounting Standards and Recently Issued Accounting Pronouncements	Recently Adopted Accounting Standards ASU No. 2019-12 — In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12 simplifies accounting guidance for certain tax matters including franchise taxes, certain transactions that result in a step-up in tax basis of goodwill, and enacted changes in tax laws in interim periods. In addition, it eliminates a company’s need to evaluate certain exceptions relating to the incremental approach for intra-period tax allocation, accounting for basis differences when there are ownership changes in foreign investments, and interim period income tax accounting for year-to-date losses that exceed anticipated losses. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. We adopted ASU 2019-12 beginning in the first quarter of fiscal 2021. The adoption of ASU 2019-12 did not have a material impact on our condensed consolidated financial statements. Recently Issued Accounting Pronouncements No recently issued accounting pronouncements are expected to have a material effect on our condensed consolidated financial statements.
Income Tax	Our policy is to recognize interest and penalties associated with uncertain tax benefits as part of the income tax provision and include accrued interest and penalties with the related income tax liability on our condensed consolidated balance sheets. To date, we have not recognized any interest and penalties in our condensed consolidated statements of operations and comprehensive income, nor have we accrued for or made payments for interest and penalties.

Organization and Summary of Significant Accounting Policies (Tables)

3 Months Ended

Apr. 03, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of carrying amount and estimated fair values of financial liabilities


	April 3, 2021				January 2, 2021
	Carrying Amount (1)		Estimated Fair Value (2)		Carrying Amount (1)		Estimated Fair Value (2)
Financial Liabilities:
Term loans (Level 2)	$	458,822	$	458,850	$	458,757	$	460,000

_______________________

(1)The carrying amounts as of both April 3, 2021 and January 2, 2021 are net of unamortized debt discounts of $1.2 million.

Schedule of sales revenue by product

The following table presents sales revenue by type of product for the periods indicated (amounts in thousands):


	13 Weeks Ended
	April 3, 2021		March 28, 2020
Perishable (1)	$	261,418	$	253,448
Non-perishable (2)	491,048		506,860
Total sales	$	752,466	$	760,308

_______________________

(1) Perishable departments include dairy and deli; produce and floral; and fresh meat and seafood.

(2) Non-perishable departments include grocery; general merchandise; health and beauty care; frozen foods; and beer and wine.

Independent Operator Notes and Receivables (Tables)

3 Months Ended

Apr. 03, 2021

Receivables [Abstract]

Schedule of amounts due from independent operators

Amounts due from IOs and the related allowances as of April 3, 2021 and January 2, 2021 consisted of the following (amounts in thousands):


			Allowance						Current Portion		Long-term Portion
	Gross		Current Portion		Long-term Portion		Net
April 3, 2021
Independent operator notes	$	30,625	$	(524)	$	(7,827)	$	22,274	$	1,586	$	20,688
Independent operator receivables	4,991		(652)		—		4,339		4,339		—
Total	$	35,616	$	(1,176)	$	(7,827)	$	26,613	$	5,925	$	20,688


			Allowance						Current Portion		Long-term Portion
	Gross		Current Portion		Long-term Portion		Net
January 2, 2021
Independent operator notes	$	37,238	$	(514)	$	(7,124)	$	29,600	$	2,160	$	27,440
Independent operator receivables	3,754		(471)		—		3,283		3,283		—
Total	$	40,992	$	(985)	$	(7,124)	$	32,883	$	5,443	$	27,440

Schedule of allowance for credit loss activity

A summary of activity in the IO notes and receivable allowance was as follows (amounts in thousands):


	13 Weeks Ended
	April 3, 2021		March 28, 2020
Beginning balance	$	8,109	$	10,371
Provision for independent operator notes and receivables	900		848
Cumulative effect of accounting change	—		(439)
Write-off of provision for independent operator notes and receivables	(6)		(188)
Ending Balance	$	9,003	$	10,592

Schedule of independent operator notes by credit quality indicators and year of origination

The following table presents the amortized cost basis of IO notes by year of origination and credit quality indicator as of April 3, 2021 (amounts in thousands):


Credit Quality Indicator	2021 (YTD)		2020		2019		2018		2017		Prior		Total
TCAP	$	247	$	1,321	$	2,053	$	1,381	$	380	$	—	$	5,382
Non-TCAP	1,148		2,785		5,185		3,675		1,728		682		15,203
New store	1,690		7,063		1,287		—		—		—		10,040
Total	$	3,085	$	11,169	$	8,525	$	5,056	$	2,108	$	682	$	30,625

Long-Term Debt (Tables)

3 Months Ended

Apr. 03, 2021

Debt Disclosure [Abstract]

Schedule of long-term debt

Long-term debt consisted of the following (amounts in thousands):


	April 3, 2021		January 2, 2021
First Lien Credit Agreement:
Term loan	$	460,000	$	460,000


Long-term debt, gross	460,000		460,000
Less: Unamortized debt discounts and debt issuance costs	(10,257)		(10,767)


Long-term debt, net	$	449,743	$	449,233

Principal maturities of debt

Principal maturities of debt as of April 3, 2021 are as follows (amounts in thousands):


Remainder of fiscal 2021	$	—
Fiscal 2022	—
Fiscal 2023	—
Fiscal 2024	—
Fiscal 2025	460,000
Thereafter	—
Total	$	460,000

Schedule of interest expense, net

Interest expense, net, consisted of the following (amounts in thousands):


	13 Weeks Ended
	April 3, 2021		March 28, 2020
Interest on loans	$	3,564	$	5,790
Amortization of debt issuance costs	563		556
Interest on finance leases	93		111
Other	3		6
Interest income	(317)		(629)
Interest expense, net	$	3,906	$	5,834

Debt extinguishment and modification cost

Debt extinguishment and modification costs consisted of the following (amounts in thousands):


	13 Weeks Ended
	April 3, 2021		March 28, 2020
Write off of debt issuance costs	$	—	$	74
Debt modification costs	—		124

Debt extinguishment and modification costs	$	—	$	198

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.22)
-URI http://asc.fasb.org/extlink&oid=120391452&loc=d3e13212-122682

Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 1A
-URI http://asc.fasb.org/extlink&oid=119993939&loc=d3e28541-108399

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21506-112644

Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(e),(f))
-URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=119993939&loc=d3e28551-108399

Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21521-112644

Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21538-112644

Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 470
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=75038535&loc=d3e64711-112823

Reference 9: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 55
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=114775985&loc=d3e28878-108400

Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21475-112644

+ Details

Share-based Awards (Tables)

3 Months Ended

Apr. 03, 2021

Share-based Payment Arrangement [Abstract]

Schedule of stock option activity

The following table summarizes stock option activity under all equity incentive plans during the 13 weeks ended April 3, 2021:


	Time-Based Stock Options			Performance-Based Stock Options
	Number of Options	Weighted-Average Exercise Price		Number of Options	Weighted-Average Exercise Price
Options outstanding as of January 2, 2021	3,864,772	$	12.42	2,325,580	$	4.54

Exercised	(207,946)	7.35		(321,009)	4.23
Forfeitures	(11,538)	17.94		—	—
Options outstanding as of April 3, 2021	3,645,288	$	12.69	2,004,571	$	4.59
Options vested and exercisable as of April 3, 2021	2,144,243	$	7.51	2,004,571	$	4.59

Schedule of RSU activity

The following table summarizes restricted stock unit ("RSU") activity under all equity incentive plans during the 13 weeks ended April 3, 2021:


	Number of Shares	Weighted-Average Grant Date Fair Value
Unvested balance as of January 2, 2021	341,842	$	35.16
Granted	319,638	35.45
Vested	(96,138)	36.91
Forfeitures	(5,838)	33.57
Unvested balance as of April 3, 2021	559,504	$	35.04

Schedule of PSU Activity

The following table summarizes performance-based restricted stock unit ("PSU") activity under the 2019 Plan during the 13 weeks ended April 3, 2021:


	Number of Shares	Weighted-Average Grant Date Fair Value
Unvested balance as of January 2, 2021	407,462	$	36.90
Granted (1)	319,606	35.45


Forfeitures	(1,396)	36.88
Unvested balance as of April 3, 2021 (2)	725,672	$	36.26

_______________________

(1)Represents initial grant of PSUs based on performance target level achievement of 100%.

(2)An additional 454,961 PSUs could potentially be included if the maximum performance level is reached.

Summary of share-based compensation expense

Share-based compensation expense consisted of the following (amounts in thousands):


	13 Weeks Ended
	April 3, 2021		March 28, 2020
Time-based stock options	$	722	$	759
Performance-based stock options	—		18,498
RSUs	1,496		873
PSUs	1,716		—
Dividends (1)	5		147
Share-based compensation expense	$	3,939	$	20,277

_______________________

(1)Represents cash dividends paid on vested share-based awards as a result of dividends declared in connection with recapitalizations that occurred in fiscal 2018 and 2016

Income Taxes (Tables)

3 Months Ended

Apr. 03, 2021

Income Tax Disclosure [Abstract]

Schedule of income tax expense (benefit) and effective tax rate

Our income tax expense (benefit) and effective income tax rate were as follows (amounts in thousands, except percentages):


	13 Weeks Ended
	April 3, 2021			March 28, 2020
Income tax expense (benefit)	$	1,049		$	(1,801)
Effective income tax rate	5.3		%	(16.6)		%

Earnings (Loss) Per Share (Tables)

3 Months Ended

Apr. 03, 2021

Earnings Per Share [Abstract]

Schedule of earnings per share, basic and diluted

The following table sets forth the calculation of basic and diluted earnings per share (amounts in thousands, except per share data):


	13 Weeks Ended
	April 3, 2021		March 28, 2020
Numerator
Net income and comprehensive income	$	18,892	$	12,642
Denominator
Weighted-average shares outstanding — basic	95,195		89,481
Effect of dilutive stock options	4,252		5,323
Effect of dilutive RSUs	123		65
Weighted-average shares outstanding — diluted (1) (2)	99,570		94,869
Earnings per share :
Basic	$	0.20	$	0.14
Diluted	$	0.19	$	0.13

_______________________

Schedule of antidilutive securities excluded from computation of earnings per share

The following weighted-average common stock equivalents were excluded from the calculation of diluted earnings per share because their effect would have been anti-dilutive (amounts in thousands):

13 Weeks Ended

April 3,
2021

March 28,
2020

RSUs

Organization and Summary of Significant Accounting Policies - Narrative (Details) $ in Thousands				3 Months Ended
	May 28, 2020 shares	Apr. 27, 2020 USD ($) shares	Feb. 03, 2020 USD ($) shares	Apr. 03, 2021 USD ($) store	Mar. 28, 2020 USD ($) store	Jan. 02, 2021 USD ($) store	Sep. 26, 2020 USD ($)	Jun. 27, 2020 USD ($)
Subsidiary, Sale of Stock [Line Items]
Number of stores \| store				389
Deferred offering cost							$ 1,100	$ 1,000
Proceeds from stock option exercised		$ 1,600	$ 1,400
Options exercised (in shares) \| shares		269,000	191,470
Number of operating segments (in segments) \| store				1
Number of reportable segments (in segments) \| store				1
Gift card, redemption period				12 months
Contract with customer, liability				$ 2,400		$ 3,200
Variable interest entity, number of stores \| store				385	350	375
Net sales				$ 752,466	$ 760,308
Accrued expenses				36,079		$ 35,699
Variable Interest Entity, Not Primary Beneficiary
Subsidiary, Sale of Stock [Line Items]
Net sales				739,600	745,500
Sales commissions and fees				112,700	$ 114,400
Accrued expenses				6,900		6,000
Maximum loss exposure				$ 35,600		$ 41,000
Hellman and Friedman, LLC
Subsidiary, Sale of Stock [Line Items]
Transfer of common stock holdings to stockholder's equity holders (in shares) \| shares	9,600,000

Organization and Summary of Significant Accounting Policies - Fair Value of Financial Liabilities (Details) - USD ($) $ in Thousands	Apr. 03, 2021	Jan. 02, 2021
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Unamortized debt discount	$ 1,200	$ 1,200
Fair Value, Inputs, Level 2 \| Carrying Amount
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Term loans (Level 2)	458,822	458,757
Fair Value, Inputs, Level 2 \| Estimated Fair Values
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Term loans (Level 2)	$ 458,850	$ 460,000

Organization and Summary of Significant Accounting Policies - Disaggregated Revenues (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 03, 2021	Mar. 28, 2020
Disaggregation of Revenue [Line Items]
Sales	$ 752,466	$ 760,308
Perishable
Disaggregation of Revenue [Line Items]
Sales	261,418	253,448
Non-Perishable
Disaggregation of Revenue [Line Items]
Sales	$ 491,048	$ 506,860

- Definition

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 30
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8906-108599

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 40
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9031-108599

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 41
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9038-108599

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 4
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130543-203045

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8736-108599

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8736-108599

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 42
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9054-108599

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130545-203045

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 924
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SAB Topic 11.L)
-URI http://asc.fasb.org/extlink&oid=6472922&loc=d3e499488-122856

+ Details

Independent Operator Notes and Receivables - Narrative (Details) - USD ($) $ in Millions	Apr. 03, 2021	Jan. 02, 2021
Financing Receivable, Allowance for Credit Loss [Line Items]
Accrued interest receivable	$ 0.3	$ 0.4
Minimum
Financing Receivable, Allowance for Credit Loss [Line Items]
Independent operator notes, stated interest rate	3.00%
Maximum
Financing Receivable, Allowance for Credit Loss [Line Items]
Independent operator notes, stated interest rate	9.95%

Independent Operator Notes and Receivables - Amounts Due From Independent Operators and the Related Allowances and Accruals for Estimated Losses (Details) - USD ($) $ in Thousands	Apr. 03, 2021	Jan. 02, 2021
Financing Receivable, after Allowance for Credit Loss [Abstract]
Gross	$ 30,625	$ 37,238
Allowance, Current Portion	(524)	(514)
Allowance, Long-term Portion	(7,827)	(7,124)
Net	22,274	29,600
Current Portion	1,586	2,160
Long-term Portion	20,688	27,440
Accounts Receivable, after Allowance for Credit Loss [Abstract]
Gross	4,991	3,754
Allowance, Current Portion	(652)	(471)
Allowance, Long-Term Portion	0	0
Net	4,339	3,283
Current Portion	4,339	3,283
Long-term Portion	0	0
Accounts, Notes, Loans and Financing Receivable, Unclassified [Abstract]
Gross	35,616	40,992
Allowance, Current Portion	(1,176)	(985)
Allowance, Long-Term Portion	(7,827)	(7,124)
Net	26,613	32,883
Current Portion	5,925	5,443
Long-term Portion	$ 20,688	$ 27,440

Independent Operator Notes and Receivables - Allowance for Credit Loss (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 03, 2021	Mar. 28, 2020
Accounts And Financing Receivable, Allowance For Credit Loss [Roll Forward]
Beginning balance	$ 8,109	$ 10,371
Provision for independent operator notes and receivables	900	848
Cumulative effect of accounting change	0	(439)
Write-off of provision for independent operator notes and receivables	(6)	(188)
Ending Balance	$ 9,003	$ 10,592

Independent Operator Notes and Receivables - Credit Quality Indicators (Details) - USD ($) $ in Thousands	Apr. 03, 2021	Jan. 02, 2021
Financing Receivable, Credit Quality Indicator [Line Items]
2021 (YTD)	$ 3,085
2020	11,169
2019	8,525
2018	5,056
2017	2,108
Prior	682
Total	30,625	$ 37,238
TCAP
Financing Receivable, Credit Quality Indicator [Line Items]
2021 (YTD)	247
2020	1,321
2019	2,053
2018	1,381
2017	380
Prior	0
Total	5,382
Non-TCAP
Financing Receivable, Credit Quality Indicator [Line Items]
2021 (YTD)	1,148
2020	2,785
2019	5,185
2018	3,675
2017	1,728
Prior	682
Total	15,203
New store
Financing Receivable, Credit Quality Indicator [Line Items]
2021 (YTD)	1,690
2020	7,063
2019	1,287
2018	0
2017	0
Prior	0
Total	$ 10,040

Long-Term Debt - Schedule of Long-term Debt (Details) - USD ($) $ in Thousands	Apr. 03, 2021	Jan. 02, 2021
Debt Instrument [Line Items]
Long-term debt, gross	$ 460,000	$ 460,000
Less: Unamortized debt discounts and debt issuance costs	(10,257)	(10,767)
Long-term debt, net	449,743	449,233
Senior Notes \| First Lien Credit Agreement
Debt Instrument [Line Items]
Long-term debt, gross	$ 460,000	$ 460,000

Long-Term Debt - Narrative (Details) - USD ($)						3 Months Ended
Long-Term Debt - Narrative (Details) - USD ($)	Mar. 19, 2020	Jan. 24, 2020	Oct. 23, 2019	Jul. 23, 2019	Jun. 24, 2019	Apr. 03, 2021	Mar. 28, 2020	Oct. 22, 2018
Debt Instrument [Line Items]
Write off of debt issuance costs						$ 0	$ 74,000
Debt modification costs						0	124,000
First Lien Credit Agreement \| Revolving Credit Facility
Debt Instrument [Line Items]
Maximum borrowing capacity								$ 100,000,000.0
Proceeds from line of credit	$ 90,000,000.0
Remaining borrowing capacity						$ 96,500,000
Secured leverage ratio						7.00
First Lien Credit Agreement \| Revolving Credit Facility \| Minimum
Debt Instrument [Line Items]
Commitment fee percentage						0.25%
First Lien Credit Agreement \| Revolving Credit Facility \| Maximum
Debt Instrument [Line Items]
Commitment fee percentage						0.50%
First Lien Credit Agreement \| Letter of Credit
Debt Instrument [Line Items]
Maximum borrowing capacity								35,000,000.0
Letters of credit outstanding						$ 3,500,000
First Lien Credit Agreement \| Bridge Loan
Debt Instrument [Line Items]
Maximum borrowing capacity								20,000,000.0
First Lien Credit Agreement \| Senior Notes
Debt Instrument [Line Items]
Debt instrument, face amount								$ 725,000,000.0
Repayments of long-term debt					$ 248,000,000.0
Debt instrument, periodic payment, interest					$ 3,800,000
Term Loan Maturing October 22, 2025 \| Senior Notes
Debt Instrument [Line Items]
Debt instrument, face amount				$ 475,200,000
Repayments of long-term debt			$ 15,000,000.0
Effective interest rate						2.86%
Term Loan Maturing October 22, 2025 \| Senior Notes \| Minimum \| Eurodollar
Debt Instrument [Line Items]
Basis spread on variable rate				3.50%
Term Loan Maturing October 22, 2025 \| Senior Notes \| Minimum \| Base Rate
Debt Instrument [Line Items]
Basis spread on variable rate				2.50%
Term Loan Maturing October 22, 2025 \| Senior Notes \| Maximum \| Eurodollar
Debt Instrument [Line Items]
Basis spread on variable rate				3.25%
Term Loan Maturing October 22, 2025 \| Senior Notes \| Maximum \| Base Rate
Debt Instrument [Line Items]
Basis spread on variable rate				2.25%
Second Replacement Term Loan \| Senior Notes
Debt Instrument [Line Items]
Debt instrument, face amount		$ 460,000,000.0
Write off of debt issuance costs							100,000
Debt modification costs							$ 100,000
Second Replacement Term Loan \| Senior Notes \| Eurodollar
Debt Instrument [Line Items]
Basis spread on variable rate		2.75%
Second Replacement Term Loan \| Senior Notes \| Base Rate
Debt Instrument [Line Items]
Basis spread on variable rate		1.75%

Long-Term Debt - Schedule of Principal Maturities (Details) $ in Thousands	Apr. 03, 2021 USD ($)
Debt Disclosure [Abstract]
Remainder of fiscal 2021	$ 0
Fiscal 2022	0
Fiscal 2023	0
Fiscal 2024	0
Fiscal 2025	460,000
Thereafter	0
Total	$ 460,000

Long-Term Debt - Interest Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 03, 2021	Mar. 28, 2020
Debt Disclosure [Abstract]
Interest on loans	$ 3,564	$ 5,790
Amortization of debt issuance costs	563	556
Interest on finance leases	93	111
Other	3	6
Interest income	(317)	(629)
Interest expense, net	$ 3,906	$ 5,834

Long-Term Debt - Debt Extinguishment and Modification Costs (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 03, 2021	Mar. 28, 2020
Debt Disclosure [Abstract]
Write off of debt issuance costs	$ 0	$ 74
Debt modification costs	0	124
Debt extinguishment and modification costs	$ 0	$ 198

Share-based Awards - Summary of Stock Option Activity (Details) - $ / shares			3 Months Ended
	Apr. 27, 2020	Feb. 03, 2020	Apr. 03, 2021
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares [Roll Forward]
Exercised (in shares)	(269,000)	(191,470)
Time-Based Stock Options
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares [Roll Forward]
Options outstanding, beginning balance (in shares)			3,864,772
Exercised (in shares)			(207,946)
Forfeitures (in shares)			(11,538)
Options outstanding, ending balance (in shares)			3,645,288
Options vested and expected to vest (in shares)			2,144,243
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Weighted-average exercise price, beginning balance (in usd per share)			$ 12.42
Exercised (in usd per share)			7.35
Forfeitures (in usd per share)			17.94
Weighted-average exercise price, ending balance (in usd per share)			12.69
Options vested and expected to vest (in shares)			$ 7.51
Performance-Based Stock Options
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares [Roll Forward]
Options outstanding, beginning balance (in shares)			2,325,580
Exercised (in shares)			(321,009)
Forfeitures (in shares)			0
Options outstanding, ending balance (in shares)	1,700,000		2,004,571
Options vested and expected to vest (in shares)			2,004,571
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Weighted-average exercise price, beginning balance (in usd per share)			$ 4.54
Exercised (in usd per share)			4.23
Forfeitures (in usd per share)			0
Weighted-average exercise price, ending balance (in usd per share)			4.59
Options vested and expected to vest (in shares)			$ 4.59

Share-based Awards - Summary of RSU and PSU Activity (Details)	3 Months Ended
	Apr. 03, 2021 $ / shares shares
RSUs
Number of Shares
Unvested, beginning balance (in shares)	341,842
Granted (in shares)	319,638
Vested (in shares)	(96,138)
Forfeitures (in shares)	(5,838)
Unvested, ending balance (in shares)	559,504
Weighted-Average Grant Date Fair Value
Unvested, beginning balance (in usd per share) \| $ / shares	$ 35.16
Granted (in usd per share) \| $ / shares	35.45
Vested (in usd per share) \| $ / shares	36.91
Forfeitures (in usd per share) \| $ / shares	33.57
Unvested, ending balance (in usd per share) \| $ / shares	$ 35.04
PSUs
Number of Shares
Unvested, beginning balance (in shares)	407,462
Granted (in shares)	319,606
Forfeitures (in shares)	(1,396)
Unvested, ending balance (in shares)	725,672
Weighted-Average Grant Date Fair Value
Unvested, beginning balance (in usd per share) \| $ / shares	$ 36.90
Granted (in usd per share) \| $ / shares	35.45
Forfeitures (in usd per share) \| $ / shares	36.88
Unvested, ending balance (in usd per share) \| $ / shares	$ 36.26
Performance target level, percentage	1
Adjustment for expected performance achievement (in shares)	454,961

Share-based Awards - Summary of Share-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 03, 2021	Mar. 28, 2020
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Share-based compensation expense	$ 3,939	$ 20,277
Dividends	5	147
Time-based stock options
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Share-based compensation expense	722	759
Performance-based stock options
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Share-based compensation expense	0	18,498
RSUs
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Share-based compensation expense	1,496	873
PSUs
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Share-based compensation expense	$ 1,716	$ 0

Income Taxes - Income Tax Expense (Benefit) and Effective Tax Rate (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 03, 2021	Mar. 28, 2020
Income Tax Disclosure [Abstract]
Income tax expense (benefit)	$ 1,049	$ (1,801)
Effective income tax rate	5.30%	(16.60%)

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

Income Taxes - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
Income Taxes - Narrative (Details) - USD ($) $ in Thousands	Apr. 03, 2021	Mar. 28, 2020
Income Tax Disclosure [Abstract]
Income tax expense (benefit)	$ 1,049	$ (1,801)

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

Related Party Transactions (Details) $ in Thousands	3 Months Ended
Related Party Transactions (Details) $ in Thousands	Apr. 03, 2021 USD ($)	Mar. 28, 2020 USD ($) warehouse	Apr. 03, 2021 store	Apr. 03, 2021 warehouse	Jan. 02, 2021 USD ($)
Related Party Transaction [Line Items]
Number of stores \| store			389
Accounts and financing receivable, before allowance for credit loss	$ 35,616				$ 40,992
Affiliated Entity
Related Party Transaction [Line Items]
Number of stores		1	15	1
Independent operator commissions	1,500	$ 1,500
Prepaid rent	$ 500				$ 0

Earnings Per Share - Earnings Per Share Attributable to Common Stockholders (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Apr. 03, 2021	Mar. 28, 2020	Jan. 02, 2021	Apr. 27, 2020
Numerator
Net income	$ 18,892	$ 12,642
Comprehensive income	$ 18,892	$ 12,642
Denominator
Weighted-average shares of common stock - basic (in shares)	95,195,000	89,481,000
Effect of dilutive RSUs (in shares)	4,252,000	5,323,000
Effect of dilutive options (in shares)	123,000	65,000
Weighted average shares of common stock - diluted (in shares)	99,570,000	94,869,000
Earnings per share :
Basic (in usd per share)	$ 0.20	$ 0.14
Diluted (in usd per share)	$ 0.19	$ 0.13
Performance-Based Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options, nonvested (in shares)	2,004,571		2,325,580	1,700,000

Earnings Per Share - Anti-dilutive Weighted-Average Common Stock Equivalents Excluded from Calculation of Diluted Earnings (Net Loss) Per Share (Details) - shares shares in Thousands	3 Months Ended
	Apr. 03, 2021	Mar. 28, 2020
RSUs
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	3	2