Business Combinations (Notes)

12 Months Ended

Jan. 03, 2017

Business Combinations [Abstract]

Business Combinations

Business Combinations

During 2014, the Company acquired 19 restaurants from its franchisees, through two separate transactions. The total cash purchase price was $15.7 million and the Company incurred acquisition costs related to the transactions of $0.1 million reflected in General and Administrative expense for the year ended December 30, 2014. The Consolidated Statements of Operations include the results of operations for the restaurants from the date of acquisition. The pro forma impact of the acquisitions is not presented as the impact was not material to reported results.

The acquisition of the 19 restaurants was accounted for using the purchase method as defined in ASC 805, Business Combination. The goodwill generated by the acquisitions is not amortizable for book purposes but is amortizable and deductible for tax purposes. The assets acquired and liabilities assumed were recorded based on their fair values at the time of the acquisitions, as detailed below (in thousands):

	Fair Value at December 30, 2014
Inventories	$	352
Prepaid expenses and other assets	33
Deferred tax asset	142
Property and equipment	7,564
Intangibles	1,567
Goodwill	6,400
Deferred rent and other liabilities	(319		)
Total purchase price	$	15,739

Of the $1.6 million of intangible assets, $1.4 million were related to reacquired franchise rights, which are being amortized on a straight-line basis over an average life of approximately 16 years and $0.2 million were related to favorable leases, which are being amortized on a straight-line basis over an average life of nine years. The unfavorable leases, which were included in deferred rent in the accompanying Consolidated Balance Sheets, are being amortized on a straight-line basis over an average period of11 years.