Restaurant Impairment, Closure Costs and Asset Disposals Restaurant Impairment, Closure Costs and Asset Disposals

6 Months Ended

Jul. 04, 2017

Property, Plant and Equipment Impairment or Disposal [Abstract]

Restaurant Impairment, Closure Costs and Asset Disposals

Restaurant Impairments, Closure Costs and Asset Disposals

The following table presents restaurant impairments, closure costs and asset disposals (in thousands):

	Fiscal Quarter Ended					Two Fiscal Quarters Ended
	July 4, 2017			June 28, 2016		July 4, 2017		June 28, 2016
Restaurant impairments (1)	$	4,037		$	10,346	$	5,973	$	10,541
Closure costs (1)	(1,471		)	538		18,415		1,087
Loss on disposal of assets and other	264			364		496		636
	$	2,830		$	11,248	$	24,884	$	12,264

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(1) Restaurant impairments and closure costs in all periods presented above include amounts related to restaurants previously impaired or closed.

During the second quarter of 2017, nine restaurants were identified as impaired compared to 11 during the second quarter of 2016. During the first two quarters of 2017, 13 restaurants were identified as impaired compared to 12 restaurants during the first two quarters of 2016. Impairment is based on management’s current assessment of the expected future cash flows of various restaurants based on recent results and other specific market factors. Impairment expense is a Level 3 fair value measure and was determined by comparing the carrying value of restaurant assets to the estimated fair market value of the restaurant assets at resale value.

During the second quarter of 2017, a gain of $3.6 million was recognized related to closures primarily due to adjustments to the liabilities to landlords as lease terminations occurred for 21 of the 55 restaurants closed during the first quarter of 2017, partially offset by $2.0 million of costs related to the restaurants closed in the first quarter of 2017. During the first two quarters of 2017, $18.4 million of closure costs were recognized related to the 55 restaurants closed during the first quarter of 2017, as well as ongoing costs of restaurants closed in the fourth quarter of 2015. The closure costs of $0.5 million recognized during the second quarter of 2016 and $1.1 million during the first two quarters of 2016 are related to the ongoing costs of restaurants closed in the fourth quarter of 2015. These expenses are included in the “Restaurant impairments, closure costs and asset disposals” line in the Condensed Consolidated Statements of Operations.