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

9 Months Ended

Oct. 03, 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				Three Fiscal Quarters Ended
	October 3, 2017		September 27, 2016		October 3, 2017		September 27, 2016
Restaurant impairments ⁽¹⁾	$	9,080	$	79	$	15,053	$	10,620
Closure costs ⁽¹⁾	779		642		19,194		1,729
Loss on disposal of assets and other ⁽²⁾	404		1,562		900		2,198
	$	10,263	$	2,283	$	35,147	$	14,547

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

(2)

Included in loss on disposal of assets and other for both the third quarter of 2016 and first three quarters of 2016 is a $1.1 million charge to reduce capitalized labor and overhead as a result of the reduced growth for new restaurant development. Additionally, the third quarter of 2016 and the first three quarters of 2016 include a $0.4 million gain from insurance proceeds received for property damage in excess of the loss recognized.

During the third quarter of 2017, 18 restaurants were identified as impaired, compared to no restaurant impairments during the third quarter of 2016. During the first three quarters of 2017, 31 restaurants were identified as impaired, compared to 12 restaurants impaired during the first three quarters of 2016. Impairment is based on management’s current assessment of the expected future cash flows of a restaurant 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.

The closure costs of $0.8 million recognized during the third quarter of 2017 and $19.2 million during the first three quarters of 2017 are 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. Additionally, the $19.2 million of closure costs recognized during the first three quarters of 2017 is net of a gain of $3.6 million which was primarily due to adjustments to the liabilities to landlords as lease terminations occurred for 27 of the 55 restaurants closed during the first quarter of 2017. The closure costs of $0.6 million recognized during the third quarter of 2016 and $1.7 million during the first three 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.