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

9 Months Ended

Oct. 02, 2018

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 2, 2018			October 3, 2017		October 2, 2018		October 3, 2017
Restaurant impairments (1)	$	314		$	9,080	$	1,231	$	15,053
Closure costs (1)	1,488			779		3,561		19,194
(Gain) loss on disposal of assets and other (2)	(10		)	404		1,160		900
	$	1,792		$	10,263	$	5,952	$	35,147

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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) The third quarter of 2018 and the first three quarters of 2018 include a $0.4 million gain from insurance proceeds received for property damage in excess of the loss recognized.

During the third quarter of 2018, there were no restaurants identified as impaired, compared to 18 restaurant impairments during the third quarter of 2017. During the first three quarters of 2018, one restaurant was identified as impaired compared to 31 restaurant impairments during the first three quarters of 2017. 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 is 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 $1.5 million recognized during the third quarter of 2018 and $3.6 million during the first three quarters of 2018 are related to the three restaurants closed in the third quarter of 2018 and 12 restaurants closed in the first three quarters of 2018, most of which were approaching the expiration of their leases, as well as ongoing costs from restaurants closed in previous years. These ongoing costs include adjustments to the liabilities to landlords as lease terminations occur. 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. These expenses are included in the “Restaurant impairments, closure costs and asset disposals” line in the Condensed Consolidated Statements of Operations.