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

6 Months Ended

Jul. 02, 2019

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 2, 2019		July 3, 2018		July 2, 2019		July 3, 2018
Restaurant impairments ⁽¹⁾	$	2,276	$	319	$	2,465	$	917
Closure costs ⁽¹⁾	173		1,519		134		2,073
Loss on disposal of assets and other	435		742		705		1,170
	$	2,884	$	2,580	$	3,304	$	4,160

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

As a result of downward pressure on the operating results of two of our restaurants, we identified these restaurants as impaired during the second quarter of 2019, and as a result, recorded an impairment charge of $2.2 million. There were no restaurant impairments during the first quarter of 2019. There were no restaurant impairments during the second quarter of 2018 and one restaurant impairment during the first two quarters of 2018. Both periods include ongoing equipment costs for restaurants previously impaired. 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 and the right-of-use asset based on a discounted cash flow analysis utilizing market lease rates.

Closure costs of $0.2 million in the second quarter of 2019 and $0.1 million during the first two quarters of 2019 include ongoing costs of restaurants closed in previous years, partially offset by a gain of $0.1 million and $0.4 million, respectively, relating to changes in the Company’s assessment of remaining operating lease terms. The closure costs of $1.5 million recognized during the second quarter of 2018 and $2.1 million recognized during the first two quarters of 2018 are related to the seven restaurants closed in the second quarter of 2018 and nine restaurants closed in the first two quarters of 2018, most of which were approaching the expiration of their leases, as well as ongoing costs of restaurants closed in previous years. These ongoing costs include adjustments to the liabilities to landlords as lease terminations occur.

These expenses are included in the “Restaurant impairments, closure costs and asset disposals” line in the Condensed Consolidated Statements of Operations.