Restaurant Impairments, Closure Costs and Asset Disposals

3 Months Ended

Mar. 31, 2020

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
	March 31, 2020		April 2, 2019
Restaurant impairments (1)	$	127	$	189
Closure costs (1)	213		(39		)
Loss on disposal of assets and other	716		270
	$	1,056	$	420

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

There were no restaurant impairments during the first quarters of 2020 and 2019. 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. The Company will continue to monitor the impact from the COVID-19 pandemic as it relates to recoverability of long-lived assets, but the Company determined that the current trends did not require restaurant impairments as of the completion of the first quarter of 2020. We are unable to predict how long these conditions will persist, what additional measures may be introduced by governments or what effect any such additional measures may have on restaurants and our business. Any measure that encourages consumers to continue to stay in their homes, engage in social distancing or avoid larger gatherings of people for an extended period of time is highly likely to be harmful to the restaurant industry in general, and consequently our business.

Each of these periods include ongoing equipment costs for restaurants previously impaired.

Closure costs in the first quarters of 2020 and 2019 include ongoing costs related to restaurants closed in previous years. In addition, closure costs in the first quarter of 2019 were offset by a $0.3 million adjustment to liabilities as lease terminations occur.

Loss on disposal of assets and other includes expenses recognized during the first quarter of 2020 related to the divestiture of company-owned restaurants to a franchisee.

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