Restaurant Impairments, Closure Costs and Asset Disposals

9 Months Ended

Sep. 28, 2021

Property, Plant and Equipment Impairment or Disposal [Abstract]

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
	September 28, 2021		September 29, 2020		September 28, 2021		September 29, 2020
Restaurant impairments (1)	$	536	$	113	$	1,216	$	2,375
Closure costs (1)	236		(168)		829		345
Loss on disposal of assets and other	354		424		702		1,263
	$	1,126	$	369	$	2,747	$	3,983

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

The Company impaired one restaurant in the third quarter of 2021 and had no restaurant impairments in the third quarter of 2020. The Company impaired two restaurants in the first three quarters of 2021 and five restaurants in the first three quarters of 2020. 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 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. Although the Company has seen an improvement in sales, the Company is 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 stay in their homes, engage in social distancing or avoid larger gatherings of people for an extended period of time is and has been highly likely to continue to be harmful to the restaurant industry in general.

Closure costs in the third quarter of 2021 and the first three quarters of 2021 include ongoing costs related to restaurants closed in previous years as well as eight company-owned restaurant closures during the first three quarters of 2021. Closure costs in the third quarter and first three quarters of 2020 include ongoing costs related to restaurants closed in previous years as well as three company-owned restaurant closures during the third quarter of 2020. In addition, closure costs were offset by gains resulting from adjustments to liabilities as lease terminations occur. These gains included a total of $0.6 million in the third quarter and first three quarters of 2020.

Loss on disposal of assets and other for the first three quarters of 2021 includes a gain on insurance proceeds from property damage. Loss on disposal of assets and other includes expenses recognized during the first three quarters 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.