Restaurant Impairments, Closure Costs and Asset Disposals

12 Months Ended

Dec. 28, 2021

Restructuring and Related Activities [Abstract]

Restaurant Impairments, Closure Costs and Asset Disposals

The following table presents restaurant impairments, closure costs and asset disposals for fiscal years 2021, 2020 and 2019 (in thousands):


	2021		2020		2019
Restaurant impairments(1)	$	3,424	$	4,113	$	6,218
Closure costs(1)	1,239		535		(54)
Loss on disposal of assets and other	1,064		1,892		1,583
	$	5,727	$	6,540	$	7,747

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(1)Restaurant impairments and closure costs in all periods presented above include amounts related to restaurants previously impaired or closed. Closure costs in 2019 included a gain on lease remeasurement.

Restaurant Impairments

During 2021, 2020 and 2019, six restaurants, eight restaurants and two restaurants were identified as impaired, respectively. In addition, the assets held for the Warner Sale (discussed in Note 2, Supplemental Financial Information) were written down by $0.5 million. In 2019, the Company also recorded a $3.6 million write down of assets in connection with the sale of nine company-owned restaurants to a franchisee that completed in January of 2020. All periods include ongoing equipment costs for restaurants previously impaired. Impairment is based on management’s current assessment of the expected future cash flows of various restaurants 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 onset of the COVID-19 pandemic during 2020 resulted in significant disruption to the restaurant industry and adversely affected the Company’s business. The extent of the COVID-19 pandemic impact on the Company’s operations depends on future developments and is highly uncertain due to unknown duration and severity of the outbreak. The Company will continue to monitor the impact from the COVID-19 pandemic as it relates to recoverability of long-lived assets.

In performing its impairment testing, the Company forecasts the future undiscounted cash flows by looking at recent restaurant level performance, restaurant level operating plans, sales trends and cost trends for cost of sales, labor and operating expenses. The Company compares this cash flow forecast to the asset’s carrying value at the restaurant. Based on this analysis, if the carrying amount of the assets is greater than the estimated future undiscounted cash flows, an impairment charge is recognized, measured as the amount by which the carrying amount exceeds the fair value of the asset.

Restaurant Closures

Closure costs during 2021, 2020 and 2019 pertain to ongoing costs of restaurants that closed in previous years, as well as costs related to the closure of twelve, six, and five restaurants, respectively. These closure costs were offset by gains of $0.2 million in 2021, $0.6 million in 2020 and $0.4 million in 2019 resulting from the adjustments to liabilities as lease terminations occur. Closure costs can include fees from real estate advisors and brokers related to terminations of the leases and charges resulting from final adjustments to liabilities as lease terminations occur.

Loss on disposal of assets and other includes expenses related to the divestiture of company-owned restaurants to a franchisee in 2020 and 2019.