Restaurant Impairments, Closure Costs and Asset Disposals

6 Months Ended

Jun. 28, 2022

Discontinued Operations and Disposal Groups [Abstract]

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
	June 28, 2022		June 29, 2021		June 28, 2022		June 29, 2021
Restaurant impairments (1)	$	668	$	178	$	774	$	680
Closure costs (1)	465		288		855		593
Loss (gain) on disposal of assets and other	838		(76)		1,731		348
	$	1,971	$	390	$	3,360	$	1,621

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

Two restaurants were identified as impaired during the second quarter of 2022 and the first two quarters of 2022. There were no restaurant impairments in the second quarter of 2021 and one restaurant impairment during the first two quarters of 2021. 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.

Closure costs in the second quarter of 2022 include ongoing costs related to restaurants closed in previous years as well as two company-owned restaurant closures during the first two quarters of 2022. The Company did not close any restaurants in the second quarter of 2022. Closure costs in the first two quarters of 2021 include ongoing costs related to restaurants closed in previous years as well as six restaurant closures in the first two quarters of 2021.

Loss on disposal of assets and other for the second quarter and the first two quarters of 2022 includes expenses related to the divestiture of company-owned restaurants related to the Warner Sale. Both periods include disposals of assets in the normal course of business. Loss on disposal of assets and other for the second quarter of 2021 includes a gain on insurance proceeds from property damage.

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