Quarterly report pursuant to Section 13 or 15(d)

Impairment, Closed Restaurant and Other Costs

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Impairment, Closed Restaurant and Other Costs
9 Months Ended
Sep. 25, 2022
Impairment, Closed Restaurant and Other Costs [Abstract]  
Impairment, Closed Restaurant and Other Costs Impairment, Closed Restaurant and Other Costs
The Company reviews long-lived assets, such as property and equipment, operating lease assets and intangibles, subject to amortization, for impairment when events or circumstances indicate the carrying value of the assets may not be recoverable. In determining the recoverability of the asset value, an analysis is performed at the individual restaurant level and primarily includes an assessment of historical undiscounted cash flows and other relevant factors and circumstances. The Company evaluates future cash flow projections in conjunction with qualitative factors and future operating plans and regularly reviews any restaurants with a deficient level of cash flows for the previous 24 months to determine if impairment testing is necessary.
Recoverability of assets to be held and used is measured by a comparison of the carrying value of the restaurant to its estimated future undiscounted cash flows. If the estimated undiscounted future cash flows are less than the carrying value, we determine if there is an impairment loss by comparing the carrying value of the restaurant to its estimated fair value. Based on this analysis, if the carrying value of the restaurant exceeds its estimated fair value, an impairment charge is recognized by the amount by which the carrying value exceeds the fair value.
We make assumptions to estimate future cash flows and asset fair values. The estimated fair value is generally determined using the depreciated replacement cost method, the income approach, or discounted cash flow projections. Estimated future cash flows are highly subjective assumptions based on the Company’s projections and understanding of our business, historical operating results, and trends in sales and restaurant level operating costs.
The Company’s impairment assessment process requires the use of estimates and assumptions regarding future cash flows and operating outcomes, which are based upon a significant degree of management judgment. The estimates used in the impairment
analysis represent a Level 3 fair value measurement. The Company continues to assess the performance of restaurants and monitors the need for future impairment. Changes in the economic environment, real estate markets, capital spending, overall operating performance and underlying assumptions could impact these estimates and result in future impairment charges.
The Company recorded impairment, closed restaurant and other costs as follows:
  Thirteen Weeks Ended Thirty-Nine Weeks Ended
  September 25, 2022 September 26, 2021 September 25, 2022 September 26, 2021
Property and equipment impairment 673  1,282  673  1,570 
Total impairment charge 673  1,282  673  1,570 
Closed restaurant costs
796  1,283  2,832  4,252 
(Gain) loss on lease termination (279) 1,408  (302) 1,899 
Impairment, closed restaurant and other costs $ 1,190  $ 3,973  $ 3,203  $ 7,721 
Closed restaurant costs represent on-going expenses to maintain the closed restaurants, such as rent expense, utility and insurance among other costs required to maintain the remaining closed locations.
The Company terminated three of its closed restaurant lease agreements during both the thirteen weeks ended September 25, 2022 and September 26, 2021.
The Company terminated and/or subleased seven and five of its closed restaurant lease agreements during the thirty-nine weeks ended September 25, 2022 and September 26, 2021, respectively