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Acquisitions of Red Robin Franchised Restaurants
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9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Oct. 05, 2014
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| Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| Acquisitions of Red Robin Franchised Restaurants |
Acquisitions of Red Robin Franchised Restaurants
The Company acquires franchised restaurants to enhance opportunity for future growth. On March 24, 2014, the Company acquired four restaurants from one of its U.S. franchisees with a purchase price of $8.0 million in cash. On July 14, 2014, the Company completed an acquisition of 32 Red Robin franchised restaurants, 14 in the United States and 18 in Canada, from Mach Robin, LLC and its Canadian affiliate, with a purchase price of $40.7 million in cash.
The pro forma impact of these acquisitions and the operating results of the acquired restaurants are not presented as the impact was not material to reported results.
The above acquisitions were accounted for using the purchase method as defined in ASC 805, Business Combinations. The goodwill arising from these acquisitions consists largely of the synergies and economies of scale expected from combining the acquired operations with the Company. The goodwill generated by the acquisitions is not amortizable for book purposes but is amortizable and deductible for tax purposes. The Company preliminarily allocated the purchase price to the fair value of the assets acquired and liabilities assumed as follows (in thousands):
Of the $9.4 million of intangible assets, $7.6 million is related to reacquired franchise rights, which will be amortized on a straight-line basis over 10 to 14 years, and $1.3 million is related to acquired non-amortizable liquor licenses with an indefinite life. The fair value measurement of tangible and intangible assets and liabilities as of the acquisition date is based on significant inputs not observed in the market and thus represents a level 3 fair value measurement.
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