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Impairment and Restaurant Closures
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9 Months Ended |
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Oct. 05, 2014
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| Restructuring and Related Activities [Abstract] | |
| Impairment and Restaurant Closures |
Impairment and Restaurant Closures
The value of long-lived assets, including restaurants sites, leasehold improvements, information technology systems and other fixed assets are evaluated when events or changes in circumstances indicate that impairment may be present. As of October 5, 2014, the Company has approximately $8.0 million of software in development related to our supply chain and human resource management system modules. Subsequent to October 5, 2014, the Company completed an upgrade of its ERP system which will allow management to determine whether implementation of these modules will meet the Company's operating requirements. If the Company determines that the modules will not meet necessary operating requirements, it could result in an impairment of all or a portion of the investment.
The Company closed two restaurants during the first quarter 2014 and did not close any restaurants during the second quarter 2014. Both restaurants had been impaired in fiscal year 2013. The Company temporarily closed one restaurant due to public construction during the third quarter 2014 and expects to reopen this restaurant in 2015. No impairments to restaurants were recorded during the forty weeks ended October 5, 2014 and October 6, 2013.
The Company evaluates restaurants that are closed and allocates goodwill based on the relative fair value of the disposed restaurants to the Company’s reporting unit. Since restaurant operations are typically valued based on cash flow from operations, the Company compares the historical cash flow from the closed restaurants to the cash flow from the reporting unit to determine the relative value. No goodwill was allocated to the restaurants closed during first quarter 2014, because both restaurants had projected negative cash flow and consequently did not have positive fair value.
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