Other Charges (Gains), net
|12 Months Ended|
Dec. 25, 2022
|Other Income and Expenses [Abstract]|
|Other Charges (Gains), net||
4. Other Charges (Gains), net
Other charges consist of the following (in thousands):
During 2022, the Company determined long-lived assets at 46 locations were impaired and recognized non-cash impairment charges of $38.0 million related to the impairment of the long-lived assets associated with our properties, primarily due to restaurants that did not perform as expected as a result of cost pressures that reduced restaurant-level profitability. Additionally, the Company recognized $0.5 million of non-cash impairment charges related to the impairment of long lived intangible assets related to quota state liquor licenses at six locations.
During 2021, the Company impaired long-lived assets of ten Company-owned restaurants and recognized non-cash impairment charges of $6.4 million. Additionally, the Company recognized $0.5 million of non-cash impairment charges related to the impairment of long lived intangible assets related to quota state liquor licenses at seven locations.
During 2020, the Company impaired long-lived assets of 40 Company-owned restaurants and recognized non-cash impairment charges of $21.7 million. Additionally, the Company impaired information technology assets totaling $5.2 million due to the COVID-19 pandemic redirecting our implementation of certain digital platforms in order to accelerate our speed to market.
Gain on Sale of Restaurant Property
During the second quarter of 2022 the Company closed on an agreement to sell a restaurant property that the Company owned and leased back on a short-term basis. The Company collected initial net proceeds from the purchaser-lessor of $3.9 million, which represented a portion of the total consideration received from the sale. The Company did not recognize a sale in the second quarter of 2022 as certain criteria to recognize a sale in accordance with ASC Topic 842, Leases, and ASC Topic 606, Revenue from Contracts with Customers, were not met. During the third quarter of 2022, the Company received the remaining proceeds, upon which the lease terminated and the sale transaction was completed, and recognized a $9.2 million gain on the sale of the restaurant property. The initial net proceeds of $3.9 million are included within cash flows from financing activities and the final proceeds received of $8.5 million are included within cash flows from investing activities on the Consolidated Statements of Cash Flows for the year ended December 25, 2022.
Severance and Executive Transition
During 2022, the Company recorded $2.3 million of severance and executive transition costs primarily related to transitioning to a new Chief Executive Officer, and changes in other leadership positions as a result of our strategic pivot under the North Star plan and severance related to a reduction in force of restaurant support Team Members in the fourth quarter of 2022. These costs are net of a $3.3 million stock-based compensation benefit primarily related to a change in estimated stock-based compensation forfeitures as a result of changes in executive leadership.
During 2020, the Company recorded $0.9 million of severance and executive transition costs primarily related to severance costs associated with the reduction in force of Restaurant Support Center Team Members in the first quarter of 2020.
Other Financing Costs
Other financing costs of $1.5 million include fees related to the entry by the Company into the new Credit Agreement (as defined below) on March 4, 2022 that were not capitalized with the closing of the Credit Facility. See Note 8. Borrowings.
Restaurant Closure Costs, net
Restaurant closure costs include costs incurred for permanently closed restaurants and closed restaurant lease termination gains or losses, as well as the ongoing restaurant operating costs of the Company-owned restaurants that temporarily closed due to the COVID-19 pandemic. In 2022, 2021 and 2020, the Company recorded $0.8 million, $6.3 million, and $19.8 million of costs, respectively.
Closed Corporate Office Costs, Net of Sublease Income
Closed corporate office, net of sublease income includes expense and sublease income related to a corporate office facility that was vacated and subleased.
COVID-19 Related Costs
In 2022, 2021 and 2020, the Company recorded $0.4 million, $1.3 million, and $1.9 million of costs, respectively, related to purchasing personal protective equipment for restaurant Team Members and Guests and providing emergency sick pay to restaurant Team Members during the pandemic.
In 2022, 2021 and 2020, the Company recorded $4.1 million, $1.3 million, and $6.4 million respectively, of contingencies related to litigation matters. Litigation contingencies during 2022 include the impact of cash proceeds received by the Company related to certain legal claims. See Note 12. Commitments and Contingencies, for further discussion.
Board and Stockholder Matters Costs
During 2021, the Company recorded $0.1 million of board and stockholder matters costs.
During 2020, the Company recorded $2.5 million of board and stockholder matters costs primarily related to the shareholder rights plan and the recruitment and appointment of a new board member in the first quarter of 2020.
The Company recognized full goodwill impairment during the first quarter of 2020 totaling $95.4 million resulting from the negative effects of COVID-19 on our business.
The entire disclosure for other income or other expense items (both operating and nonoperating). Sources of nonoperating income or nonoperating expense that may be disclosed, include amounts earned from dividends, interest on securities, profits (losses) on securities, net and miscellaneous other income or income deductions.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef