Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements

v3.23.2
Fair Value Measurements
 6 Months Ended
Jul. 09, 2023
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The carrying amounts of the Company's cash and cash equivalents, accounts receivable, accounts payable, and current accrued expenses and other liabilities approximate fair value due to the short-term nature or maturity of the instruments.
The Company maintains a rabbi trust to fund obligations under a deferred compensation plan. Amounts in the rabbi trust are invested in mutual funds, which are designated as trading securities and carried at fair value and are included in Other assets, net in the accompanying consolidated balance sheets. Fair market value of mutual funds is measured using level 1 inputs (quoted prices for identical assets in active markets).
The following tables present the Company's assets measured at fair value on a recurring basis included in Other assets, net on the accompanying Condensed Consolidated Balance Sheets as of July 9, 2023 and December 25, 2022 (in thousands):
July 9, 2023 Level 1 Level 2 Level 3
Assets:        
Investments in rabbi trust $ 2,994  $ 2,994  $ —  $ — 
Total assets measured at fair value $ 2,994  $ 2,994  $ —  $ — 
December 25, 2022 Level 1 Level 2 Level 3
Assets:
Investments in rabbi trust $ 4,250  $ 4,250  $ —  $ — 
Total assets measured at fair value $ 4,250  $ 4,250  $ —  $ — 
Other than as disclosed in Note 9. Acquisition of Franchised Restaurants, as of July 9, 2023, the Company had no financial assets or liabilities that were measured using level 3 inputs. The Company also had no non-financial assets or liabilities that were required to be measured on a recurring basis.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Assets and liabilities recognized or disclosed at fair value on the Condensed Consolidated Financial Statements on a nonrecurring basis include items such as property, plant and equipment, right of use assets, and other intangible assets. These assets are measured at fair value if determined to be impaired.
The Company has measured non-financial assets for impairment using continuing and projected future cash flows, which were based on significant inputs not observable in the market and thus represented a level 3 fair value measurement. See Note 5. Other Charges (Gains), net.
We impaired long-lived restaurant assets with a carrying value (including right of use lease assets) of $11.4 million, recognizing an impairment expense of $1.7 million during the twelve and twenty-eight weeks ended July 9, 2023 related to the net book value of these long-lived restaurant assets. We determined the fair value of these long-lived assets to be $9.7 million in the twelve and twenty-eight weeks ended July 9, 2023. Additionally, we impaired long-lived assets at the Company's closed corporate office with a carrying value (including right of use lease assets) of $1.0 million, recognizing an impairment expense of $0.7 million during the twenty-eight weeks ended July 9, 2023, related to the net book value of these long-lived restaurant assets. We determined the fair value of these long-lived assets to be $0.3 million in the twenty-eight weeks ended July 9, 2023. The impairments were recorded as a result of quantitative impairment analyses.
Disclosures of Fair Value of Other Assets and Liabilities
The Company's liability under its credit facility is carried at historical cost in the accompanying Condensed Consolidated Balance Sheets. As of July 9, 2023, the fair value of the credit facility was approximately $196.7 million and the principal amount carrying value was $197.5 million. The credit facility term loan is reported net of $7.4 million in unamortized discount and debt issuance costs in the Condensed Consolidated Balance Sheet as of July 9, 2023. The carrying value of the credit facility was $214.0 million and the fair value of the credit facility was $205.1 million as of December 25, 2022. The interest rate on the credit facility represents a level 2 fair value input.