6. Restaurant Closure Costs and Impairment of Long-Lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For the purpose of reviewing restaurant assets to be held and used for potential impairment, assets are grouped together at the market level, or in the case of a potential relocation or closure, at the restaurant level. We manage our restaurants as a group with significant common costs and promotional activities; as such, an individual restaurant’s cash flows are not generally independent of the cash flows of others in a market.

The fair value measurement for asset impairment is based on Level 3 inputs. We first compare the carrying value of the asset to the asset’s estimated future undiscounted cash flows. If the estimated undiscounted future cash flows are less than the carrying value of the asset, we determine if we have an impairment loss by comparing the carrying value of the asset to the asset's estimated fair value. The estimated fair value of the asset is generally determined using a discounted cash flow projection model. In certain cases, management uses other market information, when available, to estimate the fair value of an asset. The impairment charges represent the excess of each asset’s carrying amount over its estimated fair value.

We record a liability for lease termination costs consisting of the net present value of remaining lease obligations, net of estimated sublease rentals that could be reasonably obtained, at the date we cease using a property, and measure fair value using Level 3 inputs based on a discounted cash flow method.

In June 2018, we announced planned restaurant closures of approximately 55 to 65 restaurants beginning in the second quarter of 2018 and continuing over the next several quarters. As a result, we expect to incur total restaurant exits costs into 2019 aggregating approximately $37,000 to $43,000; including (i) asset impairment costs of approximately $26,000 to $27,000, and (ii) lease termination and other restaurant closure costs, net of the reversal of the deferred rent liability, aggregating approximately $11,000 to $16,000 in connection with expected restaurant closures. During the nine months ended September 30, 2018, we closed 33 underperforming Chipotle restaurants and five Pizzeria Locale restaurants.

The following is a summary of asset impairment and lease termination and other restaurant closure costs recorded in impairment, closure costs, and asset disposals on the condensed consolidated statement of income:



	Three months ended				Nine months ended
	September 30,				September 30,
	2018		2017		2018		2017
Asset impairments	$	2,165	$	2,918	$	30,491	$	3,258
Lease termination and other restaurant closure costs		7,516		178		8,682		1,072
Reversal of deferred rent liability		(4,856)		(149)		(5,526)		(1,712)

The following table summarizes the activity included in lease termination costs liability related to restaurant closures which is included in accrued liabilities on the condensed consolidated balance sheet:



	Balance December 31, 2017		Charges		Payments		Balance September 30, 2018
Lease termination costs for closed restaurants	$	1,416	$	8,682	$	(2,323)	$	7,775