GOODWILL, TRADEMARKS AND INTANGIBLE ASSETS

12 Months Ended

Sep. 28, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL, TRADEMARKS AND INTANGIBLE ASSETS

Goodwill and Trademarks

Goodwill and trademarks are not amortized, but are subject to impairment analysis. We assess the potential impairment of goodwill and trademarks annually (at the end of our fourth quarter) and on an interim basis whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If we determine through the impairment review process that goodwill or trademarks are impaired, we record an impairment charge in our consolidated statements of operations.

In performing its goodwill impairment test as of September 30, 2023, the Company determined that a triggering event had occurred. Due to the volatility of the Company's stock price in the fourth quarter of fiscal 2023, the upcoming expiration of the current Bryant Park Grill & Cafe and The Porch at Bryant Park leases on April 30, 2025 and the related requests for proposals from the landlord for both locations received in July 2023 and September 2023, respectively (see Note 11 - Commitments and Contingencies to the Consolidated Financial Statements), the Company determined that there were indicators of potential impairment of its goodwill as of September 30, 2023. As of September 28, 2024, there had been a lack of communication from the landlord regarding our proposals. In August 2024, the Company became aware that the landlord was in discussions with another operator. Accordingly, the Company performed qualitative and quantitative assessments for its goodwill as of September 28, 2024 and September 30, 2023. The fair value of the equity was determined using the income approach. Given the relatively low volume of shares traded as of September 28, 2024 and September 30, 2023, the Company determined the income approach provided the best approximation of fair value. In the income approach, we utilized a discounted cash flow analysis, which involved estimating the expected future after-tax cash flows generated and then discounting those cash flows to present value, reflecting the relevant risks associated with the achievement of projected cash flows, the possibility that the Bryant Park Grill & Cafe and The Porch at Bryant Park leases may not be renewed beyond their expirations on April 30, 2025, and the time value of money. This approach requires the use of significant estimates and assumptions, including forecasted revenue growth rates, forecasted cash flows from operations, and discount rates that reflect the risk inherent in the future cash flows.

Based on the impairment analysis, the carrying amount of our equity exceeded its estimated fair value, which indicated an impairment of the carrying value of our goodwill at September 28, 2024 and September 30, 2023. Accordingly, during the fourth quarters of fiscal 2024 and 2023, the Company recorded goodwill impairment charges of $4,000,000 and $10,000,000, respectively, of which $4,000,000 and $8,000,000, respectively, was deductible for tax purposes and resulted in a deferred income tax benefit of $1,074,000 and $2,300,000, respectively. Such impairments have been attributed to factors such as, but not limited to, a decrease in the market price of the Company's common stock and lower than expected profitability.

The changes in the carrying amount of goodwill and trademarks for the years ended September 28, 2024 and September 30, 2023 are as follows:


	Goodwill		Trademarks
	(in thousands)
Balance as of October 1, 2022	$	17,440	$	4,220
Acquired during the year	—		—
Impairment charge (1)	(10,000)		—
Balance as of September 30, 2023	7,440		4,220
Acquired during the year	—		—
Impairment charge (1)	(4,000)		—
Balance as of September 28, 2024	$	3,440	$	4,220

(1) Accumulated impairment losses as of September 28, 2024 and September 30, 2023 were $14,000,000 and $10,000,000, respectively.

Intangibles

Intangible assets consist of the following:


	September 28, 2024		September 30, 2023
	(in thousands)
Purchased leasehold rights (a) - fully amortized	$	1,995	$	1,995
Noncompete agreements and other - 5-10 years	633		633
	2,628		2,628
Less accumulated amortization	2,530		2,441
Intangible Assets - Net	$	98	$	187

(a)Purchased leasehold rights arose from acquiring leases and subleases of various restaurants.

Amortization expense related to intangible assets for the years ended September 28, 2024 and September 30, 2023 was $89,000 and $85,000, respectively. Amortization expense is expected to be $85,000 for fiscal 2025 and $14,000 for fiscal 2026 and 2027.