Impairment of Long-Lived Assets and Other Lease Charges

The Company reviews its long-lived assets, principally property and equipment, for impairment at the restaurant level. If an indicator of impairment exists for any of its assets, an estimate of the undiscounted future cash flows over the life of the primary asset for each restaurant is compared to that long-lived asset’s carrying value. If the carrying value is greater than the undiscounted cash flow, the Company then determines the fair value of the asset and if an asset is determined to be impaired, the loss is measured by the excess of the carrying amount of the asset over its fair value. For closed restaurant locations, the Company reviews the future minimum lease payments and related ancillary costs from the date of the restaurant closure to the end of the remaining lease term and records a lease charge for the lease liabilities to be incurred, net of any estimated sublease recoveries.

The Company determined the fair value of restaurant equipment, for those restaurants reviewed for impairment, based on current economic conditions and the Company’s history of using these assets in the operation of its business. These fair value asset measurements rely on significant unobservable inputs and are considered Level 3 in the fair value hierarchy.

During the three months ended June 29, 2014, the Company recorded impairment charges of $0.4 million consisting of approximately $0.1 million of capital expenditures at previously impaired restaurants and $0.3 million related to initial impairment charges at three underperforming restaurants.

During the six months ended June 29, 2014, the Company recorded other lease charges of $0.4 million and impairment charges of $0.6 million consisting of approximately $0.3 million of capital expenditures at previously impaired restaurants and approximately $0.3 million related to initial impairment charges for three underperforming restaurants.

The following table presents the activity in the closed-restaurant reserve for the six months ended June 29, 2014 and year ended December 29, 2013:



	Six Months Ended			Year Ended
	June 29, 2014			December 29, 2013
Balance, beginning of the period	$	1,466		$	—
Provisions for restaurant closures	414			1,616
Payments, net	(241		)	(242		)
Other adjustments, including the effect of discounting future obligations and changes in estimates	46			92
Balance, end of the period	$	1,685		$	1,466