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 determines 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 September 30, 2018, the Company recorded impairment and other lease charges of $0.2 million consisting of a loss of $0.1 million associated with a sale-leaseback of a restaurant property and $0.1 million of capital expenditures at underperforming restaurants. During the nine months ended September 30, 2018, the Company recorded impairment and other lease charges of $3.4 million consisting of $0.6 million of capital expenditures at underperforming restaurants, losses of $0.7 million associated with sale-leaseback transactions of restaurant properties and $1.9 million related to the write-off of defective product holding unit kitchen equipment that was replaced.

During the three months ended October 1, 2017, the Company recorded impairment and other lease charges of $1.0 million which included $0.2 million of capital expenditures at previously impaired restaurants, $0.3 million associated with an underperforming restaurant anticipated to close in 2018 and $0.6 million of other lease charges associated with the closure of one underperforming restaurant and an acquired administrative office. During the nine months ended October 1, 2017, the Company recorded impairment and other lease charges of $2.0 million, which included $0.5 million of capital expenditures at previously impaired restaurants, $0.5 million of asset impairment charges at four underperforming restaurants and $0.9 million of other lease charges primarily due to four restaurants and an acquired administrative office closed during the period.

The following table presents the activity in the accrual for closed restaurant locations:



	Nine Months Ended			Year Ended
	September 30, 2018			December 31, 2017
Balance, beginning of the period	$	2,028		$	1,513
Provisions for closures	162			1,174
Changes in estimates of accrued costs	(120		)	81
Payments, net	(746		)	(862		)
Other adjustments, including the effect of discounting future obligations	89			122
Balance, end of the period	$	1,413		$	2,028

Changes in estimates of accrued costs primarily relate to revisions or terminations of certain closed restaurant leases, changes in assumptions for sublease income and other costs.