Acquisitions

In 2012, as part of an acquisition of restaurants from Burger King Corporation ("BKC"), the Company was assigned BKC's right of first refusal on the sale of franchisee-operated restaurants in 20 states (the "ROFR"). Since the beginning of 2018, the Company has acquired an aggregate of 44 restaurants from other franchisees in the following transactions, some of which were subject to the ROFR (in thousands, except number of restaurants):



Closing Date		Number of Restaurants	Purchase Price		Market Location
February 13, 2018	(1)	1	$	—	New York
August 21, 2018	(2)	2	1,666		Detroit, Michigan
September 5, 2018	(2)	31	25,930		Western Virginia
October 2, 2018		10	10,506		South Carolina and Georgia
		44	$	38,102

(1)

During the first quarter of 2018, the allocation of the purchase price and the resulting bargain purchase gain for this acquisition was preliminary and subject to adjustment. Specifically, the Company was finalizing the valuation of franchise rights which will impact the amount of the bargain purchase gain. In the second quarter of 2018, the Company recorded a bargain purchase gain because the fair value of assets acquired, largely representing a franchise right asset of $0.3 million, exceeded the total fair value of consideration paid by $0.2 million.


(2)	Acquisitions resulting from the exercise of the ROFR.

The Company allocated the aggregate purchase price to the net tangible and intangible assets acquired in the acquisitions at their estimated fair values. The following table summarizes the preliminary allocation of the aggregate purchase price for the 2018 acquisitions reflected in the condensed consolidated balance sheets as of December 30, 2018.



Inventory	$	401
Restaurant equipment	2,092
Restaurant equipment - subject to finance leases	43
Leasehold improvements	1,329
Franchise fees	1,264
Franchise rights (Note 3)	31,275
Favorable leases (Note 3)	587
Deferred income taxes	346
Goodwill (Note 3)	1,677
Finance lease liabilities for restaurant equipment	(49		)
Unfavorable leases (Note 3)	(624		)
Accounts payable	(9		)
Net assets acquired	$	38,332

The results of operations for the restaurants acquired are included from the closing date of the respective acquisition. The 2018 acquired restaurants contributed restaurant sales of $13.0 million in the three months ended March 31, 2019 and contributed restaurant sales of $0.1 million in the three months ended April 1, 2018, respectively. It is impracticable to disclose net earnings for the post-acquisition period for the acquired restaurants as net earnings of these restaurants were not tracked on a collective basis due to the integration of administrative functions, including field supervision.

The unaudited pro forma impact on the results of operations for the restaurants acquired in 2018 for the three months ended March 31, 2019 and April 1, 2018 is included below. The unaudited pro forma results of operations are not necessarily indicative of the results that would have occurred had the acquisitions been consummated at the beginning of the periods presented, nor are they necessarily indicative of any future consolidated operating results. The following table summarizes the Company's unaudited pro forma operating results:



	Three Months Ended
	March 31, 2019			April 1, 2018
Restaurant sales	$	290,789		$	284,817
Net loss	$	(11,469	)	$	(2,269	)
Basic and diluted net loss per share	$	(0.32	)	$	(0.06	)

This unaudited pro forma financial information does not give effect to any anticipated synergies, operating efficiencies, cost savings or any integration costs related to the acquired restaurants.

The unaudited pro forma financial results exclude transaction costs recorded as general and administrative expenses of $0.1 million during the three months ended April 1, 2018.