Intangible Assets (Notes)

12 Months Ended

Dec. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Franchise Rights. Amounts allocated to franchise rights for each acquisition of Burger King and Popeyes restaurants are amortized using the straight-line method over the average remaining term of the acquired franchise agreements plus one twenty-year renewal period. As described in Note 2, the Company reviews its franchise rights for impairment whenever events or circumstances indicate that the carrying value may not be recoverable. There were no impairment charges recorded related to the Company's franchise rights during the year ended December 31, 2023. There were $0.2 million of impairment charges recorded related to the Company's franchise rights during the year ended January 1, 2023 related to the remaining franchise rights carrying value for a restaurant closure during the period which had been previously acquired. There were no impairment charges recorded related to the Company's franchise rights during the year ended January 2, 2022.

Amortization expense related to franchise rights for the years ended December 31, 2023, January 1, 2023 and January 2, 2022 was $13.9 million, $14.0 million and $13.9 million, respectively. The Company expects annual amortization to be $13.9 million in each of 2024, 2025, 2026, 2027 and 2028.

Goodwill. The Company is required to review goodwill for impairment annually, or more frequently when events and circumstances indicate that the carrying amount may be impaired. If the determined fair value of the reporting unit is less than the related carrying amount, an impairment loss is recognized. The Company performs its annual goodwill impairment test as of the end of the eighth month of its fiscal year. As part of the annual goodwill impairment test, the Company considered certain qualitative and quantitative factors, such as the Company's performance, business forecasts, capital expenditure plans, a discount rate approximating the Company's weighted average cost of capital, and an evaluation of peer company multiples, among other factors. Given the nature of the qualitative and quantitative factors considered, there is a degree of uncertainty associated with these judgments and estimates. Notably, the business forecasts and market conditions considered within the Company's annual goodwill impairment test reflect the Company's long-standing history of operating Burger King restaurants in various business cycles.

The Company assessed events and circumstances from the date of its annual goodwill impairment test through December 31, 2023 and there were no indicators representing a triggering event, nor were any goodwill related impairments recognized during the year ended December 31, 2023.

In 2022, the Company evaluated the impact of a sustained decline in the Company's stock price which resulted in an implied equity premium that was outside of an observable range and was determined to be an indicator of an impairment. As a result, the Company performed a quantitative interim goodwill impairment test for its reporting units in the second quarter of 2022. As part of this interim goodwill impairment test, the Company considered certain qualitative and quantitative factors, such as the Company's performance, business forecasts, capital expenditure plans, a discount rate approximating the Company's weighted average cost of capital, and an evaluation of peer company multiples, among other factors. Using both the income approach and the market approach, the Company compared the fair value of each of its reporting units to their respective carrying values. Based on the results of this analysis, the Company determined that the fair value of its Popeyes reporting unit was less than its carrying value, and as a result, recorded a non-cash goodwill impairment of $16.7 million. The non-cash goodwill impairment represented a full write-down of the goodwill for the Popeyes reporting unit and was included in impairment and other lease charges on the condensed Consolidated Statements of Comprehensive Income (Loss).

The following reflects the changes in goodwill for the years ended December 31, 2023 and January 1, 2023.


Goodwill at January 2, 2022	$	124,451

Impairment of goodwill	(16,700)
Goodwill at January 1, 2023	107,751

Impairment of goodwill	—
Goodwill at December 31, 2023	$	107,751