Fair Value of Financial Instruments

12 Months Ended

Dec. 25, 2024

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Fair Value of Assets and Liabilities Measured on a Recurring and Nonrecurring Basis

Financial assets and (liabilities) measured at fair value on a recurring basis are summarized below:

	Total		Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
Fair value measurements as of December 25, 2024:
Deferred compensation plan investments (1)	$	10,400	$	10,400	$	—	$	—
Interest rate swaps (2)	20,841		—		20,841		—
Investments (3)	1,106		—		1,106		—
Total	$	32,347	$	10,400	$	21,947	$	—
Fair value measurements as of December 27, 2023:
Deferred compensation plan investments (1)	$	12,225	$	12,225	$	—	$	—
Interest rate swaps (2)	8,888		—		8,888		—
Investments (3)	1,281		—		1,281		—
Total	$	22,394	$	12,225	$	10,169	$	—

(1)    The fair values of our deferred compensation plan investments are based on the closing market prices of the elected investments and are included in other noncurrent assets in our Consolidated Balance Sheets.

(2)    The fair values of our interest rate swaps are based upon Level 2 inputs, which include valuation models. The key inputs for the valuation models are quoted market prices, interest rates, forward yield curves and credit risk adjustments that are necessary to reflect the probability of default by the counterparty or us. For disclosures about the fair value measurements of our derivative instruments, see Note 10.

(3)    The fair value of investments is valued using a readily determinable net asset value per share based on the fair value of the underlying securities. There are no significant redemption restrictions associated with these investments.

Those assets and (liabilities) measured at fair value on a nonrecurring basis are summarized below:

		Significant Unobservable Inputs (Level 3)		Impairment Charges
Fair value measurements as of December 27, 2023:
Assets held and used, including other intangible assets (1)		$	—	$	375
Goodwill (2)		$	28,381	$	6,363
(1)	As of December 27, 2023, impaired assets were written down to their fair value. To determine fair value, we used the income approach, which assumes that the future cash flows reflect current market expectations. These fair value measurements require significant judgment using Level 3 inputs, such as discounted cash flows from operations, which are not observable from the market, directly or indirectly. There is uncertainty in the projected future cash flows used in the Company’s impairment analysis, which requires the use of estimates and assumptions. If actual performance does not achieve the projections, or if the assumptions used change in the future, the Company may be required to recognize impairment charges in future periods.
(2)	As of December 27, 2023, impaired Keke’s goodwill was written down to fair value. To determine fair value, we used an income approach and market approach, with equal weighting given to each approach, to value the goodwill subject to the impairment. These fair value measurements require significant judgment using Level 3 inputs. The income approach involves the use of estimates and assumptions including forecasted future revenues and operating margins, including projected growth in restaurant unit counts and average unit volumes, royalty rate, and discount rates. Inputs used are generally obtained from historical data supplemented by current and anticipated market conditions and growth rates. The market approach involves the selection and application of cash flows multiples of a group of similar companies to the projected cash flows of the operating segment.

Assets that are measured at fair value on a non-recurring basis include property, operating right-of-use assets, finance right-of-use assets, goodwill and reacquired franchise rights. During the year ended December 25, 2024 and December 27, 2023, we recognized impairment charges of $0.8 million and $8.6 million, respectively, related to certain of these assets. See Note 6 and Note 14.

The carrying amounts of cash and cash equivalents, accounts receivables, accounts payable and accrued expenses are deemed to approximate fair value due to the immediate or short-term maturity of these instruments. The fair value of notes receivable approximates the carrying value after consideration of recorded allowances and related risk-based interest rates. The liabilities under our credit facility are carried at historical cost, which approximates fair value. The fair value of our senior secured revolver approximates its carrying value since it is a variable rate facility (Level 2). The determinations of fair values of certain tangible and intangible assets for purposes of the application of the acquisition method of accounting to the acquisition of Keke’s were based on Level 3 inputs.