Impairment |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 01, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Impairment | Impairment The Company recognized non-cash impairment charges of approximately $4.5 million during the year ended January 1, 2024 and $73.5 million for the year ended January 2, 2023. This consisted of the following:
Based on the results of the Company’s annual goodwill impairment tests for the year ended January 1, 2024, the Company determined that goodwill was not impaired for the Anthony's and BurgerFi reporting units; accordingly, the Company recorded no goodwill impairment charges.
The Company reviewed the sensitivity of its goodwill impairment test assumptions noting that a 1% increase in its discount rate and a 5% decrease in cash flows would not cause an impairment of its Anthony’s goodwill for the year ended January 1, 2024.
Based on the results of the Company’s interim and annual goodwill impairment tests for the year ended January 2, 2023, the Company determined that its goodwill was impaired for the Anthony’s and BurgerFi reporting units. Accordingly, for the BurgerFi reporting unit, the Company recorded a goodwill impairment charge of approximately $17.5 million; there was no remaining carrying value of the BurgerFi goodwill at January 2, 2023. We also recognized an impairment charge for Anthony’s reporting unit’s goodwill for the year ended January 2, 2023 of $49.1 million.
As part of the annual impairment review of indefinite-lived intangible assets, the Company recorded an impairment charge of $0.1 million for the year ended January 1, 2024, related to the Anthony’s liquor licenses; there were no impairment charges recorded for indefinite-lived intangible assets for the year ended January 2, 2023.
Based on the Company’s review at the end of each reporting period of its long-lived assets and definite-lived intangible assets, it performed impairment testing for the related asset group for which there are independently identifiable cash flows. Based on its impairment testing, the Company determined that certain long-lived assets relating to its right-of-use assets, and property and equipment at certain underperforming corporate-owned restaurants were impaired at the BurgerFi and Anthony’s reporting units. For the year ended January 1, 2024, the Company recorded impairment charges of approximately $3.3 million for the BurgerFi reporting unit, and $1.2 million for the Anthony’s reporting unit. For the year ended January 2, 2023, the Company recorded impairment charges of approximately $6.7 million for the BurgerFi reporting unit, and $0.2 million for the Anthony’s reporting unit.The impairment amount was primarily the result of lower cash flow estimates associated with the licensing agreements, as well as a change in estimate of the related useful life.
As it relates to determining the fair values of the assets impaired such as goodwill and definite lived intangible assets, refer to Note 13, “Fair Value Measurements.” The Company utilized the income approach to fair value for its long-lived and right-of-use assets and based on the weight of unobservable inputs classifies their fair value measurements as Level 3 of the fair value hierarchy.
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