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Restaurant Closures and Impairment of Long-Lived Assets
6 Months Ended
Jun. 30, 2018
Restaurant Closures and Impairment of Long-Lived Assets [Abstract]  
Restaurant Closures and Impairment of Long-Lived Assets

7. Restaurant Closures and Impairment of Long-Lived Assets

Following an evaluation of underperforming restaurants, we determined that we will close approximately 55 to 65 restaurants beginning in the second quarter of 2018 and continuing over the next several quarters. We closed one Chipotle restaurant and five Pizzeria Locale restaurants due to underperformance during the three months ended June 30, 2018. Primarily in connection with these planned restaurant closures, during the three and six months ended June 30, 2018, we recognized non-cash impairment charges of $25,166  ($18,507 net of tax, as well as $0.67 and $0.66 per basic and diluted earnings per share for the three months ended June 30, 2018 and $0.66 per basic and diluted earnings per share for the six months ended June 30, 2018). The impairment charges were recognized in impairment, closure costs, and asset disposals on the condensed consolidated statement of income and represented a write down of a large portion of the associated long-lived asset value related to those restaurants. The fair value of the long-lived assets was determined using valuation techniques including discounting future cash flows and market-based analyses to determine resale value, both of which are Level 3 inputs (unobservable inputs).

We record a liability for lease termination costs consisting of the net present value of remaining lease obligations, net of estimated sublease rentals that could be reasonably obtained, at the date we cease using a property, and measure fair value using Level 3 inputs (unobservable inputs) based on a discounted cash flow method. During the three and six months ended June 30, 2018, we recorded $716 in connection with the restaurants closed due to underperformance in impairment, closure costs, and asset disposals on the condensed consolidated statement of income. On July 26, 2018, we completed the closure of an additional 29 Chipotle restaurants, and we expect to incur additional charges for these and the remaining planned restaurant closures over the next several quarters as we cease using the properties for lease termination costs of approximately $8,000 to $17,000 and accelerated depreciation of approximately $7,000 to $8,000.