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Fair Value of Financial Instruments
 3 Months Ended
Mar. 31, 2023
Fair Value of Financial Instruments [Abstract]  
Fair Value of Financial Instruments 4. Fair Value of Financial Instruments

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The carrying value of our cash and cash equivalents, restricted cash, accounts receivable and accounts payable approximate fair value because of their short-term nature.

Our held-to-maturity investments are comprised of U.S. Treasury securities and a corporate debt security, which are held at amortized cost. We also have an investment in a convertible note receivable which is held at fair-value. Additionally, we maintain a deferred compensation plan with related assets held in a rabbi trust.

The following tables show our cash, cash equivalents, and debt investments by significant investment category as of March 31, 2023 and December 31, 2022:

March 31, 2023

Adjusted cost

Unrealized Gains

Unrealized Losses

Fair Value

Cash and Cash Equivalents

Current Investments

Long-term Investments

Cash

$

73,240

$

-

$

-

$

73,240

$

73,240

$

-

$

-

Level 1(1)

Money market funds

260,944

-

-

260,944

260,944

-

-

Time deposits

75,543

-

-

75,543

75,543

-

-

U.S. Treasury securities

965,452

788

9,850

956,390

-

652,858

312,594

Subtotal

1,301,939

788

9,850

1,292,877

336,487

652,858

312,594

Level 3

Corporate debt security(2)

17,800

-

480

17,320

-

-

17,800

Note receivable(3)

4,860

-

78

4,782

-

-

4,782

Subtotal

22,660

-

558

22,102

-

-

22,582

Total

$

1,397,839

$

788

$

10,408

$

1,388,219

$

409,727

$

652,858

$

335,176

December 31, 2022

Adjusted cost

Unrealized Gains

Unrealized Losses

Fair Value

Cash and Cash Equivalents

Current Investments

Long-term Investments

Cash

$

75,829

$

-

$

-

$

75,829

$

75,829

$

-

$

-

Level 1(1)

Money market funds

232,477

-

-

232,477

232,477

-

-

Time deposits

75,694

-

-

75,694

75,694

-

-

U.S. Treasury securities

847,354

63

14,355

833,062

-

515,136

332,218

Subtotal

1,155,525

63

14,355

1,141,233

308,171

515,136

332,218

Level 3

Corporate debt security(2)

17,900

-

700

17,200

-

-

17,900

Note receivable(3)

4,860

222

-

5,082

-

-

5,082

Subtotal

22,760

222

700

22,282

-

-

22,982

Total

$

1,254,114

$

285

$

15,055

$

1,239,344

$

384,000

$

515,136

$

355,200

(1) Level 1: Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.

(2) The fair value of the corporate debt security is measured using Level 3 (unobservable) inputs. We determined the fair value for the corporate debt security using an internally-developed valuation model and unobservable inputs include credit and liquidity spreads and effective maturity.

(3) We have elected to measure our investment in a convertible note receivable of a private company at fair value under the fair value option. The fair value of the note receivable is measured using Level 3 (unobservable) inputs. We determined the fair value for the note receivable using an internally-developed valuation model and unobservable inputs include estimates of the equity value of the underlying business and the timing and probability of future financing events.

Rabbi Trust

We have elected to fund certain deferred compensation plan obligations through a rabbi trust, the assets of which are designated as trading securities. The rabbi trust is subject to creditor claims in the event of insolvency, but the assets held in the rabbi trust are not available for general corporate purposes. Amounts in the rabbi trust are invested in mutual funds, consistent with the investment choices selected by participants in their Deferred Plan accounts, which are designated as trading securities, carried at fair value and are included in other assets on the condensed consolidated balance sheets. We record trading gains and losses, along with the offsetting amount related to the increase or decrease in deferred compensation to reflect our exposure to liabilities for payment under the deferred plan in general and administrative expenses on the condensed consolidated statements of income and comprehensive income.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Assets recognized or disclosed at fair value on the condensed consolidated financial statements on a nonrecurring basis include items such as leasehold improvements, property and equipment, certain long-term investments, operating lease assets, other assets, and goodwill. These assets are measured at fair value whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable or if there has been an observable price change of a non-marketable equity security.

The following table summarizes our restaurant and office assets measured at fair value by hierarchy level on a nonrecurring basis:

Carrying Value

March 31,

Level

2023

2022

Leasehold improvements, property and equipment, net

3

$

223

$

539

Operating lease assets

3

458

400

Total

$

681

$

939

Fair value of these assets was measured using Level 3 inputs (unobservable inputs for the asset or liability). Unobservable inputs include the discount rate, projected restaurant revenues and expenses, and sublease income if we are closing the restaurant and intending to sublease the restaurant. During the three months ended March 31, 2023 and 2022, we recorded asset impairments related to restaurants and offices of $1,299 and $731, respectively. Costs are recorded within impairment, closure costs, and asset disposals on the condensed consolidated statements of income and comprehensive income. Carrying value after the impairment charges approximates fair value.