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FAIR VALUE | 12 Months Ended
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Dec. 31, 2023
Fair Value Disclosures [Abstract] |
FAIR VALUE | FAIR VALUE The following tables present information about the Company’s financial liabilities measured at fair value on a recurring basis:
|  |  | Fair Value Measurements as of December 31, 2023 |  |  |  | Fair Value Measurements as of December 25, 2022
| Total |  | Level 1 |  | Level 2 |  | Level 3 |  | Total |  | Level 1 |  | Level 2 |  | Level 3
(dollar amounts in thousands) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Contingent consideration | $ | 8,350 |  |  | — |  |  | — |  |  | 8,350 |  |  | $ | 21,296 |  |  | — |  |  | — |  |  | 21,296 |
The fair value of the contingent consideration was determined based on significant inputs not observable in the market. Contingent Consideration In connection with the Company’s acquisition of Spyce on September 7, 2021, the former equity holders of Spyce may receive up to 714,285 additional shares of Class A common stock, calculated based on the initial offering price of the Company’s Class A common stock of $28.00 per share sold in the Company’s initial public offering (“IPO”) (the “Reference Price”), contingent on the achievement of certain performance milestones between the closing date of the acquisition and June 30, 2026. See Note 6. Add itionally, the former equity holders of Spyce may receive true-up payments in cash, as described here. If as of the second anniversary of the closing date of the acquisition, the 30-Day Volume-Weighted Average Price of the Company’s Class A common stock (“VWAP Price”) is less than the Reference Price, then the Company shall pay to each former equity holder of Spyce that has continually held their respective portion of the 1,316,763 total shares of the Company’s Class A common stock issued in connection with the acquisition during such period, the delta between the Reference Price and the VWAP Price for the upfront portion of the purchase price (“true-up payment”). As of the second anniversary of the closing date of the acquisition, the Company calculated the delta between the Reference Price and the VWAP Price for the upfront portion of the purchase price as $13.62. This resulted in a true-up payment of $10.4 million, due to 570,249 shares that did not meet the continuous holding requirement. The $10.4 million true-up payment is included within financing in the Consolidated Statements of Cash Flows as the payment is less than the original fair value of contingent consideration. Additionally, if as of the date of the achievement of any of the three milestones, the VWAP Price as of such milestone achievement date is less than the Reference Price, then the Company shall pay to each former equity holder of Spyce that is eligible to receive a milestone payment the delta between the Reference Price and the VWAP Price for the contingent consideration associated with such milestone. The contingent consideration, excluding the true-up payment, which was calculated as noted above, was valued using the Monte Carlo method. The analysis considered, among other items, the equity value, the contractual terms of the Spyce merger agreement, potential liquidity event scenarios (prior to the IPO), the Company’s credit-adjusted discount rate, equity volatility, risk-free rate, and the probability that milestone targets required for issuance of shares under the contingent consideration will be achieved. During the fourth quarter of fiscal 2023, the first milestone was achieved, which resulted in former equity holders of Spyce being eligible to receive $6.0 million, which was issued and paid subsequent to December 31, 2023. Of this $6.0 million, $2.1 million was issued in Class A common stock and $3.9 million was issued in cash, based on a VWAP Price of $10.20. As the stock was issued and payment was made within one year from December 31, 2023, it was included in other current liabilities within the Consolidated Balance Sheets. The following table provides a roll forward of the aggregate fair values of the Company’s contingent consideration, for which fair value is determined using Level 3 inputs.
(dollar amounts in thousands) | Contingent consideration
Balance—December 26, 2021 | $ | 20,477 |
Change in fair value | 819 |
Balance—December 25, 2022 | $ | 21,296 |
True-up payment | (10,421) |
Current portion of contingent consideration included in other current liabilities | (6,000) |
Change in fair value | 3,475 |
Balance—December 31, 2023 | $ | 8,350 |
The following non-financial instruments were measured at fair value, on a nonrecurring basis, as of and for the fiscal years ended December 31, 2023, December 25, 2022, and December 26, 2021 reflecting certain property and equipment and operating leases for which an impairment loss was recognized during the corresponding periods within impairment and closure costs and restructuring charges within the consolidated statement of operations.
|  |  | Fair Value Measurements at December 31, 2023 |  | Fiscal Year Ended December 31, 2023
| Total |  | Level 1 |  | Level 2 |  | Level 3 |  | Impairment Losses
(dollar amounts in thousands) |  |  |  |  |  |  |  |  |
Operating lease assets | $ | 5,719 |  |  | $ | — |  |  | $ | — |  |  | $ | 5,719 |  |  | $ | 4,291 |
|  |  | Fair Value Measurements at December 25, 2022 |  | Fiscal Year Ended December 25, 2022
| Total |  | Level 1 |  | Level 2 |  | Level 3 |  | Impairment Losses
(dollar amounts in thousands) |  |  |  |  |  |  |  |  |
Certain property and equipment, net | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 8,821 |
Operating lease assets | $ | 10,744 |  |  | $ | — |  |  | $ | — |  |  | $ | 10,744 |  |  | $ | 6,228 |
|  |  | Fair Value Measurements at December 26, 2021 |  | Fiscal Year Ended December 26, 2021
| Total |  | Level 1 |  | Level 2 |  | Level 3 |  | Impairment Losses
(dollar amounts in thousands) |  |  |  |  |  |  |  |  |
Certain property and equipment, net | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 4,415 |
The fair value of these assets represents a Level 3 fair value measurement. Unobservable inputs include the discount rate, projected restaurant revenues and expenses, and sublease income if we are closing the restaurant. For the operating lease assets’ fair value estimate as of December 31, 2023 and December 25, 2022, the Company estimated the sublease income through early fiscal 2032 and discounted such cash flows using a property specific discount rate of approximately nine percent.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482106/820-10-50-2 + Details
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