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FAIR VALUE
 12 Months Ended
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
TotalLevel 1Level 2Level 3TotalLevel 1Level 2Level 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. Additionally, 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 value819 
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 value3,475 
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
 TotalLevel 1Level 2Level 3Impairment
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
 TotalLevel 1Level 2Level 3Impairment
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
 TotalLevel 1Level 2Level 3Impairment
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.