Goodwill

12 Months Ended

Dec. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

The significant majority of the Company's goodwill arose from the November 29, 2007 acquisition of Applebee's. In October 2022, the disposition of assets of $4.6 million was related to the refranchising and sale of the restaurant assets of 69 Applebee's company-operated restaurants. In December 2022, the addition to goodwill of $7.0 million arose from the acquisition of Fuzzy's, which was determined to be a separate reporting unit. Changes in the carrying amount of goodwill for the years ended December 31, 2023, 2022 and 2021 are as follows:


	Applebee's Franchise Unit		Applebee's Company Unit		IHOP Franchise Unit		Fuzzy's Franchise Unit		Total
	(In millions)


Balance at December 31, 2020	$	236.2	$	4.6	$	10.8	$	—	$	251.6
Balance at December 31, 2021	236.2		4.6		10.8		—		251.6
Disposition of assets	—		(4.6)		—		—		(4.6)
Business acquisition	—		—		—		7.0		7.0
Balance at December 31, 2022	236.2		—		10.8		7.0		254.0
Purchase price adjustment	—		—		—		0.1		0.1
Balance at December 31, 2023	$	236.2	$	—	$	10.8	$	7.1	$	254.1

Gross and net carrying amounts of goodwill at December 31, 2023 and 2022 are as follows:


	December 31, 2023						December 31, 2022
	Gross		Accumulated Impairment Loss		Net		Gross		Accumulated Impairment Loss		Net
	(In millions)
Applebee's Franchise Unit	$	686.7	$	(450.5)	$	236.2	$	686.7	$	(450.5)	$	236.2
Applebee's Company Unit	—		—		—		4.6		(4.6)		—
IHOP Franchise Unit	10.8		—		10.8		10.8		—		10.8
Fuzzy's Franchise Unit	7.1		—		7.1		7.0		—		7.0
Total	$	704.6	$	(450.5)	$	254.1	$	709.1	$	(455.1)	$	254.0

The Company assesses goodwill for impairment in accordance with its policy described in Note 2 - Basis of Presentation and Summary of Significant Accounting Policies.

The Company evaluates its goodwill and the indefinite-lived tradenames for impairment annually in the fourth quarter of each year or on an interim basis if events or changes in circumstances between annual tests indicate a potential impairment. Definite-lived intangible assets and long-lived tangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable based on estimated undiscounted future cash flows.

2023 Assessment

In the fourth quarter of 2023, the Company performed qualitative assessments of its goodwill in accordance with its accounting policies, and determined that it was more-likely-than-not that an impairment does not exist. Significant factors considered in this assessment include macro-economic conditions, market and industry conditions, cost considerations, the competitive environment, share price fluctuations, overall financial performance and results of past impairment tests.

Additionally, we elected to perform quantitative tests for impairment on the Applebee's goodwill. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The fair value technique used in this instance is classified as Level 3, where unobservable inputs are used when little or no market data is available.

In performing the quantitative test for impairment of goodwill, the Company used the income approach method of valuation that includes the discounted cash flow method and the market approach that includes the guideline public company method to determine the fair value of goodwill and intangible assets. Significant assumptions made by management in estimating fair value under the discounted cash flow model include future trends in sales, operating expenses, overhead expenses, depreciation, capital expenditures and changes in working capital, along with an appropriate discount rate based on the Company's estimated cost of equity capital and after-tax cost of debt. Significant assumptions used to determine fair value under the guideline public company method include the selection of guideline companies and the valuation multiples applied.

As a result of performing the quantitative test of impairment, the fair value was substantially in excess of its respective carrying value as of the testing date.

2022 and 2021 Assessments

In the fourth quarters of 2022 and 2021, the Company performed qualitative assessments of its goodwill in accordance with its accounting policies. We first assess qualitatively whether it is more-likely-than-not that an impairment does not exist. Significant factors considered in this assessment include macro-economic conditions, market and industry conditions, cost considerations, the competitive environment, share price fluctuations, overall financial performance and results of past impairment tests. As result of the qualitative assessment, the Company concluded it was more likely than not that the fair values of each unit exceeded the respective carrying amounts and therefore, a quantitative test of impairment was not necessary.