How does Noodles & Company measure the recoverability of its long-lived assets?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
n, which ranged from approximately one year to eight years as of December 31, 2024. Trademark rights are considered indefinitelived intangible assets, the carrying value of which are analyzed for impairment at least annually (or more often, if necessary).
Impairment of Long-Lived Assets
Long-lived assets are reviewed for impairment on a regular basis, in addition to whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets is measured by a comparison of the carrying amount of the assets to the future undiscounted net cash flows expected to be generated by the assets. Identifiable cash flows are measured at the lowest level for which they are largely independent of the cash flows of other groups of assets and liabilities, generally at the restaurant level. If the assets are determined to be impaired, the amount of impairment recognized is measured by the amount by which the carrying amount of the assets exceeds their fair value. Estimates of future cash flows are based on the Company's experience and knowledge of local operations. During 2024, 2023 and 2022, the Company recorded impairment charges of certain long-lived assets which are included in restaurant impairments, closure costs and asset disposals in the Consolidated Statements of Operations. See Note 6, Restaurant Impairments, Closure Costs and Asset Disposals. Fair value of the restaurant assets was determined using Level 3 inputs (as described in Note 5, Fair Value Measurements).
Debt Issuance Costs
Certain fees and costs incurred to obtain long-term financing are capitalized and included as a reduction in the net carrying value of long-term debt, net of accumulated amortization. These costs are amortized to interest expense over the term of the related debt. When debt is extinguished prior to its maturity date, the amortization of the remaining unamortized debt issuance costs, or pro-rata portion thereof, is charged to loss on extinguishment of debt. Debt issuance costs of $2.3 million and $2.0 million, net of accumulated amortization, as of December 31, 2024 and January 2, 2024, respectively, are included as a reduction of long-term debt in the Consolidated Balance Sheets.
Source: Item 22 — CONTRACTS (FDD pages 98–99)
What This Means (2025 FDD)
According to Noodles & Company's 2025 Franchise Disclosure Document, the company reviews its long-lived assets for impairment on a regular basis, and whenever events or changes in circumstances suggest that the carrying amount of an asset may not be recoverable. Recoverability is assessed by comparing the carrying amount of the assets to the future undiscounted net cash flows expected to be generated by those assets. These cash flows are measured at the restaurant level, which is the lowest level at which they can be considered largely independent.
If the assets are deemed to be impaired, the impairment amount is determined by the extent to which the carrying amount of the assets exceeds their fair value. Noodles & Company bases its estimates of future cash flows on its experience and knowledge of local operations.
In 2024, Noodles & Company recorded impairment charges of $13.4 million related to its restaurants. These charges are included in restaurant impairments, closure costs, and asset disposals in the Consolidated Statements of Operations. The fair value of the restaurant assets was determined using Level 3 inputs, as described in Note 5, Fair Value Measurements.