Leases

12 Months Ended

Jul. 28, 2023

8. Leases

In 2020, the Company adopted new accounting guidance for leases. As part of the adoption of this accounting guidance for leases, the Company elected to not separate lease and non-lease components. Additionally, the Company elected to apply the short term lease exemption to all asset classes and the short term lease expense for the period reasonably reflects the short term lease commitments. As the Company’s leases do not provide an implicit rate, the Company uses the incremental borrowing rate based on the information available at the time of commencement or modification date in determining the present value of lease payments. For operating leases that commenced prior to the date of adoption of the new lease accounting guidance, the Company used the incremental borrowing rate as of the adoption date. Assumptions used in determining the Company’s incremental borrowing rate include the Company’s implied credit rating and an estimate of secured borrowing rates based on comparable market data.

The Company has entered into agreements for real estate leases that are not recorded as right-of-use assets or lease liabilities as it has not yet taken possession. These leases are expected to commence in 2024 and 2025 with undiscounted future payments of $15,714 and $21,673, respectively.

The following table summarizes the components of lease cost for operating leases for the years ended July 28, 2023, July 29, 2022 and July 30, 2021:

	2023		2022		2021
Operating lease cost	$	109,908	$	108,903	$	106,266
Short term lease cost		2,947		2,409		2,363
Variable lease cost		3,669		2,673		2,248
Total lease cost	$	116,524	$	113,985	$	110,877

The following table summarizes supplemental cash flow information and non-cash activity related to the Company’s operating leases for the years ended July 28, 2023, July 29, 2022 and July 30, 2021:

	2023			2022			2021
Operating cash flow information:
Gain on sale and leaseback transactions	$	—		$	—		$	217,722
Cash paid for amounts included in the measurement of lease liabilities		95,294			92,600			89,264
Noncash information:
Right-of-use assets obtained in exchange for new operating lease liabilities		17,378			19,143			316,563
Lease modifications or reassessments increasing or decreasing right-of-use assets		11,320			11,978			35,059
Lease modifications removing right-of-use assets		(413	)		(670	)		(544	)

The following table summarizes the weighted-average remaining lease term and the weighted-average discount rate for operating leases as of July 28, 2023, July 29, 2022 and July 30, 2021:

	2023			2022			2021
Weighted-average remaining lease term	16.88 Years			17.38 Years				18.17 Years
Weighted-average discount rate		5.09	%		4.90	%		4.84	%

The following table summarizes the maturities of undiscounted cash flows reconciled to the total operating lease liability as of July 28, 2023:

Year	Total
2024	$	82,360
2025		73,888
2026		70,198
2027		67,451
2028		66,858
Thereafter		773,692
Total future minimum lease payments		1,134,447
Less imputed remaining interest		(385,698	)
Total present value of operating lease liabilities	$	748,749

Sale and Leaseback Transactions

In 2009, the Company completed sale and leaseback transactions involving 15 of its owned stores and its retail distribution center. Under the transactions, the land, buildings and improvements at the locations were sold and leased back for terms of 20 and 15 years, respectively. Equipment was not included. The leases include specified renewal options for up to 20 additional years.

In 2000, the Company completed a sale and leaseback transaction involving 65 of its owned Cracker Barrel stores. Under the transaction, the land, buildings and building improvements at the locations were sold and leased back for a term of 21 years. The leases for these stores included specified renewal options for up to 20 additional years. On July 29, 2020, the Company entered into an agreement with the original lessor and a third-party financier to obtain ownership of 64 of the 65 Cracker Barrel properties and simultaneously entered into a sale and leaseback transaction with the financier for an aggregate purchase price, net of closing costs, of $198,083. The Company purchased the remaining property for approximately $3,200. In connection with the sale and leaseback transaction, the Company entered into lease agreements for each of the properties for initial terms of 20 years and renewal options up to 50 years. The aggregate initial annual rent payment for the properties is approximately $14,379 and includes 1% annual rent increases over the initial lease terms. All the properties qualified for sale and leaseback and operating lease accounting classification and the Company recorded a gain on the sale and leaseback transaction of $69,954 which is recorded in the gain on sale and leaseback transactions line in the Consolidated Statements of Income. The Company also recorded operating lease right-of-use assets and corresponding operating lease liabilities of $261,698 and $182,649, respectively.

On August 4, 2020, the Company completed a subsequent sale and leaseback transaction involving 62 of its owned Cracker Barrel stores for an aggregate purchase price, net of closing costs, of $146,357. Under the transaction, the land, buildings and building improvements at the locations were sold and leased back for initial terms of 20 years and renewal options up to 50 years. The aggregate initial annual rent payment for the properties is approximately $10,393 and includes 1% annual rent increases over the initial lease terms. All of the properties qualified for sale and leaseback and operating lease accounting classification, and the Company recorded a gain of $217,722 which is recorded in the gain on sale and leaseback transaction line in the Consolidated Statement of Income in the first quarter of 2021. The Company also recorded operating lease right-of-use assets, including a non-cash asset recognized as part of accounting for the transaction of $175,960, and corresponding operating lease liabilities of $309,624 and $133,663, respectively.