Leases

9 Months Ended

Sep. 29, 2020

Leases [Abstract]

Leases

LeasesAs discussed in Note 1, Business Summary and Basis of Presentation, the onset of the COVID-19 pandemic impacted us significantly, including causing us to close all of our dining rooms starting in March 2020. We commenced reopening a portion of our dining rooms in June of 2020 and as of September 29, 2020, over 90% of our restaurant dining rooms are open. During the second and third quarters of 2020, we were able to negotiate with the majority of our landlords to obtain rent abatements, defer rent amounts due during the second quarter, or in some cases, extend the period of the respective lease term. In the case where the lease term was extended, we remeasured the remaining consideration in the contract. The total rent that was deferred for lease amendments that have been executed through September 29, 2020 was $4.2 million.

Further, for certain of our restaurants, the COVID-19 pandemic has had an impact to the underlying asset values. In the second quarter of 2020, we recorded right-of-use asset impairment charges of $0.3 million to reduce the carrying value of certain operating lease assets to their respective estimated fair value. There was no impairment during the third quarter of 2020.

Supplemental balance sheet information related to leases is as follows (in thousands):

Classification		September 29, 2020		December 31, 2019
Assets
Operating	Operating lease assets, net	$	202,993	$	209,717
Finance	Finance lease assets, net (1)	3,308		771
Total leased assets		$	206,301	$	210,488
Liabilities
Current lease liabilities
Operating	Current operating lease liabilities	$	25,357	$	22,775
Finance	Current finance lease liabilities (2)	1,059		510
Long-term lease liabilities
Operating	Long-term operating lease liabilities	219,473		225,014
Finance	Long-term finance lease liabilities (2)	2,309		281
Total lease liabilities		$	248,198	$	248,580

_____________________

(1)The finance lease assets are included in property and equipment, net in the Condensed Consolidated Balance Sheets.

(2)The current portion of the finance lease liabilities is included in accrued expenses and other current liabilities, and the long-term portion was included in other long-term liabilities in the Condensed Consolidated Balance Sheets.

Sublease income recognized in the Condensed Consolidated Statements of Operations was $0.2 million for both the third quarter of 2020 and 2019, and $0.7 million and $0.4 million for the first three quarters of 2020 and 2019, respectively.

Supplemental disclosures of cash flow information related to leases are as follows (in thousands):

	Fiscal Quarter Ended				Three Fiscal Quarters Ended
	September 29, 2020		October 1, 2019		September 29, 2020		October 1, 2019
Cash paid for lease liabilities:
Operating leases	$	14,784	$	10,795	$	28,358	$	32,301
Finance leases	324		223		776		600
	$	15,108	$	11,018	$	29,134	$	32,901
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases	$	108	$	2,646	$	10,388	$	7,856
Finance leases	545		—		3,387		229
	$	653	$	2,646	$	13,775	$	8,085

Leases

LeasesAs discussed in Note 1, Business Summary and Basis of Presentation, the onset of the COVID-19 pandemic impacted us significantly, including causing us to close all of our dining rooms starting in March 2020. We commenced reopening a portion of our dining rooms in June of 2020 and as of September 29, 2020, over 90% of our restaurant dining rooms are open. During the second and third quarters of 2020, we were able to negotiate with the majority of our landlords to obtain rent abatements, defer rent amounts due during the second quarter, or in some cases, extend the period of the respective lease term. In the case where the lease term was extended, we remeasured the remaining consideration in the contract. The total rent that was deferred for lease amendments that have been executed through September 29, 2020 was $4.2 million.

Further, for certain of our restaurants, the COVID-19 pandemic has had an impact to the underlying asset values. In the second quarter of 2020, we recorded right-of-use asset impairment charges of $0.3 million to reduce the carrying value of certain operating lease assets to their respective estimated fair value. There was no impairment during the third quarter of 2020.

Supplemental balance sheet information related to leases is as follows (in thousands):

Classification		September 29, 2020		December 31, 2019
Assets
Operating	Operating lease assets, net	$	202,993	$	209,717
Finance	Finance lease assets, net (1)	3,308		771
Total leased assets		$	206,301	$	210,488
Liabilities
Current lease liabilities
Operating	Current operating lease liabilities	$	25,357	$	22,775
Finance	Current finance lease liabilities (2)	1,059		510
Long-term lease liabilities
Operating	Long-term operating lease liabilities	219,473		225,014
Finance	Long-term finance lease liabilities (2)	2,309		281
Total lease liabilities		$	248,198	$	248,580

_____________________

(1)The finance lease assets are included in property and equipment, net in the Condensed Consolidated Balance Sheets.

(2)The current portion of the finance lease liabilities is included in accrued expenses and other current liabilities, and the long-term portion was included in other long-term liabilities in the Condensed Consolidated Balance Sheets.

Sublease income recognized in the Condensed Consolidated Statements of Operations was $0.2 million for both the third quarter of 2020 and 2019, and $0.7 million and $0.4 million for the first three quarters of 2020 and 2019, respectively.

Supplemental disclosures of cash flow information related to leases are as follows (in thousands):

	Fiscal Quarter Ended				Three Fiscal Quarters Ended
	September 29, 2020		October 1, 2019		September 29, 2020		October 1, 2019
Cash paid for lease liabilities:
Operating leases	$	14,784	$	10,795	$	28,358	$	32,301
Finance leases	324		223		776		600
	$	15,108	$	11,018	$	29,134	$	32,901
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases	$	108	$	2,646	$	10,388	$	7,856
Finance leases	545		—		3,387		229
	$	653	$	2,646	$	13,775	$	8,085