The Company determines if an arrangement is or contains a lease at inception, which is the date on which the terms of the contract are agreed to and the agreement creates enforceable rights and obligations. Under Topic 842, a contract is or contains a lease when (i) explicitly or implicitly identified assets have been deployed in the contract and (ii) the customer obtains substantially all of the economic benefits from the use of that underlying asset and directs how and for what purpose the asset is used during the term of the contract. The Company also considers whether its service arrangements include the right to control the use of an asset.

The Company leases office facilities, warehouses and office equipment under lease agreements with initial terms approximating one to seven years. In addition, substantially all the Company’s long-term supply contracts with farms contain components that meet the definition of embedded leases within the scope of Topic 842, Leases. These arrangements convey to the Company the right to control implicitly identified property, plant and equipment as it takes substantially all the utility generated by these assets over the term of the arrangements at a variable price. The initial term of these supply agreements ranges from one to seven years. As total purchase commitments contained in these arrangements are variable, the amounts attributable to the lease components are contingent rentals; there are no minimum lease payments associated with these long-term supply contracts.

As the classification and timing of recognition of costs attributable to the eggs and embedded cost of the lease rentals are identical, the Company does not allocate the total purchase cost of eggs between the cost of the eggs and the embedded cost of the lease rentals or distinguish between them in its accounting records. The Company records the total purchase cost of eggs, which includes costs associated with the eggs and the corresponding cost of embedded lease rentals from the same arrangement, into inventory. These costs are expensed to cost of goods sold when the associated eggs are sold to customers and are also reported as part of our variable lease cost. For the 13-weeks ended March 27, 2022, these costs totaled $30.2 million.

Our office lease for our corporate headquarters facility in Austin, Texas includes an option to renew, generally at our sole discretion, with renewal terms that can extend the lease term up to five years. In addition, certain leases contain termination options, where the rights to terminate are held by either the Company, the lessor, or both parties. These options to extend or terminate a lease are included in the lease terms when it is reasonably certain that the Company will exercise that option. As of March 27, 2022, it is not reasonably certain that we will exercise the right to extend our office lease and therefore, we have not included the extended term in the calculation of our ROU assets or liabilities. The Company’s leases do not contain any material restrictive covenants or residual value guarantees.

Operating lease cost is recognized on a straight-line basis over the lease term and is classified within cost of goods sold and selling, general and administrative cost in the unaudited condensed consolidated statement of operations for the 13-weeks ended March 27, 2022.

Finance lease cost is recognized as amortization expense for the ROU assets and interest expense associated with the finance lease liabilities. Amortization expense associated with our finance leases during the 13-weeks ended March 27, 2022 was $78 and is recorded within cost of goods sold in the unaudited condensed consolidated statement of operations.

	March 27, 2022
Operating lease cost	$	361
Finance lease cost - amortization of right-of-use assets		78
Finance lease cost - interest on lease liabilities		3
Short-term lease cost		3
Variable lease cost		30,601
Total lease cost	$	31,046

	March 27, 2022
Operating cash outflows - payments on operating leases	$	367
Operating cash outflows - interest payments on finance leases		3
Financing cash outflows - principal payments on finance leases		126

Right-of-use assets obtained in exchange for new lease obligations:
	March 27, 2022

Operating leases	$	—
Finance leases		20

	March 27, 2022
Operating Leases
Operating lease right-of-use assets	$	2,916

Operating lease liabilities		1,406
Operating lease liabilities, non-current		1,741
Total operating lease liabilities	$	3,147

Finance Leases
Property, plant and equipment, net	$	818

Finance lease liabilities		210
Other liabilities		15
Total finance leases	$	225

	As of March 27, 2022
	Operating Leases			Finance Leases
Weighted-average remaining lease term (years)	2.66				0.88
Weighted-average discount rate		3.26	%		4.61	%

	As of March 27, 2022
	Operating Leases			Finance Leases
Remainder of 2022	$	1,109		$	211
2023		1,254			5
2024		471			4
2025		338			4
2026		115			4
Thereafter		—			—
Total lease payments		3,287			228
Less imputed interest		(140	)		(3	)
Total present value of lease liabilities	$	3,147		$	225