Leases

6 Months Ended

Jun. 30, 2024

Leases [Abstract]

Leases

Leases

The Company included the following amounts related to operating and finance lease assets and liabilities within the Condensed Consolidated Balance Sheets:

		As of
		June 30, 2024		December 31, 2023
Assets	Classification
Operating lease	Operating lease right of use asset, net	$	456,124	$	456,964
Finance lease	Property and equipment, net	40,599		41,411
Total leased assets		$	496,723	$	498,375
Liabilities
Current
Operating lease	Current operating lease liabilities	$	54,937	$	50,365
Finance lease	Current portion of long-term debt	7,827		8,631
Noncurrent
Operating lease	Noncurrent operating lease liabilities	453,338		454,583
Finance lease	Long-term debt, less current portion	38,825		38,486
Total leased liabilities		$	554,927	$	552,065

Lease costs were as follows:

		Quarter Ended				Two Quarters Ended
		June 30, 2024		July 2, 2023		June 30, 2024		July 2, 2023
Lease cost	Classification
Operating lease cost	Selling, general and administrative expense	$	879	$	986	$	1,814	$	1,877
Operating lease cost	Operating expenses	24,365		22,185		48,388		44,575
Short-term lease cost	Operating expenses	1,265		1,264		2,350		2,545
Variable lease costs	Operating expenses	7,398		6,886		14,831		16,231
Sublease income	Royalties and other revenues	(35)		(35)		(70)		(70)
Finance lease cost:
Amortization of right of use assets	Depreciation and amortization expense	$	2,867	$	1,781	$	5,788	$	3,365
Interest on lease liabilities	Interest expense, net	865		491		1,742		1,064

Supplemental disclosures of cash flow information related to leases were as follows:

	Two Quarters Ended
	June 30, 2024		July 2, 2023
Other information
Cash paid for leases:
Operating cash flows for operating leases (1)	$	58,406	$	57,968
Operating cash flows for finance leases	1,728		1,121
Financing cash flows for finance leases	5,297		3,632
Right of use assets obtained in exchange for new lease liabilities:
Operating leases	$	26,909	$	43,895
Finance leases	4,594		5,931

(1)Operating cash flows from operating leases include variable rent payments which are not included in the measurement of lease liabilities. Variable rent payments were $14.8 million and $16.2 million for the two quarters ended June 30, 2024 and July 2, 2023, respectively.

There were no lease termination charges in the two quarters ended June 30, 2024. The Company recognized a net gain of $0.6 million included in Other (income)/expenses, net on the Condensed Consolidated Statement of Operations in the two quarters ended July 2, 2023, related to the termination of leases at certain Krispy Kreme shops in the U.S. where the Company had already recognized impairment of the corresponding right of use assets in a prior period.

There were no sale-leaseback transactions completed in the two quarters ended June 30, 2024. In the two quarters ended July 2, 2023, the Company completed a sale-leaseback transaction whereby it disposed of the land at one real estate property for proceeds of $10.0 million. The Company subsequently leased back the property, which is accounted for as an operating lease. The Company recognized a gain on sale of $9.6 million, which is included in Other (income)/expenses, net on the Condensed Consolidated Statement of Operations.

Leases

Leases

The Company included the following amounts related to operating and finance lease assets and liabilities within the Condensed Consolidated Balance Sheets:

		As of
		June 30, 2024		December 31, 2023
Assets	Classification
Operating lease	Operating lease right of use asset, net	$	456,124	$	456,964
Finance lease	Property and equipment, net	40,599		41,411
Total leased assets		$	496,723	$	498,375
Liabilities
Current
Operating lease	Current operating lease liabilities	$	54,937	$	50,365
Finance lease	Current portion of long-term debt	7,827		8,631
Noncurrent
Operating lease	Noncurrent operating lease liabilities	453,338		454,583
Finance lease	Long-term debt, less current portion	38,825		38,486
Total leased liabilities		$	554,927	$	552,065

Lease costs were as follows:

		Quarter Ended				Two Quarters Ended
		June 30, 2024		July 2, 2023		June 30, 2024		July 2, 2023
Lease cost	Classification
Operating lease cost	Selling, general and administrative expense	$	879	$	986	$	1,814	$	1,877
Operating lease cost	Operating expenses	24,365		22,185		48,388		44,575
Short-term lease cost	Operating expenses	1,265		1,264		2,350		2,545
Variable lease costs	Operating expenses	7,398		6,886		14,831		16,231
Sublease income	Royalties and other revenues	(35)		(35)		(70)		(70)
Finance lease cost:
Amortization of right of use assets	Depreciation and amortization expense	$	2,867	$	1,781	$	5,788	$	3,365
Interest on lease liabilities	Interest expense, net	865		491		1,742		1,064

Supplemental disclosures of cash flow information related to leases were as follows:

	Two Quarters Ended
	June 30, 2024		July 2, 2023
Other information
Cash paid for leases:
Operating cash flows for operating leases (1)	$	58,406	$	57,968
Operating cash flows for finance leases	1,728		1,121
Financing cash flows for finance leases	5,297		3,632
Right of use assets obtained in exchange for new lease liabilities:
Operating leases	$	26,909	$	43,895
Finance leases	4,594		5,931

(1)Operating cash flows from operating leases include variable rent payments which are not included in the measurement of lease liabilities. Variable rent payments were $14.8 million and $16.2 million for the two quarters ended June 30, 2024 and July 2, 2023, respectively.

There were no lease termination charges in the two quarters ended June 30, 2024. The Company recognized a net gain of $0.6 million included in Other (income)/expenses, net on the Condensed Consolidated Statement of Operations in the two quarters ended July 2, 2023, related to the termination of leases at certain Krispy Kreme shops in the U.S. where the Company had already recognized impairment of the corresponding right of use assets in a prior period.

There were no sale-leaseback transactions completed in the two quarters ended June 30, 2024. In the two quarters ended July 2, 2023, the Company completed a sale-leaseback transaction whereby it disposed of the land at one real estate property for proceeds of $10.0 million. The Company subsequently leased back the property, which is accounted for as an operating lease. The Company recognized a gain on sale of $9.6 million, which is included in Other (income)/expenses, net on the Condensed Consolidated Statement of Operations.