Leases

At December 30, 2018, Wendy’s and its franchisees operated 6,711 Wendy’s restaurants. Of the 353 Company-operated Wendy’s restaurants, Wendy’s owned the land and building for 144 restaurants, owned the building and held long-term land leases for 145 restaurants and held leases covering land and building for 64 restaurants. Lease terms are generally initially between 15 and 20 years and, in most cases, provide for rent escalations and renewal options. Certain leases contain contingent rent provisions that require additional rental payments based upon restaurant sales volume in excess of specified amounts. The Company also leases restaurant, office and transportation equipment. Certain leases also provide for payments of other costs such as real estate taxes, insurance and common area maintenance, which have been excluded from rental expense and future minimum rental payments set forth in the tables below.

As of December 30, 2018, Wendy’s also owned 516 and leased 1,279 properties that were either leased or subleased principally to franchisees. Initial lease terms are generally 20 years and, in most cases, provide for rent escalations and renewal options. Certain leases to franchisees also include contingent rent provisions based on sales volume exceeding specified amounts. The lessee bears the cost of real estate taxes, insurance and common area maintenance, which have been excluded from rental income and future minimum rental receipts set forth in the tables below.

Rental expense for operating leases consists of the following components:



	Year Ended
	2018		2017		2016
Rental expense:
Minimum rentals	$	95,749	$	90,889	$	77,952
Contingent rentals	18,971		19,021		18,291
Total rental expense (a) (b)	$	114,720	$	109,910	$	96,243

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(a)	Amounts include rental expense related to (1) leases for Company-operated restaurants recorded to “Cost of sales,” (2) leased properties that are subsequently leased to franchisees recorded to “Franchise rental expense” and (3) leases for corporate offices and equipment recorded to “General and administrative.”


(b)	Amounts exclude sublease income of $138,363, $126,814 and $95,072 recognized during 2018, 2017 and 2016, respectively.

Rental income for operating leases and subleases consists of the following components:



	Year Ended
	2018		2017		2016
Rental income:
Minimum rentals	$	184,154	$	169,857	$	123,171
Contingent rentals	19,143		20,246		19,944
Total rental income	$	203,297	$	190,103	$	143,115

The following table illustrates the Company’s future minimum rental payments and rental receipts for non-cancelable leases and subleases, including rental receipts for direct financing leases, as of December 30, 2018. Rental receipts below are presented separately for owned properties and for leased properties based on the classification of the underlying lease.



	Rental Payments					Rental Receipts
Fiscal Year	Capital Leases			Operating Leases		Capital Leases		Operating Leases		Owned Properties
2019	$	47,087		$	95,877	$	64,117	$	75,302	$	54,464
2020	45,947			93,372		65,194		75,243		55,072
2021	47,604			92,987		67,001		75,350		56,658
2022	48,687			92,830		68,168		75,947		58,211
2023	50,193			92,807		69,812		76,163		58,443
Thereafter	699,697			1,058,037		963,329		858,168		885,159
Total minimum payments	$	939,215		$	1,525,910	$	1,297,621	$	1,236,173	$	1,168,007
Less interest	(483,579		)
Present value of minimum capital lease payments (a)	$	455,636

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(a)	The present value of minimum capital lease payments of $8,405 and $447,231 are included in “Current portion of long-term debt” and “Long-term debt,” respectively.

Properties owned by the Company and leased to franchisees and other third parties under operating leases include:



	Year End
	December 30, 2018			December 31, 2017
Land	$	272,234		$	272,411
Buildings and improvements	312,672			313,108
Restaurant equipment	2,443			2,444
	587,349			587,963
Accumulated depreciation and amortization	(143,313		)	(128,003		)
	$	444,036		$	459,960

Our net investment in direct financing leases is as follows:



	Year End
	December 30, 2018			December 31, 2017
Future minimum rental receipts	$	624,596		$	662,889
Unearned interest income	(397,384		)	(433,175		)
Net investment in direct financing leases	227,212			229,714
Net current investment in direct financing leases (a)	(735		)	(625		)
Net non-current investment in direct financing leases	$	226,477		$	229,089

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(a)	Included in “Accounts and notes receivable, net.”

During 2018, 2017 and 2016, the Company recognized $27,638, $22,869 and $14,630 in interest income related to our direct financing leases, respectively, which is included in “Interest expense, net.”