Leases (Notes)

3 Months Ended

Mar. 29, 2020

Leases [Abstract]

Leases, Company as Lessee

Leases

Nature of Leases

The Company operates restaurants that are located on sites owned by us and sites leased by us from third parties. In addition, the Company owns sites and leases sites from third parties, which it leases and/or subleases to franchisees. At March 29, 2020, Wendy’s and its franchisees operated 6,805 Wendy’s restaurants. Of the 358 Company-operated Wendy’s restaurants, Wendy’s owned the land and building for 143 restaurants, owned the building and held long-term land leases for 145 restaurants and held leases covering the land and building for 70 restaurants. Wendy’s also owned 511 and leased 1,244 properties that were either leased or subleased principally to franchisees. The Company also leases restaurant, office and transportation equipment.

Company as Lessee

The components of lease cost are as follows:

	Three Months Ended
	March 29, 2020		March 31, 2019
Finance lease cost:
Amortization of finance lease assets	$	3,186	$	3,117
Interest on finance lease liabilities	10,058		6,753
	13,244		9,870
Operating lease cost	21,165		24,643
Variable lease cost (a)	14,370		14,104
Short-term lease cost	1,330		1,126
Total operating lease cost (b)	36,865		39,873
Total lease cost	$	50,109	$	49,743

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(a) Includes expenses for executory costs of $9,743 and $9,524 for the three months ended March 29, 2020 and March 31, 2019, respectively, for which the Company is reimbursed by sublessees.

(b) The three months ended March 29, 2020 and March 31, 2019 include $29,291 and $32,451, respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees and $6,833 and $6,593, respectively, recorded to “Cost of sales” for leases for Company-operated restaurants.

Leases, Company as Lessor

Company as Lessor

The components of lease income are as follows:

	Three Months Ended
	March 29, 2020		March 31, 2019
Sales-type and direct-financing leases:
Selling profit	$	628	$	1,934
Interest income	7,248		4,733
Operating lease income	$	43,952	$	45,205
Variable lease income	13,904		13,247
Franchise rental income (a)	$	57,856	$	58,452

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(a)

The three months ended March 29, 2020 and March 31, 2019 include sublease income of $42,042 and $43,021, respectively, of which $9,709 and $9,432, respectively, represents lessees’ variable payments to the Company for executory costs.