Leases (Notes)

3 Months Ended

Apr. 04, 2021

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 April 4, 2021, Wendy’s and its franchisees operated 6,838 Wendy’s restaurants. Of the 362 Company-operated Wendy’s restaurants, Wendy’s owned the land and building for 142 restaurants, owned the building and held long-term land leases for 151 restaurants and held leases covering the land and building for 69 restaurants. Wendy’s also owned 509 and leased 1,242 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
	April 4, 2021		March 29, 2020
Finance lease cost:
Amortization of finance lease assets	$	3,508	$	3,186
Interest on finance lease liabilities	10,293		10,058
	13,801		13,244
Operating lease cost	23,361		21,165
Variable lease cost (a)	15,188		14,370
Short-term lease cost	1,326		1,330
Total operating lease cost (b)	39,875		36,865
Total lease cost	$	53,676	$	50,109

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(a)Includes expenses for executory costs of $10,063 and $9,743 for the three months ended April 4, 2021 and March 29, 2020, respectively, for which the Company is reimbursed by sublessees.

(b)The three months ended April 4, 2021 and March 29, 2020 include $32,552 and $29,291, respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees and $6,681 and $6,833, 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
	April 4, 2021		March 29, 2020
Sales-type and direct-financing leases:
Selling profit	$	1,912	$	628
Interest income	7,489		7,248
Operating lease income	$	44,122	$	43,952
Variable lease income	14,754		13,904
Franchise rental income (a)	$	58,876	$	57,856

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(a)The three months ended April 4, 2021 and March 29, 2020 include sublease income of $43,250 and $42,042, respectively, of which $9,874 and $9,709, respectively, represents lessees’ variable payments to the Company for executory costs.