System Optimization Gains, Net (Tables)

6 Months Ended

Jul. 04, 2021

System optimization gains, net

Summary of Disposition Activity

The following is a summary of the disposition activity recorded as a result of our system optimization initiative:

	Three Months Ended				Six Months Ended
	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
Number of restaurants sold to franchisees	47		—		47		—
Proceeds from sales of restaurants	$	50,518	$	—	$	50,518	$	—
Net assets sold (a)	(16,939)		—		(16,939)		—
Goodwill related to sales of restaurants	(4,847)		—		(4,847)		—
Net unfavorable leases (b)	(2,939)		—		(2,939)		—
Gain on sales-type leases	7,156		—		7,156		—
Other (c)	(2,148)		—		(2,148)		—
	30,801		—		30,801		—
Post-closing adjustments on sales of restaurants (d)	—		—		515		345
Gain on sales of restaurants, net	30,801		—		31,316		345
(Loss) gain on sales of other assets, net (e)	(35)		1,987		(34)		1,965
System optimization gains, net	$	30,766	$	1,987	$	31,282	$	2,310

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(a)Net assets sold consist primarily of equipment.

(b)During the three and six months ended July 4, 2021, the Company recorded favorable lease assets of $3,799 and unfavorable lease liabilities of $6,738 as a result of leasing and/or subleasing land, buildings, and/or leasehold improvements to franchisees, in connection with the sale of the New York Company-operated restaurants (including Manhattan).

(c)The three and six months ended July 4, 2021 include a deferred gain of $3,500 as a result of certain contingencies related to the extension of lease terms.

(d)Represents the recognition of deferred gains as a result of the resolution of certain contingencies related to the extension of lease terms for restaurants previously sold to franchisees.

(e)During the three and six months ended July 4, 2021, the Company received net cash proceeds of $10 and $13, respectively, primarily from the sale of surplus and other properties. During the three and six months ended June 28, 2020, the Company received net cash proceeds of $4,125 and $4,320, respectively, primarily from the sale of surplus and other properties.

Assets Held for Sale

	July 4, 2021		January 3, 2021
Number of restaurants classified as held for sale	—		43
Net restaurant assets held for sale (a)	$	—	$	20,587
Other assets held for sale (b)	$	2,318	$	1,732

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(a)Net restaurant assets held for sale as of January 3, 2021 included New York Company-operated restaurants (excluding Manhattan) and consisted primarily of cash, inventory, property and an estimate of allocable goodwill. During the three months ended April 4, 2021, the Company also classified its four Manhattan restaurants as held for sale.

(b)Other assets held for sale primarily consist of surplus properties.