Leases (Tables)

6 Months Ended

Jul. 04, 2021

Leases [Abstract]

Lease, Cost

The components of lease cost are as follows:

	Three Months Ended				Six Months Ended
	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
Finance lease cost:
Amortization of finance lease assets	$	3,251	$	3,338	$	6,759	$	6,524
Interest on finance lease liabilities	10,267		10,160		20,560		20,218
	13,518		13,498		27,319		26,742
Operating lease cost	23,012		23,969		46,373		45,134
Variable lease cost (a)	16,583		13,848		31,771		28,218
Short-term lease cost	1,270		991		2,596		2,321
Total operating lease cost (b)	40,865		38,808		80,740		75,673
Total lease cost	$	54,383	$	52,306	$	108,059	$	102,415

_______________

(a)Includes expenses for executory costs of $10,087 and $9,457 for the three months ended July 4, 2021 and June 28, 2020, respectively, and $20,150 and $19,200 for the six months ended July 4, 2021 and June 28, 2020, respectively, for which the Company is reimbursed by sublessees.

(b)Includes $34,063 and $31,263 for the three months ended July 4, 2021 and June 28, 2020, respectively, and $66,615 and $60,554 for the six months ended July 4, 2021 and June 28, 2020, respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees. Also includes $6,111 and $6,831 for the three months ended July 4, 2021 and June 28, 2020, respectively, and $12,792 and $13,664 for the six months ended July 4, 2021 and June 28, 2020, respectively, recorded to “Cost of sales” for leases for Company-operated restaurants.

Schedule of Supplemental Cash Flow and Non-Cash Information Related to Leases

The following table includes supplemental cash flow and non-cash information related to leases:

	Six Months Ended
	July 4, 2021		June 28, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	20,957	$	18,853
Operating cash flows from operating leases	46,879		40,582
Financing cash flows from finance leases	5,777		3,707
Right-of-use assets obtained in exchange for lease obligations:
Finance lease liabilities	30,863		12,962
Operating lease liabilities	4,577		13,380

Schedule of Supplemental Information Related to Leases

The following table includes supplemental information related to leases:

	July 4, 2021			January 3, 2021
Weighted-average remaining lease term (years):
Finance leases	16.0			16.2
Operating leases	14.3			14.6
Weighted average discount rate:
Finance leases	9.29		%	9.54		%
Operating leases	5.03		%	5.06		%
Supplemental balance sheet information:
Finance lease assets, gross	$	264,824		$	261,308
Accumulated amortization	(58,238)			(55,155)
Finance lease assets	206,586			206,153
Operating lease assets	791,924			821,480

Finance Lease, Liability, Maturity

The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of July 4, 2021:

	Finance Leases				Operating Leases
Fiscal Year	Company-Operated		Franchise and Other		Company-Operated		Franchise and Other
2021 (a) (b)	$	2,229	$	25,786	$	6,989	$	36,993
2022	3,476		51,490		14,240		74,000
2023	3,422		53,175		14,401		73,794
2024	3,489		53,608		14,462		73,761
2025	3,564		54,098		14,357		73,455
Thereafter	42,705		671,835		133,387		733,429
Total minimum payments	$	58,885	$	909,992	$	197,836	$	1,065,432
Less interest	(21,909)		(410,813)		(57,308)		(322,106)
Present value of minimum lease payments (c) (d)	$	36,976	$	499,179	$	140,528	$	743,326

_______________

(a)Represents future minimum rental payments for non-cancelable leases for the remainder of 2021.

(b)In addition to the 2021 future minimum rental payments, the Company expects to pay $2,175 primarily during 2021 related to rent deferrals obtained due to the COVID-19 pandemic. The related payable is included in “Accrued expenses and other current liabilities.”

(c)The present value of minimum finance lease payments of $14,547 and $521,608 are included in “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” respectively.

(d)The present value of minimum operating lease payments of $45,269 and $838,585 are included in “Current portion of operating lease liabilities” and “Long-term operating lease liabilities,” respectively.

Lessee, Operating Lease, Liability, Maturity

The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of July 4, 2021:

	Finance Leases				Operating Leases
Fiscal Year	Company-Operated		Franchise and Other		Company-Operated		Franchise and Other
2021 (a) (b)	$	2,229	$	25,786	$	6,989	$	36,993
2022	3,476		51,490		14,240		74,000
2023	3,422		53,175		14,401		73,794
2024	3,489		53,608		14,462		73,761
2025	3,564		54,098		14,357		73,455
Thereafter	42,705		671,835		133,387		733,429
Total minimum payments	$	58,885	$	909,992	$	197,836	$	1,065,432
Less interest	(21,909)		(410,813)		(57,308)		(322,106)
Present value of minimum lease payments (c) (d)	$	36,976	$	499,179	$	140,528	$	743,326

_______________

(a)Represents future minimum rental payments for non-cancelable leases for the remainder of 2021.

(b)In addition to the 2021 future minimum rental payments, the Company expects to pay $2,175 primarily during 2021 related to rent deferrals obtained due to the COVID-19 pandemic. The related payable is included in “Accrued expenses and other current liabilities.”

(c)The present value of minimum finance lease payments of $14,547 and $521,608 are included in “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” respectively.

(d)The present value of minimum operating lease payments of $45,269 and $838,585 are included in “Current portion of operating lease liabilities” and “Long-term operating lease liabilities,” respectively.

Lease, Income

The components of lease income are as follows:

	Three Months Ended				Six Months Ended
	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
Sales-type and direct-financing leases:
Selling profit	$	1,627	$	569	$	3,539	$	1,197
Interest income (a)	7,586		7,260		15,075		14,508
Operating lease income	44,356		43,052		88,478		87,004
Variable lease income	16,512		13,805		31,266		27,709
Franchise rental income (b)	$	60,868	$	56,857	$	119,744	$	114,713

_______________

(a)Included in “Interest expense, net.”

(b)Includes sublease income of $45,245 and $41,489 for the three months ended July 4, 2021 and June 28, 2020, respectively, and $88,495 and $83,531 for the six months ended July 4, 2021 and June 28, 2020, respectively. Sublease income includes lessees’ variable payments to the Company for executory costs of $10,195 and $9,450 for the three months ended July 4, 2021 and June 28, 2020, respectively, and $20,069 and $19,159 for the six months ended July 4, 2021 and June 28, 2020, respectively.

Sales-type and Direct Financing Leases, Lease Receivable, Maturity

The following table illustrates the Company’s future minimum rental receipts for non-cancelable leases and subleases as of July 4, 2021:

	Sales-Type and Direct Financing Leases				Operating Leases
Fiscal Year	Subleases		Owned Properties		Subleases		Owned Properties
2021 (a) (b)	$	16,720	$	2,040	$	57,923	$	27,709
2022	33,942		2,612		116,647		56,397
2023	35,003		2,658		117,448		56,707
2024	37,004		2,669		117,667		57,816
2025	35,907		2,787		117,156		58,421
Thereafter	474,723		35,676		1,172,618		750,148
Total future minimum receipts	633,299		48,442		$	1,699,459	$	1,007,198
Unearned interest income	(346,389)		(26,004)
Net investment in sales-type and direct financing leases (c)	$	286,910	$	22,438

_______________

(a)Represents future minimum rental receipts for non-cancelable leases for the remainder of 2021.

(b)In addition to the 2021 future minimum rental receipts, the Company expects to collect $1,088 primarily during 2021 related to its offer to franchisees to defer base rent payments in response to the COVID-19 pandemic. The related receivable is included in “Accounts and notes receivable, net.”

(c)The present value of minimum direct financing rental receipts of $6,654 and $302,694 are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. The present value of minimum direct financing rental receipts includes a net investment in unguaranteed residual assets of $521.

Lessor, Operating Lease, Payment to be Received, Maturity

The following table illustrates the Company’s future minimum rental receipts for non-cancelable leases and subleases as of July 4, 2021:

	Sales-Type and Direct Financing Leases				Operating Leases
Fiscal Year	Subleases		Owned Properties		Subleases		Owned Properties
2021 (a) (b)	$	16,720	$	2,040	$	57,923	$	27,709
2022	33,942		2,612		116,647		56,397
2023	35,003		2,658		117,448		56,707
2024	37,004		2,669		117,667		57,816
2025	35,907		2,787		117,156		58,421
Thereafter	474,723		35,676		1,172,618		750,148
Total future minimum receipts	633,299		48,442		$	1,699,459	$	1,007,198
Unearned interest income	(346,389)		(26,004)
Net investment in sales-type and direct financing leases (c)	$	286,910	$	22,438

_______________

(a)Represents future minimum rental receipts for non-cancelable leases for the remainder of 2021.

(b)In addition to the 2021 future minimum rental receipts, the Company expects to collect $1,088 primarily during 2021 related to its offer to franchisees to defer base rent payments in response to the COVID-19 pandemic. The related receivable is included in “Accounts and notes receivable, net.”

(c)The present value of minimum direct financing rental receipts of $6,654 and $302,694 are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. The present value of minimum direct financing rental receipts includes a net investment in unguaranteed residual assets of $521.

Schedule of Property Subject To Operating Lease

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

	July 4, 2021		January 3, 2021
Land	$	280,879	$	279,956
Buildings and improvements	307,834		309,605
Restaurant equipment	1,701		1,701
	590,414		591,262
Accumulated depreciation and amortization	(176,125)		(170,722)
	$	414,289	$	420,540