Leases (Tables)

9 Months Ended

Oct. 03, 2021

Leases [Abstract]

Lease, Cost

The components of lease cost are as follows:

	Three Months Ended				Nine Months Ended
	October 3, 2021		September 27, 2020		October 3, 2021		September 27, 2020
Finance lease cost:
Amortization of finance lease assets	$	3,543	$	3,471	$	10,302	$	9,995
Interest on finance lease liabilities	10,371		10,244		30,931		30,462
	13,914		13,715		41,233		40,457
Operating lease cost	22,388		23,170		68,761		68,304
Variable lease cost (a)	16,635		15,548		48,406		43,766
Short-term lease cost	1,125		1,006		3,721		3,327
Total operating lease cost (b)	40,148		39,724		120,888		115,397
Total lease cost	$	54,062	$	53,439	$	162,121	$	155,854

_______________

(a)Includes expenses for executory costs of $10,016 and $9,326 for the three months ended October 3, 2021 and September 27, 2020, respectively, and $30,166 and $28,526 for the nine months ended October 3, 2021 and September 27, 2020, respectively, for which the Company is reimbursed by sublessees.

(b)Includes $34,396 and $32,421 for the three months ended October 3, 2021 and September 27, 2020, respectively, and $101,011 and $92,975 for the nine months ended October 3, 2021 and September 27, 2020, respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees. Also includes $5,213 and $6,651 for the three months ended October 3, 2021 and September 27, 2020, respectively, and $18,005 and $20,315 for the nine months ended October 3, 2021 and September 27, 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:

	Nine Months Ended
	October 3, 2021		September 27, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	31,608	$	28,689
Operating cash flows from operating leases	69,476		62,026
Financing cash flows from finance leases	9,021		5,850
Right-of-use assets obtained in exchange for lease obligations:
Finance lease liabilities	43,277		24,617
Operating lease liabilities	11,404		12,149

Schedule of Supplemental Information Related to Leases

The following table includes supplemental information related to leases:

	October 3, 2021			January 3, 2021
Weighted-average remaining lease term (years):
Finance leases	15.8			16.2
Operating leases	14.2			14.6
Weighted average discount rate:
Finance leases	9.19		%	9.54		%
Operating leases	5.01		%	5.06		%
Supplemental balance sheet information:
Finance lease assets, gross	$	271,075		$	261,308
Accumulated amortization	(60,415)			(55,155)
Finance lease assets	210,660			206,153
Operating lease assets	783,986			821,480

Finance Lease, Liability, Maturity

The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of October 3, 2021:

	Finance Leases				Operating Leases
Fiscal Year	Company-Operated		Franchise and Other		Company-Operated		Franchise and Other
2021 (a) (b)	$	1,398	$	13,934	$	3,504	$	18,313
2022	3,699		51,912		14,412		73,572
2023	3,644		53,569		14,726		73,226
2024	3,712		54,001		14,738		73,145
2025	3,787		54,496		14,633		72,829
Thereafter	46,140		682,798		141,258		732,276
Total minimum payments	$	62,380	$	910,710	$	203,271	$	1,043,361
Less interest	(22,694)		(405,706)		(58,455)		(312,148)
Present value of minimum lease payments (c) (d)	$	39,686	$	505,004	$	144,816	$	731,213

_______________

(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 $1,038 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 $15,915 and $528,775 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 $45,541 and $830,488 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 October 3, 2021:

	Finance Leases				Operating Leases
Fiscal Year	Company-Operated		Franchise and Other		Company-Operated		Franchise and Other
2021 (a) (b)	$	1,398	$	13,934	$	3,504	$	18,313
2022	3,699		51,912		14,412		73,572
2023	3,644		53,569		14,726		73,226
2024	3,712		54,001		14,738		73,145
2025	3,787		54,496		14,633		72,829
Thereafter	46,140		682,798		141,258		732,276
Total minimum payments	$	62,380	$	910,710	$	203,271	$	1,043,361
Less interest	(22,694)		(405,706)		(58,455)		(312,148)
Present value of minimum lease payments (c) (d)	$	39,686	$	505,004	$	144,816	$	731,213

_______________

(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 $1,038 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 $15,915 and $528,775 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 $45,541 and $830,488 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				Nine Months Ended
	October 3, 2021		September 27, 2020		October 3, 2021		September 27, 2020
Sales-type and direct-financing leases:
Selling profit	$	705	$	182	$	4,244	$	1,379
Interest income (a)	7,786		7,296		22,861		21,804
Operating lease income	45,834		43,510		134,312		130,514
Variable lease income	16,612		15,211		47,878		42,920
Franchise rental income (b)	$	62,446	$	58,721	$	182,190	$	173,434

_______________

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

(b)Includes sublease income of $46,102 and $43,122 for the three months ended October 3, 2021 and September 27, 2020, respectively, and $134,597 and $126,653 for the nine months ended October 3, 2021 and September 27, 2020, respectively. Sublease income includes lessees’ variable payments to the Company for executory costs of $10,087 and $9,379 for the three months ended October 3, 2021 and September 27, 2020, respectively, and $30,156 and $28,538 for the nine months ended October 3, 2021 and September 27, 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 October 3, 2021:

	Sales-Type and Direct Financing Leases				Operating Leases
Fiscal Year	Subleases		Owned Properties		Subleases		Owned Properties
2021 (a) (b)	$	8,409	$	1,407	$	28,841	$	13,942
2022	34,188		2,610		116,068		56,305
2023	35,247		2,656		116,795		56,614
2024	37,248		2,667		116,962		57,720
2025	36,149		2,784		116,443		58,323
Thereafter	479,695		32,057		1,172,444		748,781
Total future minimum receipts	630,936		44,181		$	1,667,553	$	991,685
Unearned interest income	(341,031)		(21,892)
Net investment in sales-type and direct financing leases (c)	$	289,905	$	22,289

_______________

(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 $273 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 sales-type and direct financing rental receipts of $6,952 and $305,242 are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. The present value of minimum sales-type and direct financing rental receipts includes a net investment in unguaranteed residual assets of $535.

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 October 3, 2021:

	Sales-Type and Direct Financing Leases				Operating Leases
Fiscal Year	Subleases		Owned Properties		Subleases		Owned Properties
2021 (a) (b)	$	8,409	$	1,407	$	28,841	$	13,942
2022	34,188		2,610		116,068		56,305
2023	35,247		2,656		116,795		56,614
2024	37,248		2,667		116,962		57,720
2025	36,149		2,784		116,443		58,323
Thereafter	479,695		32,057		1,172,444		748,781
Total future minimum receipts	630,936		44,181		$	1,667,553	$	991,685
Unearned interest income	(341,031)		(21,892)
Net investment in sales-type and direct financing leases (c)	$	289,905	$	22,289

_______________

(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 $273 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 sales-type and direct financing rental receipts of $6,952 and $305,242 are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. The present value of minimum sales-type and direct financing rental receipts includes a net investment in unguaranteed residual assets of $535.

Schedule of Property Subject To Operating Lease

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

	October 3, 2021		January 3, 2021
Land	$	280,767	$	279,956
Buildings and improvements	307,593		309,605
Restaurant equipment	1,701		1,701
	590,061		591,262
Accumulated depreciation and amortization	(179,439)		(170,722)
	$	410,622	$	420,540