Leases (Tables)

3 Months Ended

Mar. 31, 2024

As of March 31, 2024, the nature of restaurants operated by the Company and its franchisees was as follows:


			March 31, 2024
Company-operated restaurants:
Owned land and building			155
Owned building and held long-term land leases			144
Leased land and building			112
Total Company-operated restaurants			411

Franchisee-operated restaurants:
Company-owned properties leased to franchisees			493
Company-leased properties subleased to franchisees			1,176
Other franchisee-operated restaurants			5,168
Total franchisee-operated restaurants			6,837
Total Company-operated and franchisee-operated restaurants			7,248

Lease, Cost

The components of lease cost are as follows:


	Three Months Ended
	March 31, 2024		April 2, 2023
Finance lease cost:
Amortization of finance lease assets	$	4,297	$	4,063
Interest on finance lease liabilities	10,658		10,750
	14,955		14,813
Operating lease cost	21,701		21,449
Variable lease cost (a)	16,488		16,081
Short-term lease cost	1,394		1,506
Total operating lease cost (b)	39,583		39,036
Total lease cost	$	54,538	$	53,849

_______________

(a)Includes expenses for executory costs of $10,221 and $9,848 for the three months ended March 31, 2024 and April 2, 2023, respectively, for which the Company is reimbursed by sublessees.

(b)Includes $31,718 and $30,598 for the three months ended March 31, 2024 and April 2, 2023, respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees. Also includes $7,388 and $7,865 for the three months ended March 31, 2024 and April 2, 2023, respectively, recorded to “Cost of sales” for leases for Company-operated restaurants.

Lease, Income

The components of lease income are as follows:


	Three Months Ended
	March 31, 2024		April 2, 2023
Sales-type and direct-financing leases:
Selling (loss) profit	$	(16)	$	129
Interest income (a)	7,719		7,862

Operating lease income	41,497		42,156
Variable lease income	16,489		15,651
Franchise rental income (b)	$	57,986	$	57,807

_______________

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

(b)Includes sublease income of $42,783 and $42,951 recognized during the three months ended March 31, 2024 and April 2, 2023, respectively. Sublease income includes lessees’ variable payments to the Company for executory costs of $10,089 and $9,778 for the three months ended March 31, 2024 and April 2, 2023, respectively.