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Leases
 12 Months Ended
Dec. 31, 2022
Leases [Abstract]  
Leases Leases
The Company engages in leasing activity as both a lessee and a lessor. The majority of the Company's lease portfolio originated when the Company was actively involved in the development and financing of IHOP restaurants prior to the franchising of the restaurant to the franchisee. This activity included the Company's purchase or leasing of the site on which the restaurant was located and subsequently leasing/subleasing the site to the franchisee. With a few exceptions, the Company ended this practice in 2003 and the Company's current lease activity is predominantly comprised of renewals of existing lease arrangements and exercises of options on existing lease arrangements.
The Company currently leases from third parties the real property on which approximately 530 IHOP franchisee-operated restaurants and one Applebee's franchisee-operated restaurant are located; the Company (as lessor) subleases the property to the franchisees that operate those restaurants. The Company also leases property it owns to the franchisees that operate 52 IHOP restaurants and one Applebee's restaurant. The Company leases from third parties the real property on which company-operated restaurants are located. The Company also leases office space for its principal corporate office in Glendale, California and will be moving to Pasadena, California. In addition, the Company leases office space for restaurant support centers in Leawood, Kansas and Irving, Texas. The Company does not have a significant amount of non-real estate leases.
The Company's existing leases/subleases related to IHOP restaurants generally provide for an initial term of 20 to 25 years, with most having one or more five-year renewal options. Leases related to Applebee's restaurants generally have an initial term of 10 to 20 years, with renewal terms of five to 20 years. Option periods were not included in determining liabilities and right-of-use assets related to operating leases. Restaurants associated with approximately 325 of the Company's leases met the sales levels that required variable rent payments to the Company (as lessor), based on a percentage of restaurant sales in 2022. Restaurants associated with approximately 65 of the Company's leases met the sales levels that required variable rent payments by the Company (as lessee), based on a percentage of restaurant sales in 2022.
The individual lease agreements do not provide information to determine the implicit interest rate in the agreements. The Company made significant judgments in determining the incremental borrowing rates that were used in calculating operating lease liabilities. Due to the large number of leases, the Company applied a portfolio approach by grouping the leases based on the original lease term. The Company estimated the interest rate for each grouping primarily by reference to (i) yield rates on debt issuances by companies of a similar credit rating as the Company; (ii) U.S. Treasury rates as of the adoption date; and (iii) adjustments for differences in years to maturity.
The Company's lease cost for the years ended December 31, 2022, 2021, and 2020 was as follows:
Year Ended December 31,
202220212020
Finance lease cost:(In millions)
Amortization of right-of-use assets$3.6 $4.6 $5.0 
Interest on lease liabilities4.5 5.4 6.6 
Operating lease cost(1)
83.5 84.4 90.6 
Variable lease cost7.6 7.0 0.8 
Short-term lease cost0.0 0.1 0.0 
Sublease income(106.8)(104.6)(96.8)
Lease cost$(7.6)$(3.1)$6.2 
_________________________________
(1) Operating lease cost for the years ended December 31, 2021 and 2020 previously disclosed as $98.7 million and $109.8 million, respectively, were overstated due to the inclusion of certain finance lease activity. The correct operating lease cost for the years ended December 31, 2021 and 2020 was $84.4 million and $90.6 million, respectively, as reflected in the above table. The overstatement only impacted this note disclosure, and there was no impact to the Consolidated Statement of Comprehensive Income.
Future minimum lease payments under noncancellable leases as lessee as of December 31, 2022 were as follows:
Finance
Leases		Operating
Leases
 (In millions)
2023$8.8 $63.7 
20247.3 74.3 
20255.9 63.9 
20265.3 55.3 
20274.3 37.1 
Thereafter16.3 110.0 
Total minimum lease payments47.9 404.3 
Less: interest/imputed interest(10.9)(70.1)
Total obligations37.0 334.2 
Less: current portion(6.6)(59.1)
Long-term lease obligations$30.4 $275.1 
The weighted average remaining lease term as of December 31, 2022 was 7.41 years for finance leases and 6.25 years for operating leases. The weighted average discount rate as of December 31, 2022 was 10.5% for finance leases and 5.5% for operating leases.
During the years ended December 31, 2022, 2021 and 2020, the Company made the following cash payments for leases:
Year Ended December 31,
202220212020
(In millions)
Principal payments on finance lease obligations$8.9 $10.2 $12.5 
Interest payments on finance lease obligations$4.5 $5.4 $6.6 
Payments on operating leases$83.5 $91.7 $101.1 
Variable lease payments$7.6 $6.2 $0.7 
The Company's income from operating leases for the years ended December 31, 2022, 2021 and 2020 was as follows:
Year Ended December 31,
202220212020
(In millions)
Minimum lease payments$96.4 $96.0 $97.2 
Variable lease income16.9 15.3 5.2 
Total operating lease income$113.3 $111.3 $102.4 
Future minimum payments to be received as lessor under noncancellable operating leases as of December 31, 2022 were as follows:
 (In millions)
2023$103.6 
202494.8 
202582.1 
202667.6 
202749.5 
Thereafter122.0 
Total minimum rents receivable$519.6 
The Company's income from real estate leases receivable at December 31, 2022, 2021 and 2020 was as follows:
Year Ended December 31,
202220212020
(In millions)
Selling profit$0.9 $— $— 
Interest income1.5 2.1 3.4 
Variable lease income0.7 0.5 0.3 
Total financing lease income$3.1 $2.6 $3.7 
Future minimum payments to be received as lessor under noncancellable real estate leases as of December 31, 2022 were as follows:
 (In millions)
2023$4.7 
20242.6 
20251.8 
20261.8 
20271.8 
Thereafter12.4 
Total minimum rents receivable25.1 
Less: unearned income(6.6)
Total real estate leases receivable18.5 
Less: current portion(3.6)
Long-term real estate leases receivable $14.9 
Leases Leases
The Company engages in leasing activity as both a lessee and a lessor. The majority of the Company's lease portfolio originated when the Company was actively involved in the development and financing of IHOP restaurants prior to the franchising of the restaurant to the franchisee. This activity included the Company's purchase or leasing of the site on which the restaurant was located and subsequently leasing/subleasing the site to the franchisee. With a few exceptions, the Company ended this practice in 2003 and the Company's current lease activity is predominantly comprised of renewals of existing lease arrangements and exercises of options on existing lease arrangements.
The Company currently leases from third parties the real property on which approximately 530 IHOP franchisee-operated restaurants and one Applebee's franchisee-operated restaurant are located; the Company (as lessor) subleases the property to the franchisees that operate those restaurants. The Company also leases property it owns to the franchisees that operate 52 IHOP restaurants and one Applebee's restaurant. The Company leases from third parties the real property on which company-operated restaurants are located. The Company also leases office space for its principal corporate office in Glendale, California and will be moving to Pasadena, California. In addition, the Company leases office space for restaurant support centers in Leawood, Kansas and Irving, Texas. The Company does not have a significant amount of non-real estate leases.
The Company's existing leases/subleases related to IHOP restaurants generally provide for an initial term of 20 to 25 years, with most having one or more five-year renewal options. Leases related to Applebee's restaurants generally have an initial term of 10 to 20 years, with renewal terms of five to 20 years. Option periods were not included in determining liabilities and right-of-use assets related to operating leases. Restaurants associated with approximately 325 of the Company's leases met the sales levels that required variable rent payments to the Company (as lessor), based on a percentage of restaurant sales in 2022. Restaurants associated with approximately 65 of the Company's leases met the sales levels that required variable rent payments by the Company (as lessee), based on a percentage of restaurant sales in 2022.
The individual lease agreements do not provide information to determine the implicit interest rate in the agreements. The Company made significant judgments in determining the incremental borrowing rates that were used in calculating operating lease liabilities. Due to the large number of leases, the Company applied a portfolio approach by grouping the leases based on the original lease term. The Company estimated the interest rate for each grouping primarily by reference to (i) yield rates on debt issuances by companies of a similar credit rating as the Company; (ii) U.S. Treasury rates as of the adoption date; and (iii) adjustments for differences in years to maturity.
The Company's lease cost for the years ended December 31, 2022, 2021, and 2020 was as follows:
Year Ended December 31,
202220212020
Finance lease cost:(In millions)
Amortization of right-of-use assets$3.6 $4.6 $5.0 
Interest on lease liabilities4.5 5.4 6.6 
Operating lease cost(1)
83.5 84.4 90.6 
Variable lease cost7.6 7.0 0.8 
Short-term lease cost0.0 0.1 0.0 
Sublease income(106.8)(104.6)(96.8)
Lease cost$(7.6)$(3.1)$6.2 
_________________________________
(1) Operating lease cost for the years ended December 31, 2021 and 2020 previously disclosed as $98.7 million and $109.8 million, respectively, were overstated due to the inclusion of certain finance lease activity. The correct operating lease cost for the years ended December 31, 2021 and 2020 was $84.4 million and $90.6 million, respectively, as reflected in the above table. The overstatement only impacted this note disclosure, and there was no impact to the Consolidated Statement of Comprehensive Income.
Future minimum lease payments under noncancellable leases as lessee as of December 31, 2022 were as follows:
Finance
Leases		Operating
Leases
 (In millions)
2023$8.8 $63.7 
20247.3 74.3 
20255.9 63.9 
20265.3 55.3 
20274.3 37.1 
Thereafter16.3 110.0 
Total minimum lease payments47.9 404.3 
Less: interest/imputed interest(10.9)(70.1)
Total obligations37.0 334.2 
Less: current portion(6.6)(59.1)
Long-term lease obligations$30.4 $275.1 
The weighted average remaining lease term as of December 31, 2022 was 7.41 years for finance leases and 6.25 years for operating leases. The weighted average discount rate as of December 31, 2022 was 10.5% for finance leases and 5.5% for operating leases.
During the years ended December 31, 2022, 2021 and 2020, the Company made the following cash payments for leases:
Year Ended December 31,
202220212020
(In millions)
Principal payments on finance lease obligations$8.9 $10.2 $12.5 
Interest payments on finance lease obligations$4.5 $5.4 $6.6 
Payments on operating leases$83.5 $91.7 $101.1 
Variable lease payments$7.6 $6.2 $0.7 
The Company's income from operating leases for the years ended December 31, 2022, 2021 and 2020 was as follows:
Year Ended December 31,
202220212020
(In millions)
Minimum lease payments$96.4 $96.0 $97.2 
Variable lease income16.9 15.3 5.2 
Total operating lease income$113.3 $111.3 $102.4 
Future minimum payments to be received as lessor under noncancellable operating leases as of December 31, 2022 were as follows:
 (In millions)
2023$103.6 
202494.8 
202582.1 
202667.6 
202749.5 
Thereafter122.0 
Total minimum rents receivable$519.6 
The Company's income from real estate leases receivable at December 31, 2022, 2021 and 2020 was as follows:
Year Ended December 31,
202220212020
(In millions)
Selling profit$0.9 $— $— 
Interest income1.5 2.1 3.4 
Variable lease income0.7 0.5 0.3 
Total financing lease income$3.1 $2.6 $3.7 
Future minimum payments to be received as lessor under noncancellable real estate leases as of December 31, 2022 were as follows:
 (In millions)
2023$4.7 
20242.6 
20251.8 
20261.8 
20271.8 
Thereafter12.4 
Total minimum rents receivable25.1 
Less: unearned income(6.6)
Total real estate leases receivable18.5 
Less: current portion(3.6)
Long-term real estate leases receivable $14.9 
Leases Leases
The Company engages in leasing activity as both a lessee and a lessor. The majority of the Company's lease portfolio originated when the Company was actively involved in the development and financing of IHOP restaurants prior to the franchising of the restaurant to the franchisee. This activity included the Company's purchase or leasing of the site on which the restaurant was located and subsequently leasing/subleasing the site to the franchisee. With a few exceptions, the Company ended this practice in 2003 and the Company's current lease activity is predominantly comprised of renewals of existing lease arrangements and exercises of options on existing lease arrangements.
The Company currently leases from third parties the real property on which approximately 530 IHOP franchisee-operated restaurants and one Applebee's franchisee-operated restaurant are located; the Company (as lessor) subleases the property to the franchisees that operate those restaurants. The Company also leases property it owns to the franchisees that operate 52 IHOP restaurants and one Applebee's restaurant. The Company leases from third parties the real property on which company-operated restaurants are located. The Company also leases office space for its principal corporate office in Glendale, California and will be moving to Pasadena, California. In addition, the Company leases office space for restaurant support centers in Leawood, Kansas and Irving, Texas. The Company does not have a significant amount of non-real estate leases.
The Company's existing leases/subleases related to IHOP restaurants generally provide for an initial term of 20 to 25 years, with most having one or more five-year renewal options. Leases related to Applebee's restaurants generally have an initial term of 10 to 20 years, with renewal terms of five to 20 years. Option periods were not included in determining liabilities and right-of-use assets related to operating leases. Restaurants associated with approximately 325 of the Company's leases met the sales levels that required variable rent payments to the Company (as lessor), based on a percentage of restaurant sales in 2022. Restaurants associated with approximately 65 of the Company's leases met the sales levels that required variable rent payments by the Company (as lessee), based on a percentage of restaurant sales in 2022.
The individual lease agreements do not provide information to determine the implicit interest rate in the agreements. The Company made significant judgments in determining the incremental borrowing rates that were used in calculating operating lease liabilities. Due to the large number of leases, the Company applied a portfolio approach by grouping the leases based on the original lease term. The Company estimated the interest rate for each grouping primarily by reference to (i) yield rates on debt issuances by companies of a similar credit rating as the Company; (ii) U.S. Treasury rates as of the adoption date; and (iii) adjustments for differences in years to maturity.
The Company's lease cost for the years ended December 31, 2022, 2021, and 2020 was as follows:
Year Ended December 31,
202220212020
Finance lease cost:(In millions)
Amortization of right-of-use assets$3.6 $4.6 $5.0 
Interest on lease liabilities4.5 5.4 6.6 
Operating lease cost(1)
83.5 84.4 90.6 
Variable lease cost7.6 7.0 0.8 
Short-term lease cost0.0 0.1 0.0 
Sublease income(106.8)(104.6)(96.8)
Lease cost$(7.6)$(3.1)$6.2 
_________________________________
(1) Operating lease cost for the years ended December 31, 2021 and 2020 previously disclosed as $98.7 million and $109.8 million, respectively, were overstated due to the inclusion of certain finance lease activity. The correct operating lease cost for the years ended December 31, 2021 and 2020 was $84.4 million and $90.6 million, respectively, as reflected in the above table. The overstatement only impacted this note disclosure, and there was no impact to the Consolidated Statement of Comprehensive Income.
Future minimum lease payments under noncancellable leases as lessee as of December 31, 2022 were as follows:
Finance
Leases		Operating
Leases
 (In millions)
2023$8.8 $63.7 
20247.3 74.3 
20255.9 63.9 
20265.3 55.3 
20274.3 37.1 
Thereafter16.3 110.0 
Total minimum lease payments47.9 404.3 
Less: interest/imputed interest(10.9)(70.1)
Total obligations37.0 334.2 
Less: current portion(6.6)(59.1)
Long-term lease obligations$30.4 $275.1 
The weighted average remaining lease term as of December 31, 2022 was 7.41 years for finance leases and 6.25 years for operating leases. The weighted average discount rate as of December 31, 2022 was 10.5% for finance leases and 5.5% for operating leases.
During the years ended December 31, 2022, 2021 and 2020, the Company made the following cash payments for leases:
Year Ended December 31,
202220212020
(In millions)
Principal payments on finance lease obligations$8.9 $10.2 $12.5 
Interest payments on finance lease obligations$4.5 $5.4 $6.6 
Payments on operating leases$83.5 $91.7 $101.1 
Variable lease payments$7.6 $6.2 $0.7 
The Company's income from operating leases for the years ended December 31, 2022, 2021 and 2020 was as follows:
Year Ended December 31,
202220212020
(In millions)
Minimum lease payments$96.4 $96.0 $97.2 
Variable lease income16.9 15.3 5.2 
Total operating lease income$113.3 $111.3 $102.4 
Future minimum payments to be received as lessor under noncancellable operating leases as of December 31, 2022 were as follows:
 (In millions)
2023$103.6 
202494.8 
202582.1 
202667.6 
202749.5 
Thereafter122.0 
Total minimum rents receivable$519.6 
The Company's income from real estate leases receivable at December 31, 2022, 2021 and 2020 was as follows:
Year Ended December 31,
202220212020
(In millions)
Selling profit$0.9 $— $— 
Interest income1.5 2.1 3.4 
Variable lease income0.7 0.5 0.3 
Total financing lease income$3.1 $2.6 $3.7 
Future minimum payments to be received as lessor under noncancellable real estate leases as of December 31, 2022 were as follows:
 (In millions)
2023$4.7 
20242.6 
20251.8 
20261.8 
20271.8 
Thereafter12.4 
Total minimum rents receivable25.1 
Less: unearned income(6.6)
Total real estate leases receivable18.5 
Less: current portion(3.6)
Long-term real estate leases receivable $14.9 
Leases Leases
The Company engages in leasing activity as both a lessee and a lessor. The majority of the Company's lease portfolio originated when the Company was actively involved in the development and financing of IHOP restaurants prior to the franchising of the restaurant to the franchisee. This activity included the Company's purchase or leasing of the site on which the restaurant was located and subsequently leasing/subleasing the site to the franchisee. With a few exceptions, the Company ended this practice in 2003 and the Company's current lease activity is predominantly comprised of renewals of existing lease arrangements and exercises of options on existing lease arrangements.
The Company currently leases from third parties the real property on which approximately 530 IHOP franchisee-operated restaurants and one Applebee's franchisee-operated restaurant are located; the Company (as lessor) subleases the property to the franchisees that operate those restaurants. The Company also leases property it owns to the franchisees that operate 52 IHOP restaurants and one Applebee's restaurant. The Company leases from third parties the real property on which company-operated restaurants are located. The Company also leases office space for its principal corporate office in Glendale, California and will be moving to Pasadena, California. In addition, the Company leases office space for restaurant support centers in Leawood, Kansas and Irving, Texas. The Company does not have a significant amount of non-real estate leases.
The Company's existing leases/subleases related to IHOP restaurants generally provide for an initial term of 20 to 25 years, with most having one or more five-year renewal options. Leases related to Applebee's restaurants generally have an initial term of 10 to 20 years, with renewal terms of five to 20 years. Option periods were not included in determining liabilities and right-of-use assets related to operating leases. Restaurants associated with approximately 325 of the Company's leases met the sales levels that required variable rent payments to the Company (as lessor), based on a percentage of restaurant sales in 2022. Restaurants associated with approximately 65 of the Company's leases met the sales levels that required variable rent payments by the Company (as lessee), based on a percentage of restaurant sales in 2022.
The individual lease agreements do not provide information to determine the implicit interest rate in the agreements. The Company made significant judgments in determining the incremental borrowing rates that were used in calculating operating lease liabilities. Due to the large number of leases, the Company applied a portfolio approach by grouping the leases based on the original lease term. The Company estimated the interest rate for each grouping primarily by reference to (i) yield rates on debt issuances by companies of a similar credit rating as the Company; (ii) U.S. Treasury rates as of the adoption date; and (iii) adjustments for differences in years to maturity.
The Company's lease cost for the years ended December 31, 2022, 2021, and 2020 was as follows:
Year Ended December 31,
202220212020
Finance lease cost:(In millions)
Amortization of right-of-use assets$3.6 $4.6 $5.0 
Interest on lease liabilities4.5 5.4 6.6 
Operating lease cost(1)
83.5 84.4 90.6 
Variable lease cost7.6 7.0 0.8 
Short-term lease cost0.0 0.1 0.0 
Sublease income(106.8)(104.6)(96.8)
Lease cost$(7.6)$(3.1)$6.2 
_________________________________
(1) Operating lease cost for the years ended December 31, 2021 and 2020 previously disclosed as $98.7 million and $109.8 million, respectively, were overstated due to the inclusion of certain finance lease activity. The correct operating lease cost for the years ended December 31, 2021 and 2020 was $84.4 million and $90.6 million, respectively, as reflected in the above table. The overstatement only impacted this note disclosure, and there was no impact to the Consolidated Statement of Comprehensive Income.
Future minimum lease payments under noncancellable leases as lessee as of December 31, 2022 were as follows:
Finance
Leases		Operating
Leases
 (In millions)
2023$8.8 $63.7 
20247.3 74.3 
20255.9 63.9 
20265.3 55.3 
20274.3 37.1 
Thereafter16.3 110.0 
Total minimum lease payments47.9 404.3 
Less: interest/imputed interest(10.9)(70.1)
Total obligations37.0 334.2 
Less: current portion(6.6)(59.1)
Long-term lease obligations$30.4 $275.1 
The weighted average remaining lease term as of December 31, 2022 was 7.41 years for finance leases and 6.25 years for operating leases. The weighted average discount rate as of December 31, 2022 was 10.5% for finance leases and 5.5% for operating leases.
During the years ended December 31, 2022, 2021 and 2020, the Company made the following cash payments for leases:
Year Ended December 31,
202220212020
(In millions)
Principal payments on finance lease obligations$8.9 $10.2 $12.5 
Interest payments on finance lease obligations$4.5 $5.4 $6.6 
Payments on operating leases$83.5 $91.7 $101.1 
Variable lease payments$7.6 $6.2 $0.7 
The Company's income from operating leases for the years ended December 31, 2022, 2021 and 2020 was as follows:
Year Ended December 31,
202220212020
(In millions)
Minimum lease payments$96.4 $96.0 $97.2 
Variable lease income16.9 15.3 5.2 
Total operating lease income$113.3 $111.3 $102.4 
Future minimum payments to be received as lessor under noncancellable operating leases as of December 31, 2022 were as follows:
 (In millions)
2023$103.6 
202494.8 
202582.1 
202667.6 
202749.5 
Thereafter122.0 
Total minimum rents receivable$519.6 
The Company's income from real estate leases receivable at December 31, 2022, 2021 and 2020 was as follows:
Year Ended December 31,
202220212020
(In millions)
Selling profit$0.9 $— $— 
Interest income1.5 2.1 3.4 
Variable lease income0.7 0.5 0.3 
Total financing lease income$3.1 $2.6 $3.7 
Future minimum payments to be received as lessor under noncancellable real estate leases as of December 31, 2022 were as follows:
 (In millions)
2023$4.7 
20242.6 
20251.8 
20261.8 
20271.8 
Thereafter12.4 
Total minimum rents receivable25.1 
Less: unearned income(6.6)
Total real estate leases receivable18.5 
Less: current portion(3.6)
Long-term real estate leases receivable $14.9