Leases

6 Months Ended

Jun. 29, 2023

Leases [Abstract]

Leases

Leases

The Company determines if an arrangement is a lease at inception. The Company evaluates each lease for classification as either a finance lease or an operating lease according to accounting guidance ASU No. 2016-02, Leases (Topic 842). The Company performs this evaluation at the inception of the lease and when a modification is made to a lease. The Company leases real estate and equipment with lease terms of one year to 45 years, some of which include options to extend and/or terminate the lease.

The majority of the Company’s lease agreements include fixed rental payments. For those leases with variable payments based on increases in an index subsequent to lease commencement, such payments are recognized as variable lease expense as they occur. Variable lease payments that do not depend on an index or rate, including those that depend on the Company’s performance or use of the underlying asset, are also expensed as incurred. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term.

Total lease cost consists of the following:

		13 Weeks Ended				26 Weeks Ended
Lease Cost	Classification	June 29, 2023		June 30, 2022		June 29, 2023		June 30, 2022
Finance lease costs:
Amortization of finance lease assets	Depreciation and amortization	$	688	$	696	$	1,379	$	1,401
Interest on lease liabilities	Interest expense	192		216		390		437
		$	880	$	912	$	1,769	$	1,838
Operating lease costs:
Operating lease costs	Rent expense	$	6,033	$	6,364	$	12,077	$	12,741
Variable lease cost	Rent expense	527		178		943		15
Short-term lease cost	Rent expense	34		36		67		72
		$	6,594	$	6,578	$	13,087	$	12,828

Additional information related to leases is as follows:

	13 Weeks Ended				26 Weeks Ended
Other Information	June 29, 2023		June 30, 2022		June 29, 2023		June 30, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Financing cash flows from finance leases	$	645	$	752	$	1,201	$	1,336
Operating cash flows from finance leases	192		216		390		437
Operating cash flows from operating leases	6,429		7,012		12,859		$	14,136
Right of use assets obtained in exchange for new lease obligations:
Finance lease liabilities	136		116		136		188
Operating lease liabilities	—		—		—		183

	June 29, 2023		December 29, 2022
Finance leases:
Property and equipment – gross	$	29,997	$	29,885
Accumulated depreciation and amortization	(16,687)		(15,332)
Property and equipment - net	$	13,310	$	14,553

Remaining lease terms and discount rates are as follows:

Lease Term and Discount Rate	June 29, 2023		December 29, 2022
Weighted-average remaining lease terms:
Finance leases	7 years		7 years
Operating leases	12 years		12 years
Weighted-average discount rates:
Finance leases	4.59	%	4.59	%
Operating leases	4.51	%	4.51	%

Deferred rent payments of approximately $753 for the Company’s operating leases have been included in the total operating lease obligations as of June 29, 2023, of which approximately $550 is included in long-term operating lease obligations.

Leases

Leases

The Company determines if an arrangement is a lease at inception. The Company evaluates each lease for classification as either a finance lease or an operating lease according to accounting guidance ASU No. 2016-02, Leases (Topic 842). The Company performs this evaluation at the inception of the lease and when a modification is made to a lease. The Company leases real estate and equipment with lease terms of one year to 45 years, some of which include options to extend and/or terminate the lease.

The majority of the Company’s lease agreements include fixed rental payments. For those leases with variable payments based on increases in an index subsequent to lease commencement, such payments are recognized as variable lease expense as they occur. Variable lease payments that do not depend on an index or rate, including those that depend on the Company’s performance or use of the underlying asset, are also expensed as incurred. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term.

Total lease cost consists of the following:

		13 Weeks Ended				26 Weeks Ended
Lease Cost	Classification	June 29, 2023		June 30, 2022		June 29, 2023		June 30, 2022
Finance lease costs:
Amortization of finance lease assets	Depreciation and amortization	$	688	$	696	$	1,379	$	1,401
Interest on lease liabilities	Interest expense	192		216		390		437
		$	880	$	912	$	1,769	$	1,838
Operating lease costs:
Operating lease costs	Rent expense	$	6,033	$	6,364	$	12,077	$	12,741
Variable lease cost	Rent expense	527		178		943		15
Short-term lease cost	Rent expense	34		36		67		72
		$	6,594	$	6,578	$	13,087	$	12,828

Additional information related to leases is as follows:

	13 Weeks Ended				26 Weeks Ended
Other Information	June 29, 2023		June 30, 2022		June 29, 2023		June 30, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Financing cash flows from finance leases	$	645	$	752	$	1,201	$	1,336
Operating cash flows from finance leases	192		216		390		437
Operating cash flows from operating leases	6,429		7,012		12,859		$	14,136
Right of use assets obtained in exchange for new lease obligations:
Finance lease liabilities	136		116		136		188
Operating lease liabilities	—		—		—		183

	June 29, 2023		December 29, 2022
Finance leases:
Property and equipment – gross	$	29,997	$	29,885
Accumulated depreciation and amortization	(16,687)		(15,332)
Property and equipment - net	$	13,310	$	14,553

Remaining lease terms and discount rates are as follows:

Lease Term and Discount Rate	June 29, 2023		December 29, 2022
Weighted-average remaining lease terms:
Finance leases	7 years		7 years
Operating leases	12 years		12 years
Weighted-average discount rates:
Finance leases	4.59	%	4.59	%
Operating leases	4.51	%	4.51	%

Deferred rent payments of approximately $753 for the Company’s operating leases have been included in the total operating lease obligations as of June 29, 2023, of which approximately $550 is included in long-term operating lease obligations.