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Leases

12 Months Ended

Dec. 25, 2019

Lessee

Our operations utilize property, facilities and equipment leased from others. Buildings and facilities are primarily used for restaurants and support facilities. Many of our restaurants are operated under lease arrangements which generally provide for a fixed base rent, and, in many instances, contingent rent based on a percentage of gross revenues. Initial terms of land and restaurant building leases generally range from 10 to 20 years, exclusive of options to renew, which are typically for five year periods. Leases of equipment consist primarily of restaurant equipment, computer equipment and vehicles. Initial terms of equipment leases generally range from three to five years.

Lessor

We lease or sublease certain restaurant properties to our franchisees and occasionally to third parties. The lease descriptions, terms, variable lease payments and renewal options are generally the same as the lessee leases described above.

The components of lease costs were as follows:



		Fiscal Year Ended
	Classification	December 25, 2019
		(In thousands)
Lease costs
Finance lease costs:
Amortization of right-of-use assets	Depreciation and amortization	$	2,991
Interest on lease liabilities	Interest expense, net	4,536
Operating lease costs:
Operating lease costs - company	Occupancy	8,253
Operating lease costs - franchise	Costs of franchise and license revenue	17,097
Operating lease costs - general and administrative	General and administrative expenses	108
Variable lease costs:
Variable lease costs - company	Occupancy	5,993
Variable lease costs - franchise	Costs of franchise and license revenue	7,001
Variable lease costs - general and administrative	General and administrative expenses	41
Variable lease costs - closed stores	Restructuring charges and exit costs	49
Sublease income:
Sublease income - franchise	Franchise and license revenue	(28,986		)
Sublease income - closed stores	Restructuring charges and exit costs	(306		)
Total lease costs		$	16,777

Lease terms and discount rates were as follows:



	December 25, 2019
Weighted-average remaining lease term (in years):
Finance leases	9.7
Operating leases	10.8
Weighted-average discount rate:
Finance leases	23.5	%
Operating leases	5.9	%

The components of lease income were as follows:



		Fiscal Year Ended
	Classification	December 25, 2019
		(In thousands)
Lease income
Operating lease income - franchise	Franchise and license revenue	$	28,050
Operating lease income - closed stores	Restructuring charges and exit costs	255
Variable lease income - franchise	Franchise and license revenue	10,464
Variable lease income - closed stores	Restructuring charges and exit costs	49
Total lease income		$	38,818

Cash and supplemental noncash amounts were as follows:



	Fiscal Year Ended
	December 25, 2019
	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	4,536
Operating cash flows from operating leases	$	26,329
Financing cash flows from finance leases	$	2,464
Right-of-use assets obtained in exchange for new finance lease liabilities	$	305
Right-of-use assets obtained in exchange for new operating lease liabilities	$	79,534

Maturities of lease liabilities and receipts in accordance with Topic 842 as of December 25, 2019 were as follows:



	Lease Liabilities				Lease Receipts
	Finance		Operating		Operating
	(In thousands)
2020	$	4,654	$	26,148	$	32,435
2021	4,413		24,097		30,711
2022	4,208		21,972		29,182
2023	3,693		20,185		27,113
2024	3,162		18,693		25,610
Thereafter	22,510		123,693		207,063
Total undiscounted cash flows	42,640		234,788		$	352,114
Less: interest	26,187		65,694
Present value of lease liabilities	16,453		169,094
Less: current lease liabilities	1,674		16,344
Long-term lease liabilities	$	14,779	$	152,750

Rental expense and income in accordance with Topic 840 as of December 26, 2018 and December 27, 2017, respectively, were comprised of the following:



	Fiscal Year Ended
	December 26, 2018		December 27, 2017
	(In thousands)
Rental expense:
Included as a component of occupancy:
Base rents	$	10,272	$	9,315
Contingent rents	3,074		3,168
Included as a component of costs of franchise and license expense:
Base rents	15,108		17,674
Contingent rents	2,629		2,864
Total rental expense	$	31,083	$	33,021

Rental income:
Included as a component of franchise and license revenue:
Base rents	$	22,831	$	25,781
Contingent rents	4,662		5,042
Total rental income	$	27,493	$	30,823

Maturities of lease liabilities and amounts to be received as lessor or sublessor under non-cancelable leases in accordance with Topic 840 as of December 26, 2018 were as follows:



	Commitments				Lease Receipts
	Capital		Operating		Operating
	(In thousands)
2019	$	9,271	$	23,504	$	21,001
2020	8,664		20,161		18,493
2021	8,010		17,316		16,573
2022	7,320		14,646		14,887
2023	6,451		11,881		12,932
Thereafter	33,670		49,004		65,273
Total	73,386		$	136,512	$	149,159
Less imputed interest	42,795
Present value of capital lease obligations	$	30,591

Leases

Lessee

Lessor

The components of lease costs were as follows:



		Fiscal Year Ended
	Classification	December 25, 2019
		(In thousands)
Lease costs
Finance lease costs:
Amortization of right-of-use assets	Depreciation and amortization	$	2,991
Interest on lease liabilities	Interest expense, net	4,536
Operating lease costs:
Operating lease costs - company	Occupancy	8,253
Operating lease costs - franchise	Costs of franchise and license revenue	17,097
Operating lease costs - general and administrative	General and administrative expenses	108
Variable lease costs:
Variable lease costs - company	Occupancy	5,993
Variable lease costs - franchise	Costs of franchise and license revenue	7,001
Variable lease costs - general and administrative	General and administrative expenses	41
Variable lease costs - closed stores	Restructuring charges and exit costs	49
Sublease income:
Sublease income - franchise	Franchise and license revenue	(28,986		)
Sublease income - closed stores	Restructuring charges and exit costs	(306		)
Total lease costs		$	16,777

Lease terms and discount rates were as follows:



	December 25, 2019
Weighted-average remaining lease term (in years):
Finance leases	9.7
Operating leases	10.8
Weighted-average discount rate:
Finance leases	23.5	%
Operating leases	5.9	%

The components of lease income were as follows:



		Fiscal Year Ended
	Classification	December 25, 2019
		(In thousands)
Lease income
Operating lease income - franchise	Franchise and license revenue	$	28,050
Operating lease income - closed stores	Restructuring charges and exit costs	255
Variable lease income - franchise	Franchise and license revenue	10,464
Variable lease income - closed stores	Restructuring charges and exit costs	49
Total lease income		$	38,818

Cash and supplemental noncash amounts were as follows:



	Fiscal Year Ended
	December 25, 2019
	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	4,536
Operating cash flows from operating leases	$	26,329
Financing cash flows from finance leases	$	2,464
Right-of-use assets obtained in exchange for new finance lease liabilities	$	305
Right-of-use assets obtained in exchange for new operating lease liabilities	$	79,534

Maturities of lease liabilities and receipts in accordance with Topic 842 as of December 25, 2019 were as follows:



	Lease Liabilities				Lease Receipts
	Finance		Operating		Operating
	(In thousands)
2020	$	4,654	$	26,148	$	32,435
2021	4,413		24,097		30,711
2022	4,208		21,972		29,182
2023	3,693		20,185		27,113
2024	3,162		18,693		25,610
Thereafter	22,510		123,693		207,063
Total undiscounted cash flows	42,640		234,788		$	352,114
Less: interest	26,187		65,694
Present value of lease liabilities	16,453		169,094
Less: current lease liabilities	1,674		16,344
Long-term lease liabilities	$	14,779	$	152,750

Rental expense and income in accordance with Topic 840 as of December 26, 2018 and December 27, 2017, respectively, were comprised of the following:



	Fiscal Year Ended
	December 26, 2018		December 27, 2017
	(In thousands)
Rental expense:
Included as a component of occupancy:
Base rents	$	10,272	$	9,315
Contingent rents	3,074		3,168
Included as a component of costs of franchise and license expense:
Base rents	15,108		17,674
Contingent rents	2,629		2,864
Total rental expense	$	31,083	$	33,021

Rental income:
Included as a component of franchise and license revenue:
Base rents	$	22,831	$	25,781
Contingent rents	4,662		5,042
Total rental income	$	27,493	$	30,823

Maturities of lease liabilities and amounts to be received as lessor or sublessor under non-cancelable leases in accordance with Topic 840 as of December 26, 2018 were as follows:



	Commitments				Lease Receipts
	Capital		Operating		Operating
	(In thousands)
2019	$	9,271	$	23,504	$	21,001
2020	8,664		20,161		18,493
2021	8,010		17,316		16,573
2022	7,320		14,646		14,887
2023	6,451		11,881		12,932
Thereafter	33,670		49,004		65,273
Total	73,386		$	136,512	$	149,159
Less imputed interest	42,795
Present value of capital lease obligations	$	30,591

Leases

Lessee

Lessor

The components of lease costs were as follows:



		Fiscal Year Ended
	Classification	December 25, 2019
		(In thousands)
Lease costs
Finance lease costs:
Amortization of right-of-use assets	Depreciation and amortization	$	2,991
Interest on lease liabilities	Interest expense, net	4,536
Operating lease costs:
Operating lease costs - company	Occupancy	8,253
Operating lease costs - franchise	Costs of franchise and license revenue	17,097
Operating lease costs - general and administrative	General and administrative expenses	108
Variable lease costs:
Variable lease costs - company	Occupancy	5,993
Variable lease costs - franchise	Costs of franchise and license revenue	7,001
Variable lease costs - general and administrative	General and administrative expenses	41
Variable lease costs - closed stores	Restructuring charges and exit costs	49
Sublease income:
Sublease income - franchise	Franchise and license revenue	(28,986		)
Sublease income - closed stores	Restructuring charges and exit costs	(306		)
Total lease costs		$	16,777

Lease terms and discount rates were as follows:



	December 25, 2019
Weighted-average remaining lease term (in years):
Finance leases	9.7
Operating leases	10.8
Weighted-average discount rate:
Finance leases	23.5	%
Operating leases	5.9	%

The components of lease income were as follows:



		Fiscal Year Ended
	Classification	December 25, 2019
		(In thousands)
Lease income
Operating lease income - franchise	Franchise and license revenue	$	28,050
Operating lease income - closed stores	Restructuring charges and exit costs	255
Variable lease income - franchise	Franchise and license revenue	10,464
Variable lease income - closed stores	Restructuring charges and exit costs	49
Total lease income		$	38,818

Cash and supplemental noncash amounts were as follows:



	Fiscal Year Ended
	December 25, 2019
	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	4,536
Operating cash flows from operating leases	$	26,329
Financing cash flows from finance leases	$	2,464
Right-of-use assets obtained in exchange for new finance lease liabilities	$	305
Right-of-use assets obtained in exchange for new operating lease liabilities	$	79,534

Maturities of lease liabilities and receipts in accordance with Topic 842 as of December 25, 2019 were as follows:



	Lease Liabilities				Lease Receipts
	Finance		Operating		Operating
	(In thousands)
2020	$	4,654	$	26,148	$	32,435
2021	4,413		24,097		30,711
2022	4,208		21,972		29,182
2023	3,693		20,185		27,113
2024	3,162		18,693		25,610
Thereafter	22,510		123,693		207,063
Total undiscounted cash flows	42,640		234,788		$	352,114
Less: interest	26,187		65,694
Present value of lease liabilities	16,453		169,094
Less: current lease liabilities	1,674		16,344
Long-term lease liabilities	$	14,779	$	152,750

Rental expense and income in accordance with Topic 840 as of December 26, 2018 and December 27, 2017, respectively, were comprised of the following:



	Fiscal Year Ended
	December 26, 2018		December 27, 2017
	(In thousands)
Rental expense:
Included as a component of occupancy:
Base rents	$	10,272	$	9,315
Contingent rents	3,074		3,168
Included as a component of costs of franchise and license expense:
Base rents	15,108		17,674
Contingent rents	2,629		2,864
Total rental expense	$	31,083	$	33,021

Rental income:
Included as a component of franchise and license revenue:
Base rents	$	22,831	$	25,781
Contingent rents	4,662		5,042
Total rental income	$	27,493	$	30,823

Maturities of lease liabilities and amounts to be received as lessor or sublessor under non-cancelable leases in accordance with Topic 840 as of December 26, 2018 were as follows:



	Commitments				Lease Receipts
	Capital		Operating		Operating
	(In thousands)
2019	$	9,271	$	23,504	$	21,001
2020	8,664		20,161		18,493
2021	8,010		17,316		16,573
2022	7,320		14,646		14,887
2023	6,451		11,881		12,932
Thereafter	33,670		49,004		65,273
Total	73,386		$	136,512	$	149,159
Less imputed interest	42,795
Present value of capital lease obligations	$	30,591