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Revenues
 3 Months Ended
Mar. 30, 2022
Revenue from Contract with Customer [Abstract]  
Revenues Revenues
Our revenues are derived primarily from two sales channels, which we operate as one segment: company restaurants and franchised and licensed restaurants. The following table disaggregates our revenue by sales channel and type of good or service:

 Quarter Ended
 March 30, 2022March 31, 2021
 (In thousands)
Company restaurant sales$43,976 $33,569 
Franchise and license revenue:
Royalties26,525 20,844 
Advertising revenue18,206 14,111 
Initial and other fees4,507 1,838 
Occupancy revenue 9,893 10,214 
Franchise and license revenue 
59,131 47,007 
Total operating revenue$103,107 $80,576 

Franchise occupancy revenue consisted of the following:

 Quarter Ended
 March 30, 2022March 31, 2021
 (In thousands)
Operating lease revenue$7,418 $7,913 
Variable lease revenue
2,475 2,301 
Total occupancy revenue
$9,893 $10,214 

Balances related to contracts with customers consist of receivables, deferred franchise revenue and deferred gift card revenue. See Note 3 for details on our receivables.
The components of the change in deferred franchise revenue are as follows:

 (In thousands)
Balance, December 29, 2021$19,896 
Fees received from franchisees1,199 
Franchisee deferred costs (1)
(626)
Revenue recognized, net (2)
(739)
Balance, March 30, 202219,730 
Less current portion included in other current liabilities1,928 
Deferred franchise revenue included in other noncurrent liabilities$17,802 

(1)    Deferred costs are contract assets consisting of incentives given to franchisees related to the rollout of kitchen equipment to all franchise locations.
(2)    Of this amount $0.6 million was included in the deferred franchise revenue balance as of December 29, 2021.
Deferred franchise revenue consists primarily of the unamortized portion of initial franchise fees that are currently being amortized into revenue and amounts related to development agreements and unopened restaurants that we will begin amortizing into revenue when the related restaurants are opened net of certain deferred costs. Deferred franchise revenue represents our remaining performance obligations to our franchisees, excluding amounts of variable consideration related to sales-based royalties and advertising.

The Company has entered into equipment purchase contracts of approximately $18.3 million related to the rollout of kitchen equipment for franchise restaurants, which will be paid by the franchisees as the equipment is installed, less approximately $5.7 million in commitments from the Company. Amounts committed from the Company are contract assets that have been netted against deferred revenue and will be recognized as a component of franchise and license revenue over the remaining term of the related franchise agreement. At March 30, 2022, our remaining obligation under these contracts was approximately $9.2 million, $1.6 million of which is included in accounts payable. At March 30, 2022, we had approximately $8.4 million in inventory and $0.7 million in contract assets related to the kitchen equipment rollout.

Deferred gift card liabilities consist of the unredeemed portion of gift cards sold in company restaurants and at third party locations. The balance of deferred gift card liabilities represents our remaining performance obligations to our customers. The balance of deferred gift card liabilities as of March 30, 2022 and December 29, 2021 was $5.8 million and $7.2 million, respectively. During the quarter ended March 30, 2022, we recognized revenue of $0.2 million from gift card redemptions at company restaurants.