Leases

6 Months Ended

Jun. 26, 2022

Leases [Abstract]

Leases

Leases

Lessor Operating Leases

We sublease certain retail space to our franchisees in the United Kingdom which are primarily operating leases. At June 26, 2022, we leased and subleased approximately 436 Papa John’s restaurant properties to franchisees in the United Kingdom. The initial lease terms on the franchised sites in the United Kingdom are generally 15 years. The Company has the option to negotiate an extension toward the end of the lease term at the landlord’s discretion. Rental income, primarily derived from properties leased and subleased to franchisees in the United Kingdom, is recognized on a straight-line basis over the respective operating lease terms. We recognized total sublease income of $3.0 million and $6.0 million for the three and six months ended June 26, 2022, respectively, and $3.3 million and $6.1 million for the three and six months ended June 27, 2021, respectively, within Other revenues in the Condensed Consolidated Statements of Operations.

Lease Guarantees

As a result of assigning our interest in obligations under property leases as a condition of the refranchising of certain restaurants, we are contingently liable for payment of approximately 62 domestic leases. These leases have varying terms, the latest of which expires in 2036. As of June 26, 2022, the estimated maximum amount of undiscounted payments the Company could be required to make in the event of nonpayment by the primary lessees was $10.2 million. This contingent liability is not included in the Condensed Consolidated Balance Sheet as it is not probable to occur. The fair value of the guarantee is not material.

Supplemental Cash Flow & Other Information

Supplemental cash flow information related to leases for the periods reported is as follows:

	Six Months Ended
(in thousands)	June 26, 2022		June 27, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	510	$	574
Financing cash flows from finance leases	2,508		2,188
Operating cash flows from operating leases (a)	18,363		19,139
Right-of-use assets obtained in exchange for new finance lease liabilities	569		8,393
Right-of-use assets obtained in exchange for new operating lease liabilities (b)	31,369		35,115
Cash received from sublease income	5,623		5,890
(a)Included within the change in Other assets and liabilities within the Condensed Consolidated Statements of Cash Flows offset by non-cash operating lease right-of-use asset amortization and lease liability accretion.
(b)Includes right-of-use assets of approximately $14.3 million for the six months ended June 27, 2021 associated with the lease commencement of our Atlanta, Georgia corporate office.

Leases

Leases

Lessor Operating Leases

We sublease certain retail space to our franchisees in the United Kingdom which are primarily operating leases. At June 26, 2022, we leased and subleased approximately 436 Papa John’s restaurant properties to franchisees in the United Kingdom. The initial lease terms on the franchised sites in the United Kingdom are generally 15 years. The Company has the option to negotiate an extension toward the end of the lease term at the landlord’s discretion. Rental income, primarily derived from properties leased and subleased to franchisees in the United Kingdom, is recognized on a straight-line basis over the respective operating lease terms. We recognized total sublease income of $3.0 million and $6.0 million for the three and six months ended June 26, 2022, respectively, and $3.3 million and $6.1 million for the three and six months ended June 27, 2021, respectively, within Other revenues in the Condensed Consolidated Statements of Operations.

Lease Guarantees

As a result of assigning our interest in obligations under property leases as a condition of the refranchising of certain restaurants, we are contingently liable for payment of approximately 62 domestic leases. These leases have varying terms, the latest of which expires in 2036. As of June 26, 2022, the estimated maximum amount of undiscounted payments the Company could be required to make in the event of nonpayment by the primary lessees was $10.2 million. This contingent liability is not included in the Condensed Consolidated Balance Sheet as it is not probable to occur. The fair value of the guarantee is not material.

Supplemental Cash Flow & Other Information

Supplemental cash flow information related to leases for the periods reported is as follows:

	Six Months Ended
(in thousands)	June 26, 2022		June 27, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	510	$	574
Financing cash flows from finance leases	2,508		2,188
Operating cash flows from operating leases (a)	18,363		19,139
Right-of-use assets obtained in exchange for new finance lease liabilities	569		8,393
Right-of-use assets obtained in exchange for new operating lease liabilities (b)	31,369		35,115
Cash received from sublease income	5,623		5,890
(a)Included within the change in Other assets and liabilities within the Condensed Consolidated Statements of Cash Flows offset by non-cash operating lease right-of-use asset amortization and lease liability accretion.
(b)Includes right-of-use assets of approximately $14.3 million for the six months ended June 27, 2021 associated with the lease commencement of our Atlanta, Georgia corporate office.

Leases

Leases

Lessor Operating Leases

We sublease certain retail space to our franchisees in the United Kingdom which are primarily operating leases. At June 26, 2022, we leased and subleased approximately 436 Papa John’s restaurant properties to franchisees in the United Kingdom. The initial lease terms on the franchised sites in the United Kingdom are generally 15 years. The Company has the option to negotiate an extension toward the end of the lease term at the landlord’s discretion. Rental income, primarily derived from properties leased and subleased to franchisees in the United Kingdom, is recognized on a straight-line basis over the respective operating lease terms. We recognized total sublease income of $3.0 million and $6.0 million for the three and six months ended June 26, 2022, respectively, and $3.3 million and $6.1 million for the three and six months ended June 27, 2021, respectively, within Other revenues in the Condensed Consolidated Statements of Operations.

Lease Guarantees

As a result of assigning our interest in obligations under property leases as a condition of the refranchising of certain restaurants, we are contingently liable for payment of approximately 62 domestic leases. These leases have varying terms, the latest of which expires in 2036. As of June 26, 2022, the estimated maximum amount of undiscounted payments the Company could be required to make in the event of nonpayment by the primary lessees was $10.2 million. This contingent liability is not included in the Condensed Consolidated Balance Sheet as it is not probable to occur. The fair value of the guarantee is not material.

Supplemental Cash Flow & Other Information

Supplemental cash flow information related to leases for the periods reported is as follows:

	Six Months Ended
(in thousands)	June 26, 2022		June 27, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	510	$	574
Financing cash flows from finance leases	2,508		2,188
Operating cash flows from operating leases (a)	18,363		19,139
Right-of-use assets obtained in exchange for new finance lease liabilities	569		8,393
Right-of-use assets obtained in exchange for new operating lease liabilities (b)	31,369		35,115
Cash received from sublease income	5,623		5,890
(a)Included within the change in Other assets and liabilities within the Condensed Consolidated Statements of Cash Flows offset by non-cash operating lease right-of-use asset amortization and lease liability accretion.
(b)Includes right-of-use assets of approximately $14.3 million for the six months ended June 27, 2021 associated with the lease commencement of our Atlanta, Georgia corporate office.