Leases

9 Months Ended

Sep. 25, 2022

Leases [Abstract]

Leases

Leases

Lessor Operating Leases

At September 25, 2022, we leased and subleased approximately 444 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 $9.0 million for the three and nine months ended September 25, 2022, respectively, and $2.9 million and $9.0 million for the three and nine months ended September 26, 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 55 domestic leases. These leases have varying terms, the latest of which expires in 2036. As of September 25, 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 $9.8 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:

	Nine Months Ended
(in thousands)	September 25, 2022		September 26, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	754	$	864
Financing cash flows from finance leases	3,854		3,358
Operating cash flows from operating leases (a)	26,771		28,830
Right-of-use assets obtained in exchange for new finance lease liabilities	5,980		9,190
Right-of-use assets obtained in exchange for new operating lease liabilities (b)	43,639		52,462
Cash received from sublease income	8,251		8,728
(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 $21.8 million for the nine months ended September 26, 2021 associated with the lease commencement of our Atlanta, Georgia corporate office.

Leases

Leases

Lessor Operating Leases

At September 25, 2022, we leased and subleased approximately 444 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 $9.0 million for the three and nine months ended September 25, 2022, respectively, and $2.9 million and $9.0 million for the three and nine months ended September 26, 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 55 domestic leases. These leases have varying terms, the latest of which expires in 2036. As of September 25, 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 $9.8 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:

	Nine Months Ended
(in thousands)	September 25, 2022		September 26, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	754	$	864
Financing cash flows from finance leases	3,854		3,358
Operating cash flows from operating leases (a)	26,771		28,830
Right-of-use assets obtained in exchange for new finance lease liabilities	5,980		9,190
Right-of-use assets obtained in exchange for new operating lease liabilities (b)	43,639		52,462
Cash received from sublease income	8,251		8,728
(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 $21.8 million for the nine months ended September 26, 2021 associated with the lease commencement of our Atlanta, Georgia corporate office.

Leases

Leases

Lessor Operating Leases

At September 25, 2022, we leased and subleased approximately 444 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 $9.0 million for the three and nine months ended September 25, 2022, respectively, and $2.9 million and $9.0 million for the three and nine months ended September 26, 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 55 domestic leases. These leases have varying terms, the latest of which expires in 2036. As of September 25, 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 $9.8 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:

	Nine Months Ended
(in thousands)	September 25, 2022		September 26, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	754	$	864
Financing cash flows from finance leases	3,854		3,358
Operating cash flows from operating leases (a)	26,771		28,830
Right-of-use assets obtained in exchange for new finance lease liabilities	5,980		9,190
Right-of-use assets obtained in exchange for new operating lease liabilities (b)	43,639		52,462
Cash received from sublease income	8,251		8,728
(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 $21.8 million for the nine months ended September 26, 2021 associated with the lease commencement of our Atlanta, Georgia corporate office.