Leases

3 Months Ended

Mar. 22, 2020

Leases [Abstract]

Lease Disclosures

7. Leases

The Company leases certain retail store and supply chain center locations, supply chain vehicles and its corporate headquarters with expiration dates through 2041.

The components of operating and finance lease cost for the first quarter of 2020 and the first quarter of 2019 were as follows:

	Fiscal Quarter Ended
	March 22,		March 24,
	2020		2019
Operating lease cost	$	9,582	$	10,796
Finance lease cost:
Amortization of right-of-use assets		249		254
Interest on lease liabilities		375		479
Total finance lease cost	$	624	$	733

Rent expense totaled $16.4 million in both the first quarter of 2020 and the first quarter of 2019, and includes operating lease cost, as well as expense for non-lease components including common area maintenance, real estate taxes and insurance for the Company’s real estate leases. Rent expense also includes the variable rate per mile driven and fixed maintenance charges for the Company’s supply chain center tractors and trailers and expense for short-term rentals. Variable rent expense and rent expense for short-term leases were immaterial in both the first quarter of 2020 and the first quarter of 2019.

Supplemental balance sheet information related to the Company’s finance leases as of March 22, 2020 and December 29, 2019 was as follows:

	March 22,			December 29,
	2020			2019
Land and buildings	$	25,167		$	25,476
Accumulated depreciation and amortization		(8,083	)		(7,846	)
Finance lease assets, net	$	17,084		$	17,630
Current portion of long-term debt	$	1,390		$	1,394
Long-term debt, less current portion		17,616			18,263
Total principal payable on finance leases	$	19,006		$	19,657

As of March 22, 2020 and December 29, 2019, the weighted average remaining lease term and weighted average discount rate for the Company’s operating and finance leases were as follows:

March 22, 2020

December 29, 2019

Operating

Finance

Operating

Finance

Leases

Leases

Leases

Leases

Weighted average remaining lease term

8 years

14 years

8 years

14 years

Weighted average discount rate

3.8

%

11.7

%

3.8

%

11.7

%

Supplemental cash flow information related to leases for the first quarter of 2020 and the first quarter of 2019 was as follows:

	Fiscal Quarter Ended
	March 22,		March 24,
	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	10,119	$	10,690
Operating cash flows from finance leases		375		479
Financing cash flows from finance leases		349		155
Right-of-use assets obtained in exchange for lease obligations:
Operating leases		8,982		12,977
Finance leases		—		—

Maturities of lease liabilities as of March 22, 2020 were as follows:

	Operating			Finance
	Leases			Leases
2020	$	33,683		$	2,467
2021		40,956			2,775
2022		38,068			2,792
2023		32,776			2,815
2024		31,228			2,839
Thereafter		96,570			25,493
Total future minimum rental commitments		273,281			39,181
Less – amounts representing interest		(37,063	)		(20,175	)
Total lease liabilities	$	236,218		$	19,006

As of March 22, 2020, the Company has additional leases for two supply chain centers and certain supply chain tractors and trailers that had not yet commenced with estimated future minimum rental commitments of approximately $68.6 million. These leases are expected to commence in 2020 with lease terms of up to 21 years. One of the supply chain center leases commenced in the second quarter of 2020. These undiscounted amounts are not included in the table above.

The Company has guaranteed lease payments related to certain franchisees’ lease arrangements. The maximum amount of potential future payments under these guarantees was $15.8 million as of March 22, 2020. The Company does not believe these arrangements have or are likely to have a material effect on its results of operations, financial condition, revenues, expenses or liquidity.