Leases

12 Months Ended

Dec. 28, 2021

Leases

Leases

(8) Leases

We recognize right-of-use assets and lease liabilities for both real estate and equipment leases that have a term in excess of one year. As of December 28, 2021 and December 29, 2020, these amounts were as follows:

	As of December 28, 2021
	Real estate		Equipment		Total
Operating lease right-of-use assets	$	574,356	$	4,057	$	578,413
Current portion of operating lease liabilities		20,577		1,375		21,952
Operating lease liabilities, net of current portion		620,210		2,682		622,892
Total operating lease liabilities	$	640,787	$	4,057	$	644,844

	As of December 29, 2020
	Real estate		Equipment		Total
Operating lease right-of-use assets	$	526,746	$	3,879	$	530,625
Current portion of operating lease liabilities		17,850		1,421		19,271
Operating lease liabilities, net of current portion		569,713		2,458		572,171
Total operating lease liabilities	$	587,563	$	3,879	$	591,442

Information related to our real estate operating leases as of and for the fiscal year ended December 28, 2021 and December 29, 2020 was as follows:

	Fiscal Year Ended
Real estate costs		December 28, 2021			December 29, 2020
Operating lease	$	62,430		$	58,425
Variable lease		3,767			1,479
Short-term lease		—			90
Total lease costs	$	66,197		$	59,994
Real estate lease liabilities maturity analysis					As of December 28, 2021
2022				$	60,958
2023					61,235
2024					61,313
2025					59,313
2026					59,187
Thereafter					810,475
Total				$	1,112,481
Less interest					471,694
Total discounted operating lease liabilities				$	640,787
	Fiscal Year Ended
Real estate leases other information		December 28, 2021			December 29, 2020
Cash paid for amounts included in measurement of operating lease liabilities	$	57,040		$	52,904
Right-of-use assets obtained in exchange for new operating lease liabilities	$	68,921		$	50,322
Weighted-average remaining lease term (years)		17.88			17.78
Weighted-average discount rate		6.46	%		6.71	%

Operating lease payments exclude $13.7 million of future minimum lease payments for executed real estate leases of which we have not yet taken possession. In addition to the above operating leases, as of December 28, 2021, we had two finance leases with a right-of-use asset balance and lease liability balance of $2.2 million and $2.7 million, respectively. As of December 29, 2020, we had one finance lease with a right-of-use asset balance and lease liability balance of $1.7 million and $2.1 million, respectively. The right-of-use asset balance is included as a component of other assets and the lease liability balance as a component of other liabilities in the consolidated balance sheets.

In 2021, we entered into three sale leaseback transactions involving land that had recently been acquired. These sales generated proceeds of $5.6 million and no gain or loss was recognized on the transactions. The resulting operating leases are included in the operating lease right-of-use assets and lease liabilities noted above.

In 2020, we entered into a sale leaseback transaction involving land that had recently been acquired. The sale generated proceeds of $2.2 million and no gain or loss was recognized on the transaction. The resulting operating lease is included in the operating lease right-of-use assets and lease liabilities noted above. 

We recognize operating lease right-of-use assets and operating lease liabilities for real estate leases, including our restaurant leases and Support Center lease, as well as certain restaurant equipment leases based on the present value of the lease payments over the lease term. We estimate the present value based on our incremental borrowing rate which corresponds to the underlying lease term. In addition, operating lease right-of-use assets are reduced for accrued rent and increased for any initial direct costs recognized at lease inception. For leases commencing in 2019 and later, we account for lease and non-lease components as a single lease component.

Certain of our operating leases contain predetermined fixed escalations of the minimum rent over the lease term. For these leases, we recognize the related total rent expense on a straight-line basis over the lease term. We may receive rent concessions or leasehold improvement incentives upon opening a restaurant that is subject to a lease which we consider when determining straight-line rent expense. We also may receive rent holidays, which would begin on the possession date and end when the store opens, during which no cash rent payments are typically due under the terms of the lease. Rent holidays are included in the lease term when determining straight-line rent expense. In recognizing straight-line rent expense, we record the difference between amounts charged to operations and amounts paid as accrued rent. Straight-line rent expense is included as an operating lease cost in the table above.

Certain of our operating leases contain clauses that provide for additional contingent rent based on a percentage of sales greater than certain specified target amounts. We recognize contingent rent expense prior to the achievement of the specified target that triggers the contingent rent, provided achievement of the target is considered probable. In addition, certain of our operating leases have variable escalations of the minimum rent that depend on an index or rate. For these leases, we recognize operating lease right-of-use assets and operating lease liabilities based on the index or rate at the commencement date. Any subsequent changes to the index or rate are recognized as variable rent expense when the escalation is determinable. Contingent rent and variable rent expense are included as variable lease costs in the table above.