(12) Leases

All of the Company's Ruth's Chris Steak House owned restaurants operate in leased premises, with the exception of the locations in Houston, Columbus and Ft. Lauderdale, which are owned properties and the locations in Anaheim, Lake Mary, Princeton and South Barrington which operate on leased land. The Company's Mitchell's Fish Market and Mitchell's Steakhouse locations all operate in leased premises. The leases generally provide for minimum annual rental payments and are subject to escalations based, in some cases, upon increases in the Consumer Price Index, real estate taxes, and other costs. In addition, certain leases contain contingent rental provisions based upon the sales of the underlying restaurants. Certain leases also provide for rent deferral during the initial term of such lease and/or scheduled minimum rent increases during the terms of the leases. For financial reporting purposes, rent expense is recorded on a straight-line basis over the life of the lease. Accordingly, included in liabilities in the accompanying consolidated balance sheets at December 26, 2010 and December 25, 2011 are accruals related to such rent deferrals and the pro rata portion of scheduled rent increases of approximately $22.3 million and $23.0 million, respectively, net of the current portion included in other current liabilities $1.8 million and $1.4 million, respectively.

The Company leases certain restaurant related equipment under non-cancellable operating lease agreements with third parties, which are included with leased premises in future minimum annual rental commitments. Future minimum annual rental commitments under leases as of December 25, 2011 are as follows:


Lessee:
2012	$	24,647
2013		24,577
2014		24,162
2015		23,041
2016		22,996
Thereafter		187,224

	$	306,647

Rental expense consists of the following and is included in restaurant operating expenses in the accompanying consolidated statements of income:


	Fiscal Year
	2009		2010		2011
Minimum rentals	$	23,275	$	23,467	$	23,581
Contingent rentals		1,363		1,710		1,965

	$	24,638	$	25,177	$	25,546