Commitments and Contingencies

12 Months Ended

Dec. 29, 2019

Commitments and Contingencies Disclosure [Abstract]

Lease Guarantees - The Company assigned its interest, and is contingently liable, under certain real estate leases. These leases have varying terms, the latest of which expires in 2032. As of December 29, 2019, the undiscounted payments the Company could be required to make in the event of non-payment by the primary lessees was approximately $31.2 million. The present value of these potential payments discounted at the Company’s incremental borrowing rate as of December 29, 2019 was approximately $24.7 million. In the event of default, the indemnity clauses in the Company’s purchase and sale agreements govern its ability to pursue and recover damages incurred. As of December 29, 2019, the Company recorded a contingent lease liability of $0.8 million.

Purchase Obligations - Purchase obligations were $312.0 million and $364.3 million as of December 29, 2019 and December 30, 2018, respectively. These purchase obligations are primarily due within five years, however, commitments with various vendors extend through January 2028. Outstanding commitments consist primarily of food and beverage products related to normal business operations, advertising, restaurant-level service contracts and technology. In 2019, the Company purchased approximately 95% of its U.S. beef raw materials from four beef suppliers that represent more than 80% of the total beef marketplace in the U.S.

Litigation and Other Matters - In relation to various legal matters, the Company had $3.0 million and $2.8 million of liability recorded as of December 29, 2019 and December 30, 2018, respectively. During 2019, 2018 and 2017, the Company recognized $1.3 million, $1.6 million and $1.2 million, respectively, in Other restaurant operating expense in the Company’s Consolidated Statements of Operations and Comprehensive Income for certain legal settlements.

The Company is subject to legal proceedings, claims and liabilities, such as liquor liability, slip and fall cases, wage-and-hour and other employment-related litigation, which arise in the ordinary course of business and are generally covered by insurance if they exceed specified retention or deductible amounts. In the opinion of management, the amount of ultimate liability with respect to those actions will not have a material adverse impact on the Company’s financial position or results of operations and cash flows.

Insurance - As of December 29, 2019, the future undiscounted payments the Company expects for workers’ compensation, general liability and health insurance claims are:



(dollars in thousands)
2020	$	20,468
2021	11,316
2022	7,341
2023	4,216
2024	2,392
Thereafter	11,220
	$	56,953

The following is a reconciliation of the expected aggregate undiscounted reserves to the discounted reserves for insurance claims recognized on the Company’s Consolidated Balance Sheets as of the periods indicated:



(dollars in thousands)	DECEMBER 29, 2019			DECEMBER 30, 2018
Undiscounted reserves	$	56,953		$	60,473
Discount (1)	(2,635		)	(4,647		)
Discounted reserves	$	54,318		$	55,826

Discounted reserves recognized in the Company’s Consolidated Balance Sheets:
Accrued and other current liabilities	$	20,500		$	22,055
Other long-term liabilities, net	33,818			33,771
	$	54,318		$	55,826

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(1)

Discount rates of 1.61% and 2.77% were used for December 29, 2019 and December 30, 2018, respectively.