Leases (Tables)

6 Months Ended

Jun. 30, 2022


Supplemental Balance Sheet
	6/30/2022		12/31/2021		Account Classification
Assets
Operating lease right-of-use assets	$	2,306	$	2,612	Operating lease right-of-use assets
Finance lease right-of-use assets		34		33	Property, plant and equipment, net
Total leased assets	$	2,340	$	2,645

Liabilities
Current
Operating lease liabilities	$	473	$	508	Accounts payable and other current liabilities
Finance lease liabilities		4		3	Accounts payable and other current liabilities
Non-current
Operating lease liabilities		2,000		2,286	Non-current operating lease liabilities
Finance lease liabilities		39		40	Non-current finance lease liabilities
Total lease liabilities	$	2,516	$	2,837

Summary of Lease Cost


Summary of Lease Cost	Quarter Ended						Year to Date Ended
	6/30/2022			6/30/2021			6/30/2022			6/30/2021			Account Classification

Operating lease cost	$	143		$	138		$	300		$	274		Occupancy and other operating expenses, G&A or Franchise expenses
Finance lease cost
Amortization of leased assets		1			—			2			1		Occupancy and other operating expenses
Interest on lease liabilities		1			1			1			1		Interest expense, net
Variable lease cost(a)		63			87			159			182		Occupancy and other operating expenses or Franchise expenses
Short-term lease cost		4			3			7			5		Occupancy and other operating expenses or G&A
Sub-lease income		(7	)		(6	)		(13	)		(14	)	Franchise fees and income or Other revenues
Total lease cost	$	205		$	223		$	456		$	449

(a)

The Company was granted $11 million and $2 million in lease concessions from landlords related to the effects of the COVID-19 pandemic during the quarters ended June 30, 2022 and 2021, respectively, and $14 million and $7 million during the years to date ended June 30, 2022 and 2021, respectively. The lease concessions were primarily in the form of rent reduction over the period of time when the Company’s restaurant business was adversely impacted. The Company applied the interpretive guidance in a FASB staff Q&A document issued in April 2020 and elected: (1) not to evaluate whether a concession received in response to the COVID-19 pandemic is a lease modification and (2) to assume such concession was contemplated as part of the existing lease contract with no contract modification. Such concession was recognized as negative variable lease cost in the period the concession was granted.

Schedule of Supplemental Cash Flow Information


Supplemental Cash Flow Information	Year to Date Ended
	6/30/2022		6/30/2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	278	$	286
Operating cash flows from finance leases		1		1
Financing cash flows from finance leases		2		1
Right-of-use assets obtained in exchange for lease liabilities(b):
Operating leases	$	23	$	215
Finance leases		3		—

(b)

This supplemental non-cash disclosure for right-of-use (“ROU”) assets obtained in exchange for lease liabilities includes increase in lease liabilities associated with obtaining new ROU assets of $123 million and $201 million for the years to date ended June 30, 2022 and 2021, respectively, as well as adjustments to lease liabilities or ROU assets due to modification or other reassessment events, which resulted in a $97 million decrease and $14 million increase in lease liabilities for the years to date ended June 30, 2022 and 2021, respectively.

Schedule of Lease Terms and Discount Rate



Lease Term and Discount Rate	6/30/2022			6/30/2021
Weighted-average remaining lease term (years)
Operating leases		7.1			7.0
Finance leases		11.4			10.7

Weighted-average discount rate
Operating leases		5.3	%		5.8	%
Finance leases		5.3	%		5.7	%

Summary of Maturities of Lease Liabilities

Maturities of lease liabilities as of June 30, 2022 were as follows:


	Amount of Operating Leases		Amount of Finance Leases		Total
Remainder of 2022	$	327	$	3	$	330
2023		513		6		519
2024		449		5		454
2025		382		5		387
2026		327		5		332
Thereafter		980		33		1,013
Total undiscounted lease payment		2,978		57		3,035
Less: imputed interest(c)		505		14		519
Present value of lease liabilities	$	2,473	$	43	$	2,516

(c)

As the rate implicit in the lease cannot be readily determined, we use our incremental borrowing rate based on the information available at the lease commencement date in determining the imputed interest and present value of lease payments. We used the incremental borrowing rate on January 1, 2019 for operating leases that commenced prior to that date.