Note 11. Leases

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

Note 11. Leases

The Company adopted ASC 842 on January 1, 2019, as discussed in Note 2.  Under ASC 842, leases are generally classified as either operating right-of-use assets or finance lease assets. Right-of-use assets represent the Company's right to use an underlying asset during the lease term. Right-of-use liabilities represent the Company's obligation to make lease payments arising from the lease. These assets and liabilities are calculated by using the net present value of fixed lease payments over the lease term. The Company's lease terms include options to extend or terminate the lease when it is reasonably certain that the option will be exercised.  The Company applied an incremental borrowing rate to determine the present value of lease payments. Finance lease agreements include an interest rate that is used to determine the present value of future lease payments.

A significant portion of our operating and finance lease portfolio includes restaurant locations. The Company’s operating leases with a term of 12 months or greater were recognized as operating right-of-use assets and liabilities and recorded as operating lease assets and operating lease liabilities. Historical capital leases and certain historical build-to-suit leases were reclassified from obligations under leases to finance lease assets and liabilities. Finance lease assets are recorded in property and equipment and finance lease liabilities are recorded in notes payable and other borrowings. Historical sale-and-leaseback transactions in which the Company is deemed to have a continued interest in the leased asset are recorded as property and equipment and as finance obligations. Finance obligations are recorded in notes payable and other borrowings.

Operating lease expense and finance lease depreciation expense are recognized on a straight line basis over the lease term.

Total lease cost consists of the following.

	Second Quarter 2019		First Six Months 2019
Finance lease costs:
Amortization of right-of-use assets	$	487	$	979
Interest on lease liabilities		215		422
Operating lease costs *		4,003		7,860
Total lease costs	$	4,705	$	9,261

 *Includes short-term leases, variable lease costs and sublease income, which are immaterial.

Supplemental cash flow information related to leases is as follows.

	First Six Months 2019
Cash paid for amounts included in the measurement of lease liabilities:
Financing cash flows from finance leases	$	797
Operating cash flows from finance leases	$	422
Operating cash flows from operating leases	$	8,375
Right-of-use assets obtained in exchange for lease obligations:
Finance lease liabilities	$	1,097
Operating lease liabilities	$	8,919

 Supplemental balance sheet information related to leases is as follows. 

	June 30, 2019
Finance leases:
Property and equipment, net	$	11,755
Current portion of notes payable and other borrowings	$	1,634
Long-term notes payable and other borrowings		10,450
Total finance lease liabilities	$	12,084

Weighted-average lease terms and discount rates are as follows. 

	June 30, 2019
Weighted-average remaining lease terms:
Finance leases		8.7 years
Operating leases		7.3 years
Weighted-average discount rates:
Finance leases		7.1	%
Operating leases		6.9	%

Maturities of lease liabilities as of June 30, 2019 are as follows. 

Year		Operating Leases		Finance Leases
	2019	$	8,439	$	1,218
	2020		15,797		2,377
	2021		14,701		2,358
	2022		12,438		1,869
	2023		10,588		1,669
	After 2023		31,397		6,815
	Total lease payments		93,360		16,306
	Less interest		21,088		4,222
	Total lease liabilities	$	72,272	$	12,084

On December 31, 2018, obligations under non-cancelable finance obligations, capital leases, and operating leases (excluding real estate taxes, insurance and maintenance costs) require the following minimum future rental payments. 

									Operating Leases
Year			Finance Obligations		Capital Leases		Total		Operating Property		Non-Operating Property
	2019	$	11,114	$	55	$	11,169	$	17,914	$	483
	2020		8,040		55		8,095		16,691		554
	2021		5,925		55		5,980		16,787		578
	2022		2,951		5		2,956		15,603		599
	2023		1,587		—		1,587		14,071		539
	After 2023		1,673		—		1,673		36,709		1,790
	Total minimum future rental payments		31,290		170		31,460	$	117,775	$	4,543
	Less amount representing interest		18,004		60		18,064
	Total principal obligations under leases		13,286		110		13,396
	Less current portion		4,433		30		4,463
	Non-current principal obligations under leases		8,853		80		8,933
	Residual value at end of lease term		50,744		60		50,804
	Obligations under leases	$	59,597	$	140	$	59,737