Leases (Tables)

3 Months Ended

6 Months Ended

Jun. 30, 2024

As of June 30, 2024, the nature of restaurants operated by the Company and its franchisees was as follows:


			June 30, 2024
Company-operated restaurants:
Owned land and building			155
Owned building and held long-term land leases			145
Leased land and building			111
Total Company-operated restaurants			411

Franchisee-operated restaurants:
Company-owned properties leased to franchisees			492
Company-leased properties subleased to franchisees			1,173
Other franchisee-operated restaurants			5,185
Total franchisee-operated restaurants			6,850
Total Company-operated and franchisee-operated restaurants			7,261

Lease, Cost

The components of lease cost are as follows:


	Three Months Ended				Six Months Ended
	June 30, 2024		July 2, 2023		June 30, 2024		July 2, 2023
Finance lease cost:
Amortization of finance lease assets	$	4,372	$	4,058	$	8,669	$	8,121
Interest on finance lease liabilities	10,699		10,743		21,357		21,493
	15,071		14,801		30,026		29,614
Operating lease cost	21,524		21,429		43,225		42,878
Variable lease cost (a)	17,365		17,519		33,853		33,600
Short-term lease cost	1,226		1,461		2,620		2,967
Total operating lease cost (b)	40,115		40,409		79,698		79,445
Total lease cost	$	55,186	$	55,210	$	109,724	$	109,059

_______________

(a)Includes expenses for executory costs of $10,033 and $10,172 for the three months ended June 30, 2024 and July 2, 2023, respectively, and $20,254 and $20,020 for the six months ended June 30, 2024 and July 2, 2023, respectively, for which the Company is reimbursed by sublessees.

(b)Includes $32,355 and $32,329 for the three months ended June 30, 2024 and July 2, 2023, respectively, and $64,073 and $62,927 for the six months ended June 30, 2024 and July 2, 2023, respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees. Also includes $7,402 and $7,546 for the three months ended June 30, 2024 and July 2, 2023, respectively, and $14,790 and $15,411 for the six months ended June 30, 2024 and July 2, 2023, respectively, recorded to “Cost of sales” for leases for Company-operated restaurants.

Lease, Income

The components of lease income are as follows:


	Three Months Ended				Six Months Ended
	June 30, 2024		July 2, 2023		June 30, 2024		July 2, 2023
Sales-type and direct-financing leases:
Selling profit	$	88	$	1,072	$	72	$	1,201
Interest income (a)	7,178		7,868		14,897		15,730

Operating lease income	42,950		40,629		84,447		82,785
Variable lease income	17,688		17,404		34,177		33,055
Franchise rental income (b)	$	60,638	$	58,033	$	118,624	$	115,840

_______________

(a)Included in “Interest expense, net.”

(b)Includes sublease income of $45,049 and $42,961 recognized during the three months ended June 30, 2024 and July 2, 2023, respectively, and $87,832 and $85,912 recognized during the six months ended June 30, 2024 and July 2, 2023, respectively. Sublease income includes lessees’ variable payments to the Company for executory costs of $10,155 and $10,115 for the three months ended June 30, 2024 and July 2, 2023, respectively, and $20,244 and $19,893 for the six months ended June 30, 2024 and July 2, 2023, respectively.