Leases (Tables)

3 Months Ended

9 Months Ended

Sep. 29, 2024

As of September 29, 2024, the nature of restaurants operated by the Company and its franchisees was as follows:


			September 29, 2024
Company-operated restaurants:
Owned land and building			154
Owned building and held long-term land leases			145
Leased land and building			112
Total Company-operated restaurants			411

Franchisee-operated restaurants:
Company-owned properties leased to franchisees			492
Company-leased properties subleased to franchisees			1,161
Other franchisee-operated restaurants			5,228
Total franchisee-operated restaurants			6,881
Total Company-operated and franchisee-operated restaurants			7,292

Lease, Cost

The components of lease cost are as follows:


	Three Months Ended				Nine Months Ended
	September 29, 2024		October 1, 2023		September 29, 2024		October 1, 2023
Finance lease cost:
Amortization of finance lease assets	$	4,779	$	4,111	$	13,448	$	12,232
Interest on finance lease liabilities	10,921		10,664		32,278		32,157
	15,700		14,775		45,726		44,389
Operating lease cost	21,496		21,577		64,721		64,455
Variable lease cost (a)	17,087		16,889		50,940		50,489
Short-term lease cost	1,478		1,466		4,098		4,433
Total operating lease cost (b)	40,061		39,932		119,759		119,377
Total lease cost	$	55,761	$	54,707	$	165,485	$	163,766

_______________

(a)Includes expenses for executory costs of $10,108 and $9,777 for the three months ended September 29, 2024 and October 1, 2023, respectively, and $30,362 and $29,797 for the nine months ended September 29, 2024 and October 1, 2023, respectively, for which the Company is reimbursed by sublessees.

(b)Includes $32,197 and $31,824 for the three months ended September 29, 2024 and October 1, 2023, respectively, and $96,270 and $94,751 for the nine months ended September 29, 2024 and October 1, 2023, respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees. Also includes $7,299 and $7,570 for the three months ended September 29, 2024 and October 1, 2023, respectively, and $22,089 and $22,981 for the nine months ended September 29, 2024 and October 1, 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				Nine Months Ended
	September 29, 2024		October 1, 2023		September 29, 2024		October 1, 2023
Sales-type and direct-financing leases:
Selling profit	$	67	$	354	$	139	$	1,555
Interest income (a)	7,110		7,853		22,007		23,583

Operating lease income	41,882		40,567		126,329		123,352
Variable lease income	17,432		17,000		51,609		50,055
Franchise rental income (b)	$	59,314	$	57,567	$	177,938	$	173,407

_______________

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

(b)Includes sublease income of $43,698 and $42,545 recognized during the three months ended September 29, 2024 and October 1, 2023, respectively, and $131,530 and $128,457 recognized during the nine months ended September 29, 2024 and October 1, 2023, respectively. Sublease income includes lessees’ variable payments to the Company for executory costs of $10,112 and $9,811 for the three months ended September 29, 2024 and October 1, 2023,

respectively, and $30,356 and $29,704 for the nine months ended September 29, 2024 and October 1, 2023, respectively.