Leases

6 Months Ended

Jun. 29, 2025

Leases

Nature of Leases

The Company operates restaurants that are located on sites owned by us and sites leased by us from third parties. In addition, the Company owns sites and leases sites from third parties, which it leases and/or subleases to franchisees. The Company also leases restaurant, office and transportation equipment. As of June 29, 2025, the nature of restaurants operated by the Company and its franchisees was as follows:


			June 29, 2025
Company-operated restaurants:
Owned land and building			155
Owned building and held long-term land leases			138
Leased land and building			107
Total Company-operated restaurants			400

Franchisee-operated restaurants:
Company-owned properties leased to franchisees			489
Company-leased properties subleased to franchisees			1,156
Other franchisee-operated restaurants			5,289
Total franchisee-operated restaurants			6,934
Total Company-operated and franchisee-operated restaurants			7,334

Company as Lessee

The components of lease cost are as follows:


	Three Months Ended				Six Months Ended
	June 29, 2025		June 30, 2024		June 29, 2025		June 30, 2024
Finance lease cost:
Amortization of finance lease assets	$	4,885	$	4,372	$	10,030	$	8,669
Interest on finance lease liabilities	10,865		10,699		21,742		21,357
	15,750		15,071		31,772		30,026
Operating lease cost	21,322		21,524		41,839		43,225
Variable lease cost (a)	17,269		17,365		33,482		33,853
Short-term lease cost	1,304		1,226		2,570		2,620
Total operating lease cost (b)	39,895		40,115		77,891		79,698
Total lease cost	$	55,645	$	55,186	$	109,663	$	109,724

_______________

(a)Includes expenses for executory costs of $10,578 and $10,033 for the three months ended June 29, 2025 and June 30, 2024, respectively, and $20,972 and $20,254 for the six months ended June 29, 2025 and June 30, 2024, respectively, for which the Company is reimbursed by sublessees.

(b)Includes $32,569 and $32,355 for the three months ended June 29, 2025 and June 30, 2024, respectively, and $63,221 and $64,073 for the six months ended June 29, 2025 and June 30, 2024, respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees. Also includes $6,946 and $7,402 for the three months ended June 29, 2025 and June 30, 2024, respectively, and $13,887 and $14,790 for the six months ended June 29, 2025 and June 30, 2024, respectively, recorded to “Cost of sales” for leases for Company-operated restaurants.

Leases, Company as Lessor

Company as Lessor

The components of lease income are as follows:


	Three Months Ended				Six Months Ended
	June 29, 2025		June 30, 2024		June 29, 2025		June 30, 2024
Sales-type and direct-financing leases:
Selling profit	$	34	$	88	$	23	$	72
Interest income (a)	6,943		7,178		13,858		14,897

Operating lease income	42,467		42,950		84,888		84,447
Variable lease income	17,944		17,688		33,977		34,177
Franchise rental income (b)	$	60,411	$	60,638	$	118,865	$	118,624

_______________

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

(b)Includes sublease income of $44,667 and $45,049 recognized during the three months ended June 29, 2025 and June 30, 2024, respectively, and $87,451 and $87,832 for the six months ended June 29, 2025 and June 30, 2024, respectively. Sublease income includes lessees’ variable payments to the Company for executory costs of $10,512 and $10,155 for the three months ended June 29, 2025 and June 30, 2024, respectively, and $20,709 and $20,244 for the six months ended June 29, 2025 and June 30, 2024, respectively.