Leases

9 Months Ended

Sep. 28, 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 September 28, 2025, the nature of restaurants operated by the Company and its franchisees was as follows:


			September 28, 2025
Company-operated restaurants:
Owned land and building			155
Owned building and held long-term land leases			141
Leased land and building			139
Total Company-operated restaurants			435

Franchisee-operated restaurants:
Company-owned properties leased to franchisees			490
Company-leased properties subleased to franchisees			1,149
Other franchisee-operated restaurants			5,289
Total franchisee-operated restaurants			6,928
Total Company-operated and franchisee-operated restaurants			7,363

Company as Lessee

The components of lease cost are as follows:


	Three Months Ended				Nine Months Ended
	September 28, 2025		September 29, 2024		September 28, 2025		September 29, 2024
Finance lease cost:
Amortization of finance lease assets	$	5,070	$	4,779	$	15,100	$	13,448
Interest on finance lease liabilities	11,142		10,921		32,884		32,278
	16,212		15,700		47,984		45,726
Operating lease cost	19,704		21,496		61,543		64,721
Variable lease cost (a)	17,190		17,087		50,672		50,940
Short-term lease cost	1,284		1,478		3,854		4,098
Total operating lease cost (b)	38,178		40,061		116,069		119,759
Total lease cost	$	54,390	$	55,761	$	164,053	$	165,485

_______________

(a)Includes expenses for executory costs of $10,367 and $10,108 for the three months ended September 28, 2025 and September 29, 2024, respectively, and $31,339 and $30,362 for the nine months ended September 28, 2025 and September 29, 2024, respectively, for which the Company is reimbursed by sublessees.

(b)Includes $30,899 and $32,197 for the three months ended September 28, 2025 and September 29, 2024, respectively, and $94,120 and $96,270 for the nine months ended September 28, 2025 and September 29, 2024, respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees. Also includes $6,886 and $7,299 for the three months ended September 28, 2025 and September 29, 2024, respectively, and $20,773 and $22,089 for the nine months ended September 28, 2025 and September 29, 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				Nine Months Ended
	September 28, 2025		September 29, 2024		September 28, 2025		September 29, 2024
Sales-type and direct-financing leases:
Selling profit	$	95	$	67	$	118	$	139
Interest income (a)	6,845		7,110		20,703		22,007

Operating lease income	39,511		41,882		124,399		126,329
Variable lease income	17,828		17,432		51,805		51,609
Franchise rental income (b)	$	57,339	$	59,314	$	176,204	$	177,938

_______________

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

(b)Includes sublease income of $41,548 and $43,698 recognized during the three months ended September 28, 2025 and September 29, 2024, respectively, and $128,999 and $131,530 for the nine months ended September 28, 2025 and September 29, 2024, respectively. Sublease income includes lessees’ variable payments to the Company for executory costs of $10,439 and $10,112 for the three months ended September 28, 2025 and September 29, 2024, respectively, and $31,148 and $30,356 for the nine months ended September 28, 2025 and September 29, 2024, respectively.