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Leases

12 Months Ended

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


			Year End
			December 28, 2025
Company-operated restaurants:
Owned land and building			155
Owned building and held long-term land leases			142
Leased land and building			137
Total Company-operated restaurants			434

Franchisee-operated restaurants:
Company-owned properties leased to franchisees			491
Company-leased properties subleased to franchisees			1,146
Other franchisee-operated restaurants			5,326
Total franchisee-operated restaurants			6,963
Total Company-operated and franchisee-operated restaurants			7,397

Company as Lessee

The components of lease cost for 2025, 2024 and 2023 are as follows:


	Year Ended
	2025		2024		2023
Finance lease cost:
Amortization of finance lease assets	$	18,901	$	13,877	$	16,061
Interest on finance lease liabilities	44,650		43,051		42,624
	63,551		56,928		58,685
Operating lease cost	81,762		84,382		85,138
Variable lease cost (a)	67,633		66,977		66,859
Short-term lease cost	5,234		5,420		5,864
Total operating lease cost (b)	154,629		156,779		157,861
Total lease cost	$	218,180	$	213,707	$	216,546

_______________

(a)Includes expenses for executory costs of $42,057, $39,754, and $39,456 for 2025, 2024 and 2023, respectively, for which the Company is reimbursed by sublessees.

(b)Includes $125,563, $127,228 and $125,180 for 2025, 2024 and 2023, respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees. Also includes $27,731, $27,633 and $30,538 for 2025, 2024 and 2023, respectively, recorded to “Cost of sales” for leases for Company-operated restaurants.

The following table includes supplemental cash flow and non-cash information related to leases:


	Year Ended
	2025		2024		2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	44,674	$	43,050	$	42,624
Operating cash flows from operating leases	84,815		86,664		86,972
Financing cash flows from finance leases	24,546		20,404		21,588
Right-of-use assets obtained in exchange for lease obligations:
Finance lease liabilities (a)	115,252		47,014		20,243
Operating lease liabilities	22,111		41,423		12,659

_______________

(a)2025 includes finance lease liabilities assumed as part of the Company’s acquisition of 35 franchise-operated restaurants. See Note 16 for further information.

The following table includes supplemental information related to leases:


	Year End
	December 28, 2025			December 29, 2024
Weighted-average remaining lease term (years):
Finance leases	14.7			14.0
Operating leases	11.4			11.9

Weighted average discount rate:
Finance leases	7.59		%	8.09		%
Operating leases	5.01		%	4.98		%

Supplemental balance sheet information:
Finance lease assets, gross	$	432,554		$	349,212
Accumulated amortization	(119,710)			(104,258)
Finance lease assets	312,844			244,954
Operating lease assets	642,589			679,777

The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of December 28, 2025:


	Finance Leases				Operating Leases
Fiscal Year	Company-Operated		Franchise and Other		Company-Operated		Franchise and Other
2026	$	12,528	$	59,459	$	21,491	$	62,526
2027	12,699		60,642		21,588		64,692
2028	12,774		61,976		21,428		65,142
2029	12,988		63,401		21,453		64,698
2030	13,343		63,343		20,829		63,875
Thereafter	166,718		536,633		142,064		388,321
Total minimum payments	$	231,050	$	845,454	$	248,853	$	709,254
Less interest	(88,084)		(315,032)		(62,991)		(183,740)
Present value of minimum lease payments (a) (b)	$	142,966	$	530,422	$	185,862	$	525,514

_______________

(a)The present value of minimum finance lease payments of $26,673 and $646,715 are included in “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” respectively.

(b)The present value of minimum operating lease payments of $51,119 and $660,257 are included in “Current portion of operating lease liabilities” and “Long-term operating lease liabilities,” respectively.

Leases, Company as Lessor

Company as Lessor

The components of lease income for 2025, 2024 and 2023 are as follows:


	Year Ended
	2025		2024		2023
Sales-type and direct-financing leases:
Selling profit	$	2,910	$	474	$	2,466
Interest income (a)	27,512		29,187		31,412

Operating lease income	166,430		168,497		163,927
Variable lease income	69,320		67,996		66,241
Franchise rental income (b)	$	235,750	$	236,493	$	230,168

_______________

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

(b)Includes sublease income of $172,742, $174,478 and $170,112 recognized during 2025, 2024 and 2023, respectively. Sublease income includes lessees’ variable payments to the Company for executory costs of $42,050, $39,793 and $39,350 for 2025, 2024 and 2023, respectively.

The following table illustrates the Company’s future minimum rental receipts for non-cancelable leases and subleases as of December 28, 2025:


	Sales-Type and Direct Financing Leases				Operating Leases
Fiscal Year	Subleases		Owned Properties		Subleases		Owned Properties
2026	$	35,859	$	1,222	$	109,097	$	59,212
2027	36,418		1,359		110,151		59,009
2028	37,420		1,117		111,322		58,993
2029	37,677		1,122		111,529		59,830
2030	38,641		1,363		110,457		60,086
Thereafter	323,981		9,447		683,222		450,453
Total future minimum receipts	509,996		15,630		$	1,235,778	$	747,583
Unearned interest income	(224,428)		(5,375)
Net investment in sales-type and direct financing leases (a)	$	285,568	$	10,255

_______________

(a)The present value of minimum sales-type and direct financing rental receipts of $10,932 and $284,891 are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. The present value of minimum sales-type and direct financing rental receipts includes a net investment in unguaranteed residual assets of $135.

Properties owned by the Company and leased to franchisees and other third parties under operating leases include:


	Year End
	December 28, 2025		December 29, 2024
Land	$	271,302	$	261,131
Buildings and improvements	310,571		303,521
Restaurant equipment	1,429		1,943
	583,302		566,595
Accumulated depreciation and amortization	(220,273)		(207,923)
	$	363,029	$	358,672