Lease Disclosures

9 Months Ended

Sep. 30, 2022

Leases [Abstract]

Lease Disclosures

Lease Disclosures

The Company engages in leasing activity as both a lessee and a lessor. The Company currently leases from third parties the real property on which approximately 530 IHOP franchisee-operated restaurants and one Applebee's franchisee-operated restaurant are located; the Company (as lessor) subleases the property to the franchisees that operate those restaurants. The Company also leases property it owns to the franchisees that operate approximately 50 IHOP restaurants and one Applebee's restaurant. The Company leases from third parties the real property on which 69 Applebee's company-operated restaurants are located. The Company also leases office space for its principal corporate offices in Glendale, California and Pasadena, California and restaurant support centers in Leawood, Kansas and Raleigh, North Carolina. The Company does not have a significant amount of non-real estate leases.

The Company's existing leases/subleases related to IHOP restaurants generally provide for an initial term of 20 to 25 years, with most having one or more five-year renewal options. Leases related to Applebee's restaurants generally have an initial term of 10 to 20 years, with renewal terms of five to 20 years. Option periods were not included in determining liabilities and right-of-use assets related to operating leases. Approximately 290 of the Company's leases met the sales levels that required variable rent payments to the Company (as lessor), based on a percentage of restaurant sales during the nine months ended September 30, 2022. Approximately 65 of the leases met the sales levels that required variable rent payments by the Company (as lessee), based on a percentage of restaurant sales during the nine months ended September 30, 2022.

The Company's lease cost for the three and nine months ended September 30, 2022 and 2021 was as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In millions)
Finance lease cost:
Amortization of right-of-use assets	$	0.7	$	1.1	$	2.9	$	3.5
Interest on lease liabilities	1.2		1.3		3.7		4.2
Operating lease cost(1)	21.5		20.9		63.8		63.3
Variable lease cost	2.1		4.5		5.7		5.2
Short-term lease cost	0.0		0.0		0.0		0.0
Sublease income	(26.8)		(28.8)		(79.9)		(78.0)
Lease (income) cost	$	(1.3)	$	(1.0)	$	(3.8)	$	(1.9)

(1)Operating lease cost for the three and nine months ended September 30, 2021 previously disclosed as $24.4 million and $74.2 million, respectively, were overstated due to the inclusion of certain finance lease activity. The correct operating lease cost for the three and nine months ended September 30, 2021 was $20.9 million and $63.3 million, respectively, as reflected in the above table. The overstatement only impacted this note disclosure, and there was no impact to the Consolidated Statement of Comprehensive Income.

Future minimum lease payments under noncancelable leases as lessee as of September 30, 2022 were as follows:

	Finance Leases		Operating Leases
	(In millions)
2022 (remaining three months)	$	3.6	$	22.3
2023	12.1		71.1
2024	10.7		82.0
2025	9.2		70.1
2026	8.6		61.6
Thereafter	56.2		198.3
Total minimum lease payments	100.4		505.4
Less: interest/imputed interest	(28.3)		(98.4)
Total obligations	72.1		407.0
Less: current portion	(9.2)		(71.2)
Long-term lease obligations	$	62.9	$	335.8

A portion of the lease obligations have been included in liabilities held for sale in the Consolidated Balance Sheets.

The weighted average remaining lease term as of September 30, 2022 was 10.0 years for finance leases and 7.2 years for operating leases. The weighted average discount rate as of September 30, 2022 was 9.8% for finance leases and 5.5% for operating leases.

During the three and nine months ended September 30, 2022 and 2021, the Company made the following cash payments for leases:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In millions)
Principal payments on finance lease obligations	$	2.3	$	2.5	$	7.0	$	7.8
Interest payments on finance lease obligations	$	1.2	$	1.3	$	3.7	$	4.2
Payments on operating leases	$	23.7	$	22.9	$	70.0	$	68.7
Variable lease payments	$	1.8	$	4.4	$	5.7	$	5.0

The Company's income from operating leases for the three and nine months ended September 30, 2022 and 2021 was as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In millions)
Minimum lease payments	$	24.1	$	23.9	$	71.9	$	71.7
Variable lease income	4.0		6.8		12.5		11.1
Total operating lease income	$	28.1	$	30.7	$	84.4	$	82.8

Minimum payments to be received as lessor under noncancelable operating leases as of September 30, 2022 were as follows:

	(In millions)
2022 (remaining three months)	$	26.0
2023	101.7
2024	93.2
2025	80.6
2026	66.1
Thereafter	157.3
Total minimum rents receivable	$	524.9

The Company's income from real estate leases receivables for the three and nine months ended September 30, 2022 and 2021 was as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In millions)
Interest income	$	0.4	$	0.5	$	1.1	$	1.6
Variable lease income	0.1		0.1		0.5		0.4
Selling profit	0.5		—		1.0		—
Total real estate lease income	$	1.0	$	0.6	$	2.6	$	2.0

Minimum payments to be received as lessor under noncancelable real estate leases as of September 30, 2022 were as follows:

	(In millions)
2022 (remaining three months)	$	1.8
2023	4.7
2024	2.6
2025	1.8
2026	1.8
Thereafter	14.1
Total minimum rents receivable	26.8
Less: unearned income	(6.9)
Total net investment in real estate leases	19.9
Less: current portion	(4.4)
Long-term investment in real estate leases	$	15.5

Lease Disclosures

Lease Disclosures

The Company engages in leasing activity as both a lessee and a lessor. The Company currently leases from third parties the real property on which approximately 530 IHOP franchisee-operated restaurants and one Applebee's franchisee-operated restaurant are located; the Company (as lessor) subleases the property to the franchisees that operate those restaurants. The Company also leases property it owns to the franchisees that operate approximately 50 IHOP restaurants and one Applebee's restaurant. The Company leases from third parties the real property on which 69 Applebee's company-operated restaurants are located. The Company also leases office space for its principal corporate offices in Glendale, California and Pasadena, California and restaurant support centers in Leawood, Kansas and Raleigh, North Carolina. The Company does not have a significant amount of non-real estate leases.

The Company's existing leases/subleases related to IHOP restaurants generally provide for an initial term of 20 to 25 years, with most having one or more five-year renewal options. Leases related to Applebee's restaurants generally have an initial term of 10 to 20 years, with renewal terms of five to 20 years. Option periods were not included in determining liabilities and right-of-use assets related to operating leases. Approximately 290 of the Company's leases met the sales levels that required variable rent payments to the Company (as lessor), based on a percentage of restaurant sales during the nine months ended September 30, 2022. Approximately 65 of the leases met the sales levels that required variable rent payments by the Company (as lessee), based on a percentage of restaurant sales during the nine months ended September 30, 2022.

The Company's lease cost for the three and nine months ended September 30, 2022 and 2021 was as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In millions)
Finance lease cost:
Amortization of right-of-use assets	$	0.7	$	1.1	$	2.9	$	3.5
Interest on lease liabilities	1.2		1.3		3.7		4.2
Operating lease cost(1)	21.5		20.9		63.8		63.3
Variable lease cost	2.1		4.5		5.7		5.2
Short-term lease cost	0.0		0.0		0.0		0.0
Sublease income	(26.8)		(28.8)		(79.9)		(78.0)
Lease (income) cost	$	(1.3)	$	(1.0)	$	(3.8)	$	(1.9)

(1)Operating lease cost for the three and nine months ended September 30, 2021 previously disclosed as $24.4 million and $74.2 million, respectively, were overstated due to the inclusion of certain finance lease activity. The correct operating lease cost for the three and nine months ended September 30, 2021 was $20.9 million and $63.3 million, respectively, as reflected in the above table. The overstatement only impacted this note disclosure, and there was no impact to the Consolidated Statement of Comprehensive Income.

Future minimum lease payments under noncancelable leases as lessee as of September 30, 2022 were as follows:

	Finance Leases		Operating Leases
	(In millions)
2022 (remaining three months)	$	3.6	$	22.3
2023	12.1		71.1
2024	10.7		82.0
2025	9.2		70.1
2026	8.6		61.6
Thereafter	56.2		198.3
Total minimum lease payments	100.4		505.4
Less: interest/imputed interest	(28.3)		(98.4)
Total obligations	72.1		407.0
Less: current portion	(9.2)		(71.2)
Long-term lease obligations	$	62.9	$	335.8

A portion of the lease obligations have been included in liabilities held for sale in the Consolidated Balance Sheets.

The weighted average remaining lease term as of September 30, 2022 was 10.0 years for finance leases and 7.2 years for operating leases. The weighted average discount rate as of September 30, 2022 was 9.8% for finance leases and 5.5% for operating leases.

During the three and nine months ended September 30, 2022 and 2021, the Company made the following cash payments for leases:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In millions)
Principal payments on finance lease obligations	$	2.3	$	2.5	$	7.0	$	7.8
Interest payments on finance lease obligations	$	1.2	$	1.3	$	3.7	$	4.2
Payments on operating leases	$	23.7	$	22.9	$	70.0	$	68.7
Variable lease payments	$	1.8	$	4.4	$	5.7	$	5.0

The Company's income from operating leases for the three and nine months ended September 30, 2022 and 2021 was as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In millions)
Minimum lease payments	$	24.1	$	23.9	$	71.9	$	71.7
Variable lease income	4.0		6.8		12.5		11.1
Total operating lease income	$	28.1	$	30.7	$	84.4	$	82.8

Minimum payments to be received as lessor under noncancelable operating leases as of September 30, 2022 were as follows:

	(In millions)
2022 (remaining three months)	$	26.0
2023	101.7
2024	93.2
2025	80.6
2026	66.1
Thereafter	157.3
Total minimum rents receivable	$	524.9

The Company's income from real estate leases receivables for the three and nine months ended September 30, 2022 and 2021 was as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In millions)
Interest income	$	0.4	$	0.5	$	1.1	$	1.6
Variable lease income	0.1		0.1		0.5		0.4
Selling profit	0.5		—		1.0		—
Total real estate lease income	$	1.0	$	0.6	$	2.6	$	2.0

Minimum payments to be received as lessor under noncancelable real estate leases as of September 30, 2022 were as follows:

	(In millions)
2022 (remaining three months)	$	1.8
2023	4.7
2024	2.6
2025	1.8
2026	1.8
Thereafter	14.1
Total minimum rents receivable	26.8
Less: unearned income	(6.9)
Total net investment in real estate leases	19.9
Less: current portion	(4.4)
Long-term investment in real estate leases	$	15.5

Lease Disclosures

Lease Disclosures

The Company engages in leasing activity as both a lessee and a lessor. The Company currently leases from third parties the real property on which approximately 530 IHOP franchisee-operated restaurants and one Applebee's franchisee-operated restaurant are located; the Company (as lessor) subleases the property to the franchisees that operate those restaurants. The Company also leases property it owns to the franchisees that operate approximately 50 IHOP restaurants and one Applebee's restaurant. The Company leases from third parties the real property on which 69 Applebee's company-operated restaurants are located. The Company also leases office space for its principal corporate offices in Glendale, California and Pasadena, California and restaurant support centers in Leawood, Kansas and Raleigh, North Carolina. The Company does not have a significant amount of non-real estate leases.

The Company's existing leases/subleases related to IHOP restaurants generally provide for an initial term of 20 to 25 years, with most having one or more five-year renewal options. Leases related to Applebee's restaurants generally have an initial term of 10 to 20 years, with renewal terms of five to 20 years. Option periods were not included in determining liabilities and right-of-use assets related to operating leases. Approximately 290 of the Company's leases met the sales levels that required variable rent payments to the Company (as lessor), based on a percentage of restaurant sales during the nine months ended September 30, 2022. Approximately 65 of the leases met the sales levels that required variable rent payments by the Company (as lessee), based on a percentage of restaurant sales during the nine months ended September 30, 2022.

The Company's lease cost for the three and nine months ended September 30, 2022 and 2021 was as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In millions)
Finance lease cost:
Amortization of right-of-use assets	$	0.7	$	1.1	$	2.9	$	3.5
Interest on lease liabilities	1.2		1.3		3.7		4.2
Operating lease cost(1)	21.5		20.9		63.8		63.3
Variable lease cost	2.1		4.5		5.7		5.2
Short-term lease cost	0.0		0.0		0.0		0.0
Sublease income	(26.8)		(28.8)		(79.9)		(78.0)
Lease (income) cost	$	(1.3)	$	(1.0)	$	(3.8)	$	(1.9)

(1)Operating lease cost for the three and nine months ended September 30, 2021 previously disclosed as $24.4 million and $74.2 million, respectively, were overstated due to the inclusion of certain finance lease activity. The correct operating lease cost for the three and nine months ended September 30, 2021 was $20.9 million and $63.3 million, respectively, as reflected in the above table. The overstatement only impacted this note disclosure, and there was no impact to the Consolidated Statement of Comprehensive Income.

Future minimum lease payments under noncancelable leases as lessee as of September 30, 2022 were as follows:

	Finance Leases		Operating Leases
	(In millions)
2022 (remaining three months)	$	3.6	$	22.3
2023	12.1		71.1
2024	10.7		82.0
2025	9.2		70.1
2026	8.6		61.6
Thereafter	56.2		198.3
Total minimum lease payments	100.4		505.4
Less: interest/imputed interest	(28.3)		(98.4)
Total obligations	72.1		407.0
Less: current portion	(9.2)		(71.2)
Long-term lease obligations	$	62.9	$	335.8

A portion of the lease obligations have been included in liabilities held for sale in the Consolidated Balance Sheets.

The weighted average remaining lease term as of September 30, 2022 was 10.0 years for finance leases and 7.2 years for operating leases. The weighted average discount rate as of September 30, 2022 was 9.8% for finance leases and 5.5% for operating leases.

During the three and nine months ended September 30, 2022 and 2021, the Company made the following cash payments for leases:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In millions)
Principal payments on finance lease obligations	$	2.3	$	2.5	$	7.0	$	7.8
Interest payments on finance lease obligations	$	1.2	$	1.3	$	3.7	$	4.2
Payments on operating leases	$	23.7	$	22.9	$	70.0	$	68.7
Variable lease payments	$	1.8	$	4.4	$	5.7	$	5.0

The Company's income from operating leases for the three and nine months ended September 30, 2022 and 2021 was as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In millions)
Minimum lease payments	$	24.1	$	23.9	$	71.9	$	71.7
Variable lease income	4.0		6.8		12.5		11.1
Total operating lease income	$	28.1	$	30.7	$	84.4	$	82.8

Minimum payments to be received as lessor under noncancelable operating leases as of September 30, 2022 were as follows:

	(In millions)
2022 (remaining three months)	$	26.0
2023	101.7
2024	93.2
2025	80.6
2026	66.1
Thereafter	157.3
Total minimum rents receivable	$	524.9

The Company's income from real estate leases receivables for the three and nine months ended September 30, 2022 and 2021 was as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In millions)
Interest income	$	0.4	$	0.5	$	1.1	$	1.6
Variable lease income	0.1		0.1		0.5		0.4
Selling profit	0.5		—		1.0		—
Total real estate lease income	$	1.0	$	0.6	$	2.6	$	2.0

Minimum payments to be received as lessor under noncancelable real estate leases as of September 30, 2022 were as follows:

	(In millions)
2022 (remaining three months)	$	1.8
2023	4.7
2024	2.6
2025	1.8
2026	1.8
Thereafter	14.1
Total minimum rents receivable	26.8
Less: unearned income	(6.9)
Total net investment in real estate leases	19.9
Less: current portion	(4.4)
Long-term investment in real estate leases	$	15.5

Lease Disclosures

Lease Disclosures

The Company engages in leasing activity as both a lessee and a lessor. The Company currently leases from third parties the real property on which approximately 530 IHOP franchisee-operated restaurants and one Applebee's franchisee-operated restaurant are located; the Company (as lessor) subleases the property to the franchisees that operate those restaurants. The Company also leases property it owns to the franchisees that operate approximately 50 IHOP restaurants and one Applebee's restaurant. The Company leases from third parties the real property on which 69 Applebee's company-operated restaurants are located. The Company also leases office space for its principal corporate offices in Glendale, California and Pasadena, California and restaurant support centers in Leawood, Kansas and Raleigh, North Carolina. The Company does not have a significant amount of non-real estate leases.

The Company's existing leases/subleases related to IHOP restaurants generally provide for an initial term of 20 to 25 years, with most having one or more five-year renewal options. Leases related to Applebee's restaurants generally have an initial term of 10 to 20 years, with renewal terms of five to 20 years. Option periods were not included in determining liabilities and right-of-use assets related to operating leases. Approximately 290 of the Company's leases met the sales levels that required variable rent payments to the Company (as lessor), based on a percentage of restaurant sales during the nine months ended September 30, 2022. Approximately 65 of the leases met the sales levels that required variable rent payments by the Company (as lessee), based on a percentage of restaurant sales during the nine months ended September 30, 2022.

The Company's lease cost for the three and nine months ended September 30, 2022 and 2021 was as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In millions)
Finance lease cost:
Amortization of right-of-use assets	$	0.7	$	1.1	$	2.9	$	3.5
Interest on lease liabilities	1.2		1.3		3.7		4.2
Operating lease cost(1)	21.5		20.9		63.8		63.3
Variable lease cost	2.1		4.5		5.7		5.2
Short-term lease cost	0.0		0.0		0.0		0.0
Sublease income	(26.8)		(28.8)		(79.9)		(78.0)
Lease (income) cost	$	(1.3)	$	(1.0)	$	(3.8)	$	(1.9)

(1)Operating lease cost for the three and nine months ended September 30, 2021 previously disclosed as $24.4 million and $74.2 million, respectively, were overstated due to the inclusion of certain finance lease activity. The correct operating lease cost for the three and nine months ended September 30, 2021 was $20.9 million and $63.3 million, respectively, as reflected in the above table. The overstatement only impacted this note disclosure, and there was no impact to the Consolidated Statement of Comprehensive Income.

Future minimum lease payments under noncancelable leases as lessee as of September 30, 2022 were as follows:

	Finance Leases		Operating Leases
	(In millions)
2022 (remaining three months)	$	3.6	$	22.3
2023	12.1		71.1
2024	10.7		82.0
2025	9.2		70.1
2026	8.6		61.6
Thereafter	56.2		198.3
Total minimum lease payments	100.4		505.4
Less: interest/imputed interest	(28.3)		(98.4)
Total obligations	72.1		407.0
Less: current portion	(9.2)		(71.2)
Long-term lease obligations	$	62.9	$	335.8

A portion of the lease obligations have been included in liabilities held for sale in the Consolidated Balance Sheets.

The weighted average remaining lease term as of September 30, 2022 was 10.0 years for finance leases and 7.2 years for operating leases. The weighted average discount rate as of September 30, 2022 was 9.8% for finance leases and 5.5% for operating leases.

During the three and nine months ended September 30, 2022 and 2021, the Company made the following cash payments for leases:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In millions)
Principal payments on finance lease obligations	$	2.3	$	2.5	$	7.0	$	7.8
Interest payments on finance lease obligations	$	1.2	$	1.3	$	3.7	$	4.2
Payments on operating leases	$	23.7	$	22.9	$	70.0	$	68.7
Variable lease payments	$	1.8	$	4.4	$	5.7	$	5.0

The Company's income from operating leases for the three and nine months ended September 30, 2022 and 2021 was as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In millions)
Minimum lease payments	$	24.1	$	23.9	$	71.9	$	71.7
Variable lease income	4.0		6.8		12.5		11.1
Total operating lease income	$	28.1	$	30.7	$	84.4	$	82.8

Minimum payments to be received as lessor under noncancelable operating leases as of September 30, 2022 were as follows:

	(In millions)
2022 (remaining three months)	$	26.0
2023	101.7
2024	93.2
2025	80.6
2026	66.1
Thereafter	157.3
Total minimum rents receivable	$	524.9

The Company's income from real estate leases receivables for the three and nine months ended September 30, 2022 and 2021 was as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In millions)
Interest income	$	0.4	$	0.5	$	1.1	$	1.6
Variable lease income	0.1		0.1		0.5		0.4
Selling profit	0.5		—		1.0		—
Total real estate lease income	$	1.0	$	0.6	$	2.6	$	2.0

Minimum payments to be received as lessor under noncancelable real estate leases as of September 30, 2022 were as follows:

	(In millions)
2022 (remaining three months)	$	1.8
2023	4.7
2024	2.6
2025	1.8
2026	1.8
Thereafter	14.1
Total minimum rents receivable	26.8
Less: unearned income	(6.9)
Total net investment in real estate leases	19.9
Less: current portion	(4.4)
Long-term investment in real estate leases	$	15.5