Leases

12 Months Ended

Dec. 29, 2022

Leases [Abstract]

Leases

8. Leases

The Company determines if an arrangement is a lease at inception. The Company evaluates each lease for classification as either a finance lease or an operating lease according to accounting guidance ASC 842. The Company performs this evaluation at the inception of the lease and when a modification is made to a lease. The Company leases real estate and equipment with lease terms of one year to 45 years, some of which include options to extend and/or terminate the lease. The exercise of lease renewal options is done at the Company’s sole discretion. When deemed reasonably certain of exercise, the renewal options are included in the determination of the lease term and related right-of-use asset and lease liability. The depreciable life of the asset is limited to the expected term. The Company’s lease agreements do not contain any residual value guarantees or any restrictions or covenants.

Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at commencement date of the lease based on the present value of lease payments over the lease term. When readily determinable, the Company uses the implicit rate in the lease in determining the present value of lease payments. When the lease does not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the lease commencement date, including the fixed rate the Company could borrow for a similar amount, over a similar lease term with similar collateral. The Company recognizes right-of-use assets for all assets subject to operating leases in an amount equal to the operating lease liabilities, adjusted for the balances of long-term prepaid rent, favorable lease intangible assets, deferred lease expense, unfavorable lease liabilities and deferred lease incentive liabilities. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term.

The majority of the Company’s lease agreements include fixed rental payments. For those leases with variable payments based on increases in an index subsequent to lease commencement, such payments are recognized as variable lease expense as they occur. Variable lease payments that do not depend on an index or rate, including those that depend on the Company’s performance or use of the underlying asset, are also expensed as incurred. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term.

Total lease cost consists of the following:

Lease Cost	Classification	Fiscal 2022		Fiscal 2021
Finance lease costs:
Amortization of finance lease assets	Depreciation and amortization	$	2,789	$	2,732
Interest on lease liabilities	Interest expense	850		951
		$	3,639	$	3,683
Operating lease costs:
Operating lease costs	Rent expense	$	25,381	$	25,489
Variable lease cost	Rent expense	514		(30)
Short-term lease cost	Rent expense	142		135
		$	26,037	$	25,594

Additional information related to leases is as follows:

Other Information	Fiscal 2022		Fiscal 2021
Cash paid for amounts included in the measurement of lease liabilities:
Financing cash flows from finance leases	$	2,670	$	2,774
Operating cash flows from finance leases	850		951
Operating cash flows from operating leases	29,025		31,136
Right of use assets obtained in exchange for new lease obligations:
Finance lease liabilities	419		—
Operating lease liabilities, including from acquisitions	275		2,663

	December 29, 2022		December 30, 2021
Finance leases:
Property and equipment – gross	$	29,885	$	75,124
Accumulated depreciation and amortization	(15,332)		(58,197)
Property and equipment - net	$	14,553	$	16,927

Remaining lease terms and discount rates are as follows:

Lease Term and Discount Rate	December 29, 2022	December 30, 2021
Weighted-average remaining lease terms:
Finance leases	7 years	8 years
Operating leases	12 years	13 years
Weighted-average discount rates:
Finance leases	4.59%	4.58%
Operating leases	4.51%	4.48%

Maturities of lease liabilities as of December 29, 2022 are as follows:

Fiscal Year	Operating Leases		Finance Leases
2023	$	23,610	$	3,243
2024	25,072		3,139
2025	25,225		2,980
2026	24,795		2,863
2027	23,181		1,935
Thereafter	154,681		6,626
Total lease payments	276,564		20,786
Less: amount representing interest	(66,730)		(3,284)
Total lease liabilities	$	209,834	$	17,502

Deferred rent payments of approximately $827 for the Company’s operating leases have been included in the total operating lease obligations as of December 29, 2022, of which approximately $624 is included in long-term operating lease obligations.

Leases

8. Leases

The Company determines if an arrangement is a lease at inception. The Company evaluates each lease for classification as either a finance lease or an operating lease according to accounting guidance ASC 842. The Company performs this evaluation at the inception of the lease and when a modification is made to a lease. The Company leases real estate and equipment with lease terms of one year to 45 years, some of which include options to extend and/or terminate the lease. The exercise of lease renewal options is done at the Company’s sole discretion. When deemed reasonably certain of exercise, the renewal options are included in the determination of the lease term and related right-of-use asset and lease liability. The depreciable life of the asset is limited to the expected term. The Company’s lease agreements do not contain any residual value guarantees or any restrictions or covenants.

Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at commencement date of the lease based on the present value of lease payments over the lease term. When readily determinable, the Company uses the implicit rate in the lease in determining the present value of lease payments. When the lease does not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the lease commencement date, including the fixed rate the Company could borrow for a similar amount, over a similar lease term with similar collateral. The Company recognizes right-of-use assets for all assets subject to operating leases in an amount equal to the operating lease liabilities, adjusted for the balances of long-term prepaid rent, favorable lease intangible assets, deferred lease expense, unfavorable lease liabilities and deferred lease incentive liabilities. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term.

The majority of the Company’s lease agreements include fixed rental payments. For those leases with variable payments based on increases in an index subsequent to lease commencement, such payments are recognized as variable lease expense as they occur. Variable lease payments that do not depend on an index or rate, including those that depend on the Company’s performance or use of the underlying asset, are also expensed as incurred. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term.

Total lease cost consists of the following:

Lease Cost	Classification	Fiscal 2022		Fiscal 2021
Finance lease costs:
Amortization of finance lease assets	Depreciation and amortization	$	2,789	$	2,732
Interest on lease liabilities	Interest expense	850		951
		$	3,639	$	3,683
Operating lease costs:
Operating lease costs	Rent expense	$	25,381	$	25,489
Variable lease cost	Rent expense	514		(30)
Short-term lease cost	Rent expense	142		135
		$	26,037	$	25,594

Additional information related to leases is as follows:

Other Information	Fiscal 2022		Fiscal 2021
Cash paid for amounts included in the measurement of lease liabilities:
Financing cash flows from finance leases	$	2,670	$	2,774
Operating cash flows from finance leases	850		951
Operating cash flows from operating leases	29,025		31,136
Right of use assets obtained in exchange for new lease obligations:
Finance lease liabilities	419		—
Operating lease liabilities, including from acquisitions	275		2,663

	December 29, 2022		December 30, 2021
Finance leases:
Property and equipment – gross	$	29,885	$	75,124
Accumulated depreciation and amortization	(15,332)		(58,197)
Property and equipment - net	$	14,553	$	16,927

Remaining lease terms and discount rates are as follows:

Lease Term and Discount Rate	December 29, 2022	December 30, 2021
Weighted-average remaining lease terms:
Finance leases	7 years	8 years
Operating leases	12 years	13 years
Weighted-average discount rates:
Finance leases	4.59%	4.58%
Operating leases	4.51%	4.48%

Maturities of lease liabilities as of December 29, 2022 are as follows:

Fiscal Year	Operating Leases		Finance Leases
2023	$	23,610	$	3,243
2024	25,072		3,139
2025	25,225		2,980
2026	24,795		2,863
2027	23,181		1,935
Thereafter	154,681		6,626
Total lease payments	276,564		20,786
Less: amount representing interest	(66,730)		(3,284)
Total lease liabilities	$	209,834	$	17,502

Deferred rent payments of approximately $827 for the Company’s operating leases have been included in the total operating lease obligations as of December 29, 2022, of which approximately $624 is included in long-term operating lease obligations.