LEASES

6 Months Ended

Apr. 17, 2022

Leases [Abstract]

LEASES

LEASES

Nature of leases — We own restaurant sites and we also lease restaurant sites from third parties. Some of these owned or leased sites are leased and/or subleased to franchisees. Initial terms of our real estate leases are generally 20 years, exclusive of options to renew, which are generally exercisable at our sole discretion for 1 to 20 years. In some instances, our leases have provisions for contingent rentals based upon a percentage of defined revenues. Many of our restaurants also have rent escalation clauses and require the payment of property taxes, insurance, and maintenance costs. Variable lease costs include contingent rent, cost-of-living index adjustments, and payments for additional rent such as real estate taxes, insurance, and common area maintenance, which are excluded from the measurement of the lease liability.

As lessor, our leases and subleases primarily consist of restaurants that have been leased to franchisees in connection with refranchising transactions. Revenues from leasing arrangements with our franchisees are presented in “Franchise rental revenues” in the accompanying condensed consolidated statements of earnings, and the related expenses are presented in “Franchise occupancy expenses.”

The following table presents rental income (in thousands):

	Quarter				Year-to-date
	April 17, 2022		April 11, 2021		April 17, 2022		April 11, 2021
Operating lease income - franchise	$	52,988	$	54,142	$	124,345	$	126,384
Variable lease income - franchise	23,540		23,759		55,282		55,266
Amortization of favorable and unfavorable lease contracts, net	28		—		28		—
Franchise rental revenues	$	76,556	$	77,901	$	179,655	$	181,650
Operating lease income - closed restaurants and other (1)	$	1,407	$	1,360	$	3,065	$	3,225

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(1)Primarily relates to closed restaurant properties included in “Other operating expenses, net” in our condensed consolidated statements of earnings.

The following table presents as of April 17, 2022, the annual maturities of our lease liabilities (in thousands):

	Finance Leases		Operating Leases
Fiscal year:
Remainder of 2022	$	491	$	113,985
2023	979		221,635
2024	400		185,228
2025	38		178,781
2026	26		161,832
Thereafter	26		845,684
Total future lease payments (1)	$	1,960	$	1,707,145
Less imputed interest	(96)		(360,372)
Present value of lease liabilities	$	1,864	$	1,346,773
Less current portion	(930)		(174,065)
Long-term lease obligations	$	934	$	1,172,708

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(1)Total future lease payments include non-cancellable commitments of $2.0 million for finance leases and $1,479.2 million for operating leases.