Leases (Notes)

12 Months Ended

Dec. 29, 2019

Leases [Abstract]

Lessee, Operating Leases [Text Block]

Leases

We lease certain venues, warehouses, office space and equipment. The leases generally require us to pay minimum rent, property taxes, insurance, and other maintenance costs. Certain lease agreements include rental payments based on a percentage of retail sales over contractual levels and others include rental payments adjusted periodically for inflation. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Most of the Company's leases generally have initial terms of 10 to 20 years and include one or more options to renew. The exercise of lease renewal options is at our sole discretion, and based on our history of exercising renewal lease options, our operating lease obligations typically assume the exercise of two lease renewal options. The depreciable life of assets and leasehold improvements are limited by the expected lease term.

		December 29, 2019
	Balance Sheet Classification	(in thousands)
Assets
Operating	Operating lease right-of-use assets, net	$	532,913
Finance	Property and equipment, net (1)	9,099
Total leased assets		$	542,012
Liabilities
Current
Operating	Operating lease obligations, current portion	$	48,920
Finance	Finance lease obligations, current portion	810
Noncurrent
Operating	Operating lease obligations, less current portion	525,535
Finance	Finance lease obligations, less current portion	11,502
Total leased liabilities		$	586,767

__________________

⁽¹⁾ Finance lease assets are recorded net of accumulated amortization of $6.0 million as of December 29, 2019.

In Fiscal 2019 we recognized and impairment charge of $3.8 million against our operating right-of-use lease assets related to nine Company-operated venues. The impairment charge primarily related to (i) six Company-operated locations that are expected to close before the end of their lease term as a result of poor financial performance and various economic factors in the markets in which these venues are located, and (ii) a change in the sublease income assumptions to reflect a longer than expected period to secure subtenants on three Peter Piper Pizza locations in Oklahoma that closed in 2018.

As most of our leases do not provide an implicit rate, we use our estimated incremental borrowing rate based on the current cost of debt on our Secured Credit Facilities,as defined in Note 11. “Indebtedness and Interest Expense”, at commencement date in determining the present value of lease payments.

		Fiscal 2019
	Statement of Earnings Classification	(in thousands)
Operating lease cost (1)	Lease costs	$	109,043
Operating lease cost (2)	General and administrative	1,303
Finance lease cost
Amortization of leased assets	Depreciation and amortization	990
Interest on lease obligations	Net interest expense	1,485
Net lease cost		$	112,821

__________________

⁽¹⁾ Includes common area maintenance charges of $13.9 million for Fiscal 2019.

⁽²⁾ Represents the lease cost associated with operating leases relating to our corporate offices and warehouse facilities.

The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of December 29, 2019:

	Operating Leases (1)		Finance Leases (2)		Total
	(in thousands)
2020	$	93,748	$	2,204	$	95,952
2021	91,677		2,181		93,858
2022	89,592		2,147		91,739
2023	87,040		1,920		88,960
2024	83,142		1,851		84,993
After 2024	404,439		11,171		415,610
Total lease payments	849,638		21,474		871,112
Less: interest	275,183		9,162		284,345
Present value of minimum lease payments (3)	$	574,455	$	12,312	$	586,767

__________________

⁽¹⁾ Operating lease payments include payments related to options to extend lease terms that are reasonably certain of being exercised and exclude legally binding minimum lease payments for leases signed but not yet commenced.

⁽²⁾ Finance lease payments include payments related to options to extend lease terms that are reasonably certain of being exercised and exclude legally binding minimum lease payments for leases signed but not yet commenced.

⁽³⁾ The present value of minimum operating lease payments of $48.9 million and $525.5 million are included in “Operating lease obligations, current portion” and “Operating lease obligations, less current portion”, respectively, in our Consolidated Balance Sheet. The present value of minimum finance lease payments of $0.8 million and $11.5 million are included in “Finance lease obligations, current portion” and “Finance lease obligations, less current portion”, respectively, in our Consolidated Balance Sheet.

Lease Term and Discount Rate	Fiscal 2019
Weighted average remaining lease term (years):
Operating leases	9.9
Finance leases	10.8
Weighted average discount rate:
Operating leases	8.0	%
Finance leases	12.6	%

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

	Fiscal 2019
	(in thousands)
Cash paid for amounts included in the measurement of lease obligations:
Operating cash flows for operating leases	$	92,129
Operating cash flows for finance leases	1,485
Financing cash flows for finance leases	791
Right-of-use assets obtained in exchange for lease obligations:
Operating lease obligations	26,318
Finance lease obligations	—

The following table illustrates the Company’s future minimum rental payments for non-cancelable leases under ASC 840 as of December 30, 2018:

	Financing			Operating
Fiscal Years	(in thousands)
2019	$	2,182		$	92,435
2020	2,214			90,983
2021	2,201			88,914
2022	2,184			87,183
2023	1,956			84,806
After 2023	13,266			457,277
Future minimum lease payments	24,003			$	901,598
Less amounts representing interest	(10,996		)
Present value of future minimum lease payments	13,007
Less current portion	(677		)
Finance lease obligations, less current portion	$	12,330

Lease costs, including contingent rent based on a percentage of venues’ sales, when applicable, was comprised of the following for the periods presented:

	Fiscal Year
	2019		2018		2017
	(in thousands)
Minimum lease costs	$	96,376	$	97,598	$	96,927
Variable non-lease costs (1)	13,854		—		—
Contingent lease costs	116		43		156
	$	110,346	$	97,641	$	97,083

__________________

⁽¹⁾ As a result of electing to account for lease and non-lease components as a single component for certain classes of assets in connection with the adoption of ASU 2016-02 effective December 31, 2018, lease costs for Fiscal 2019 include $13.9 million of common area maintenance charges, which were previously included in “Other venue operating expenses” in our Consolidated Statement of Earnings. See Note 1. “Description of Business and Summary of Significant Policies - Recently Issued Accounting Guidance - Accounting Guidance Adopted” for further discussion of the adoption of ASU 2016-02.

Lease costs of $1.3 million, $1.2 million, and $1.2 million related to our corporate offices and warehouse facilities was included in “General and administrative expenses” in our Consolidated Statements of Earnings for the fiscal years ended December 29, 2019, December 30, 2018 and December 31, 2017.

Lessee, Finance Leases [Text Block]

Leases

We lease certain venues, warehouses, office space and equipment. The leases generally require us to pay minimum rent, property taxes, insurance, and other maintenance costs. Certain lease agreements include rental payments based on a percentage of retail sales over contractual levels and others include rental payments adjusted periodically for inflation. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Most of the Company's leases generally have initial terms of 10 to 20 years and include one or more options to renew. The exercise of lease renewal options is at our sole discretion, and based on our history of exercising renewal lease options, our operating lease obligations typically assume the exercise of two lease renewal options. The depreciable life of assets and leasehold improvements are limited by the expected lease term.

		December 29, 2019
	Balance Sheet Classification	(in thousands)
Assets
Operating	Operating lease right-of-use assets, net	$	532,913
Finance	Property and equipment, net (1)	9,099
Total leased assets		$	542,012
Liabilities
Current
Operating	Operating lease obligations, current portion	$	48,920
Finance	Finance lease obligations, current portion	810
Noncurrent
Operating	Operating lease obligations, less current portion	525,535
Finance	Finance lease obligations, less current portion	11,502
Total leased liabilities		$	586,767

__________________

⁽¹⁾ Finance lease assets are recorded net of accumulated amortization of $6.0 million as of December 29, 2019.

In Fiscal 2019 we recognized and impairment charge of $3.8 million against our operating right-of-use lease assets related to nine Company-operated venues. The impairment charge primarily related to (i) six Company-operated locations that are expected to close before the end of their lease term as a result of poor financial performance and various economic factors in the markets in which these venues are located, and (ii) a change in the sublease income assumptions to reflect a longer than expected period to secure subtenants on three Peter Piper Pizza locations in Oklahoma that closed in 2018.

As most of our leases do not provide an implicit rate, we use our estimated incremental borrowing rate based on the current cost of debt on our Secured Credit Facilities,as defined in Note 11. “Indebtedness and Interest Expense”, at commencement date in determining the present value of lease payments.

		Fiscal 2019
	Statement of Earnings Classification	(in thousands)
Operating lease cost (1)	Lease costs	$	109,043
Operating lease cost (2)	General and administrative	1,303
Finance lease cost
Amortization of leased assets	Depreciation and amortization	990
Interest on lease obligations	Net interest expense	1,485
Net lease cost		$	112,821

__________________

⁽¹⁾ Includes common area maintenance charges of $13.9 million for Fiscal 2019.

⁽²⁾ Represents the lease cost associated with operating leases relating to our corporate offices and warehouse facilities.

The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of December 29, 2019:

	Operating Leases (1)		Finance Leases (2)		Total
	(in thousands)
2020	$	93,748	$	2,204	$	95,952
2021	91,677		2,181		93,858
2022	89,592		2,147		91,739
2023	87,040		1,920		88,960
2024	83,142		1,851		84,993
After 2024	404,439		11,171		415,610
Total lease payments	849,638		21,474		871,112
Less: interest	275,183		9,162		284,345
Present value of minimum lease payments (3)	$	574,455	$	12,312	$	586,767

__________________

⁽¹⁾ Operating lease payments include payments related to options to extend lease terms that are reasonably certain of being exercised and exclude legally binding minimum lease payments for leases signed but not yet commenced.

⁽²⁾ Finance lease payments include payments related to options to extend lease terms that are reasonably certain of being exercised and exclude legally binding minimum lease payments for leases signed but not yet commenced.

⁽³⁾ The present value of minimum operating lease payments of $48.9 million and $525.5 million are included in “Operating lease obligations, current portion” and “Operating lease obligations, less current portion”, respectively, in our Consolidated Balance Sheet. The present value of minimum finance lease payments of $0.8 million and $11.5 million are included in “Finance lease obligations, current portion” and “Finance lease obligations, less current portion”, respectively, in our Consolidated Balance Sheet.

Lease Term and Discount Rate	Fiscal 2019
Weighted average remaining lease term (years):
Operating leases	9.9
Finance leases	10.8
Weighted average discount rate:
Operating leases	8.0	%
Finance leases	12.6	%

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

	Fiscal 2019
	(in thousands)
Cash paid for amounts included in the measurement of lease obligations:
Operating cash flows for operating leases	$	92,129
Operating cash flows for finance leases	1,485
Financing cash flows for finance leases	791
Right-of-use assets obtained in exchange for lease obligations:
Operating lease obligations	26,318
Finance lease obligations	—

The following table illustrates the Company’s future minimum rental payments for non-cancelable leases under ASC 840 as of December 30, 2018:

	Financing			Operating
Fiscal Years	(in thousands)
2019	$	2,182		$	92,435
2020	2,214			90,983
2021	2,201			88,914
2022	2,184			87,183
2023	1,956			84,806
After 2023	13,266			457,277
Future minimum lease payments	24,003			$	901,598
Less amounts representing interest	(10,996		)
Present value of future minimum lease payments	13,007
Less current portion	(677		)
Finance lease obligations, less current portion	$	12,330

Lease costs, including contingent rent based on a percentage of venues’ sales, when applicable, was comprised of the following for the periods presented:

	Fiscal Year
	2019		2018		2017
	(in thousands)
Minimum lease costs	$	96,376	$	97,598	$	96,927
Variable non-lease costs (1)	13,854		—		—
Contingent lease costs	116		43		156
	$	110,346	$	97,641	$	97,083

__________________

⁽¹⁾ As a result of electing to account for lease and non-lease components as a single component for certain classes of assets in connection with the adoption of ASU 2016-02 effective December 31, 2018, lease costs for Fiscal 2019 include $13.9 million of common area maintenance charges, which were previously included in “Other venue operating expenses” in our Consolidated Statement of Earnings. See Note 1. “Description of Business and Summary of Significant Policies - Recently Issued Accounting Guidance - Accounting Guidance Adopted” for further discussion of the adoption of ASU 2016-02.

Lease costs of $1.3 million, $1.2 million, and $1.2 million related to our corporate offices and warehouse facilities was included in “General and administrative expenses” in our Consolidated Statements of Earnings for the fiscal years ended December 29, 2019, December 30, 2018 and December 31, 2017.