Revenues

3 Months Ended

Mar. 25, 2020

Revenue from Contract with Customer [Abstract]

Our revenues are derived primarily from two sales channels, which we operate as one segment: company restaurants and franchised and licensed restaurants. The following table disaggregates our revenue by sales channels and types of goods or services:



	Quarter Ended
	March 25, 2020		March 27, 2019
	(Dollars in thousands)
Company restaurant sales	$	42,291	$	98,545
Franchise and license revenue:
Royalties	23,847		25,240
Advertising revenue	17,526		18,942
Initial and other fees	1,697		1,139
Occupancy revenue	11,334		7,545
Franchise and license revenue	54,404		52,866
Total operating revenue	$	96,695	$	151,411

Franchise occupancy revenue consisted of the following:



	Quarter Ended
	March 25, 2020		March 27, 2019
	(In thousands)
Operating lease revenue	$	8,622	$	5,425
Variable lease revenue	2,712		2,120
Total occupancy revenue	$	11,334	$	7,545

Balances related to contracts with customers consist of receivables, deferred franchise revenue and deferred gift card revenue. See Note 3 for details on our receivables.

Deferred franchise revenue consists primarily of the unamortized portion of initial franchise fees that are currently being amortized into revenue and amounts related to development agreements and unopened restaurants that we will begin amortizing into revenue when the related restaurants are opened. Initial franchise fees are amortized over the term of the related franchise agreement, generally 10-20 years. Deferred franchise revenue represents our remaining performance obligations to our franchisees, excluding amounts of variable consideration related to sales-based royalties and advertising. The components of the change in deferred franchise revenue are as follows:



	(In thousands)
Balance, December 25, 2019	$	23,256
Fees received from franchisees	287
Revenue recognized ⁽¹⁾	(795		)
Balance, March 25, 2020	22,748
Less current portion included in other current liabilities	2,179
Deferred franchise revenue included in other noncurrent liabilities	$	20,569

(1) Of this amount $0.8 million was included in the deferred franchise revenue balance as of December 25, 2019.

Gift card liabilities consist of the unredeemed portion of gift cards sold in company restaurants and at third party locations. The balance of gift card liabilities represents our remaining performance obligations to our customers. The balance of gift card liabilities as of March 25, 2020 and December 25, 2019 was $4.8 million and $6.5 million, respectively. During the quarter ended March 25, 2020, we recognized revenue of $0.2 million from gift card redemptions at company restaurants.