Leases

12 Months Ended

Dec. 28, 2022

Leases [Abstract]

Leases

Leases

Lessee

Our operations utilize property, facilities and equipment leased from others. Buildings and facilities are primarily used for restaurants and support facilities. Many of our restaurants are operated under lease arrangements which generally provide for a fixed base rent, and, in many instances, contingent rent based on a percentage of gross revenues. Initial terms of land and restaurant building leases generally range from 10 to 20 years, exclusive of options to renew, which are typically for five year periods. Leases of equipment consist primarily of restaurant equipment, computer equipment and vehicles. Initial terms of equipment leases generally range from three to five years.

Lessor

We lease or sublease certain restaurant properties to our franchisees and occasionally to third parties. The lease descriptions, terms, variable lease payments and renewal options are generally the same as the lessee leases described above.

The components of lease costs were as follows:

		Fiscal Year Ended
	Classification	December 28, 2022		December 29, 2021
		(In thousands)
Lease costs
Finance lease costs:
Amortization of right-of-use assets	Depreciation and amortization	$	1,704	$	1,895
Interest on lease liabilities	Interest expense, net	2,350		2,960
Operating lease costs:
Operating lease costs - company	Occupancy	7,624		6,394
Operating lease costs - franchise	Costs of franchise and license revenue	15,541		17,106
Operating lease costs - general and administrative	General and administrative expenses	564		432
Operating lease costs - closed stores	Restructuring charges and exit costs	201		356
Variable lease costs:
Variable lease costs - company	Occupancy	3,988		3,275
Variable lease costs - franchise	Costs of franchise and license revenue	6,596		7,172
Variable lease costs - general and administrative	General and administrative expenses	255		218
Variable lease costs - closed stores	Restructuring charges and exit costs	34		48
Sublease income:
Sublease income - franchise	Franchise and license revenue	(27,445)		(30,607)
Sublease income - closed stores	Restructuring charges and exit costs	(229)		(160)
Total lease costs		$	11,183	$	9,089

Lease terms and discount rates were as follows:

	December 28, 2022		December 29, 2021
Weighted-average remaining lease term (in years):
Finance leases	8.4		8.5
Operating leases	9.4		10.0
Weighted-average discount rate:
Finance leases	23.5	%	23.4	%
Operating leases	5.8	%	5.7	%

The components of lease income were as follows:

		Fiscal Year Ended
	Classification	December 28, 2022		December 29, 2021
		(In thousands)
Lease income
Operating lease income - franchise	Franchise and license revenue	$	28,473	$	30,767
Operating lease income - closed stores	Restructuring charges and exit costs	183		109
Operating lease income - general and administrative	General and administrative expenses	140		65
Variable lease income - franchise	Franchise and license revenue	10,124		10,999
Variable lease income - closed stores	Restructuring charges and exit costs	46		51
Total lease income		$	38,966	$	41,991

Cash and supplemental noncash amounts were as follows:

	Fiscal Year Ended
	December 28, 2022		December 29, 2021
	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	2,350	$	2,960
Operating cash flows from operating leases	$	24,626	$	25,578
Financing cash flows from finance leases	$	2,020	$	2,118
Right-of-use assets obtained in exchange for new finance lease liabilities	$	537	$	998
Right-of-use assets obtained in exchange for new operating lease liabilities (1)	$	16,040	$	8,513

    

(1)    Right-of-use assets obtained in 2022 includes $7.9 million from the acquisition of Keke’s. See Note 3.

Maturities of lease liabilities and receipts as of December 28, 2022 were as follows:

	Lease Liabilities				Lease Receipts
	Finance		Operating		Operating
	(In thousands)
2023	$	3,768	$	23,031	$	25,816
2024	3,047		21,538		24,454
2025	2,911		20,267		24,220
2026	2,576		19,427		23,768
2027	2,197		17,525		22,195
Thereafter	11,514		80,781		138,095
Total undiscounted cash flows	26,013		182,569		$	258,548
Less: interest	14,775		43,855
Present value of lease liabilities	11,238		138,714
Less: current lease liabilities	1,683		15,310
Long-term lease liabilities	$	9,555	$	123,404

Leases

Leases

Lessee

Our operations utilize property, facilities and equipment leased from others. Buildings and facilities are primarily used for restaurants and support facilities. Many of our restaurants are operated under lease arrangements which generally provide for a fixed base rent, and, in many instances, contingent rent based on a percentage of gross revenues. Initial terms of land and restaurant building leases generally range from 10 to 20 years, exclusive of options to renew, which are typically for five year periods. Leases of equipment consist primarily of restaurant equipment, computer equipment and vehicles. Initial terms of equipment leases generally range from three to five years.

Lessor

We lease or sublease certain restaurant properties to our franchisees and occasionally to third parties. The lease descriptions, terms, variable lease payments and renewal options are generally the same as the lessee leases described above.

The components of lease costs were as follows:

		Fiscal Year Ended
	Classification	December 28, 2022		December 29, 2021
		(In thousands)
Lease costs
Finance lease costs:
Amortization of right-of-use assets	Depreciation and amortization	$	1,704	$	1,895
Interest on lease liabilities	Interest expense, net	2,350		2,960
Operating lease costs:
Operating lease costs - company	Occupancy	7,624		6,394
Operating lease costs - franchise	Costs of franchise and license revenue	15,541		17,106
Operating lease costs - general and administrative	General and administrative expenses	564		432
Operating lease costs - closed stores	Restructuring charges and exit costs	201		356
Variable lease costs:
Variable lease costs - company	Occupancy	3,988		3,275
Variable lease costs - franchise	Costs of franchise and license revenue	6,596		7,172
Variable lease costs - general and administrative	General and administrative expenses	255		218
Variable lease costs - closed stores	Restructuring charges and exit costs	34		48
Sublease income:
Sublease income - franchise	Franchise and license revenue	(27,445)		(30,607)
Sublease income - closed stores	Restructuring charges and exit costs	(229)		(160)
Total lease costs		$	11,183	$	9,089

Lease terms and discount rates were as follows:

	December 28, 2022		December 29, 2021
Weighted-average remaining lease term (in years):
Finance leases	8.4		8.5
Operating leases	9.4		10.0
Weighted-average discount rate:
Finance leases	23.5	%	23.4	%
Operating leases	5.8	%	5.7	%

The components of lease income were as follows:

		Fiscal Year Ended
	Classification	December 28, 2022		December 29, 2021
		(In thousands)
Lease income
Operating lease income - franchise	Franchise and license revenue	$	28,473	$	30,767
Operating lease income - closed stores	Restructuring charges and exit costs	183		109
Operating lease income - general and administrative	General and administrative expenses	140		65
Variable lease income - franchise	Franchise and license revenue	10,124		10,999
Variable lease income - closed stores	Restructuring charges and exit costs	46		51
Total lease income		$	38,966	$	41,991

Cash and supplemental noncash amounts were as follows:

	Fiscal Year Ended
	December 28, 2022		December 29, 2021
	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	2,350	$	2,960
Operating cash flows from operating leases	$	24,626	$	25,578
Financing cash flows from finance leases	$	2,020	$	2,118
Right-of-use assets obtained in exchange for new finance lease liabilities	$	537	$	998
Right-of-use assets obtained in exchange for new operating lease liabilities (1)	$	16,040	$	8,513

    

(1)    Right-of-use assets obtained in 2022 includes $7.9 million from the acquisition of Keke’s. See Note 3.

Maturities of lease liabilities and receipts as of December 28, 2022 were as follows:

	Lease Liabilities				Lease Receipts
	Finance		Operating		Operating
	(In thousands)
2023	$	3,768	$	23,031	$	25,816
2024	3,047		21,538		24,454
2025	2,911		20,267		24,220
2026	2,576		19,427		23,768
2027	2,197		17,525		22,195
Thereafter	11,514		80,781		138,095
Total undiscounted cash flows	26,013		182,569		$	258,548
Less: interest	14,775		43,855
Present value of lease liabilities	11,238		138,714
Less: current lease liabilities	1,683		15,310
Long-term lease liabilities	$	9,555	$	123,404

Leases

Leases

Lessee

Our operations utilize property, facilities and equipment leased from others. Buildings and facilities are primarily used for restaurants and support facilities. Many of our restaurants are operated under lease arrangements which generally provide for a fixed base rent, and, in many instances, contingent rent based on a percentage of gross revenues. Initial terms of land and restaurant building leases generally range from 10 to 20 years, exclusive of options to renew, which are typically for five year periods. Leases of equipment consist primarily of restaurant equipment, computer equipment and vehicles. Initial terms of equipment leases generally range from three to five years.

Lessor

We lease or sublease certain restaurant properties to our franchisees and occasionally to third parties. The lease descriptions, terms, variable lease payments and renewal options are generally the same as the lessee leases described above.

The components of lease costs were as follows:

		Fiscal Year Ended
	Classification	December 28, 2022		December 29, 2021
		(In thousands)
Lease costs
Finance lease costs:
Amortization of right-of-use assets	Depreciation and amortization	$	1,704	$	1,895
Interest on lease liabilities	Interest expense, net	2,350		2,960
Operating lease costs:
Operating lease costs - company	Occupancy	7,624		6,394
Operating lease costs - franchise	Costs of franchise and license revenue	15,541		17,106
Operating lease costs - general and administrative	General and administrative expenses	564		432
Operating lease costs - closed stores	Restructuring charges and exit costs	201		356
Variable lease costs:
Variable lease costs - company	Occupancy	3,988		3,275
Variable lease costs - franchise	Costs of franchise and license revenue	6,596		7,172
Variable lease costs - general and administrative	General and administrative expenses	255		218
Variable lease costs - closed stores	Restructuring charges and exit costs	34		48
Sublease income:
Sublease income - franchise	Franchise and license revenue	(27,445)		(30,607)
Sublease income - closed stores	Restructuring charges and exit costs	(229)		(160)
Total lease costs		$	11,183	$	9,089

Lease terms and discount rates were as follows:

	December 28, 2022		December 29, 2021
Weighted-average remaining lease term (in years):
Finance leases	8.4		8.5
Operating leases	9.4		10.0
Weighted-average discount rate:
Finance leases	23.5	%	23.4	%
Operating leases	5.8	%	5.7	%

The components of lease income were as follows:

		Fiscal Year Ended
	Classification	December 28, 2022		December 29, 2021
		(In thousands)
Lease income
Operating lease income - franchise	Franchise and license revenue	$	28,473	$	30,767
Operating lease income - closed stores	Restructuring charges and exit costs	183		109
Operating lease income - general and administrative	General and administrative expenses	140		65
Variable lease income - franchise	Franchise and license revenue	10,124		10,999
Variable lease income - closed stores	Restructuring charges and exit costs	46		51
Total lease income		$	38,966	$	41,991

Cash and supplemental noncash amounts were as follows:

	Fiscal Year Ended
	December 28, 2022		December 29, 2021
	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	2,350	$	2,960
Operating cash flows from operating leases	$	24,626	$	25,578
Financing cash flows from finance leases	$	2,020	$	2,118
Right-of-use assets obtained in exchange for new finance lease liabilities	$	537	$	998
Right-of-use assets obtained in exchange for new operating lease liabilities (1)	$	16,040	$	8,513

    

(1)    Right-of-use assets obtained in 2022 includes $7.9 million from the acquisition of Keke’s. See Note 3.

Maturities of lease liabilities and receipts as of December 28, 2022 were as follows:

	Lease Liabilities				Lease Receipts
	Finance		Operating		Operating
	(In thousands)
2023	$	3,768	$	23,031	$	25,816
2024	3,047		21,538		24,454
2025	2,911		20,267		24,220
2026	2,576		19,427		23,768
2027	2,197		17,525		22,195
Thereafter	11,514		80,781		138,095
Total undiscounted cash flows	26,013		182,569		$	258,548
Less: interest	14,775		43,855
Present value of lease liabilities	11,238		138,714
Less: current lease liabilities	1,683		15,310
Long-term lease liabilities	$	9,555	$	123,404