Revenues

12 Months Ended

Dec. 28, 2022

Revenue from Contract with Customer [Abstract]

Revenues

Revenues

The following table disaggregates our revenue by sales channel and type of good or service:

	Fiscal Year Ended
	December 28, 2022		December 29, 2021		December 30, 2020
	(In thousands)
Company restaurant sales	$	199,753	$	175,017	$	118,160
Franchise and license revenue:
Royalties	113,891		103,425		67,501
Advertising revenue	75,926		69,957		53,745
Initial and other fees	28,262		8,009		7,332
Occupancy revenue	38,597		41,766		41,867
Franchise and license revenue	256,676		223,157		170,445
Total operating revenue	$	456,429	$	398,174	$	288,605

Balances related to contracts with customers consists of receivables, contract assets, deferred franchise revenue and deferred gift card revenue. See Note 4 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 will begin amortizing into revenue when the related restaurants are opened. 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 29, 2021	$	19,896
Fees received from franchisees	3,435
Acquired deferred franchise revenue	992
Revenue recognized, net (1)	(3,572)
Balance, December 28, 2022	20,751
Less current portion included in other current liabilities	2,258
Deferred franchise revenue included in other noncurrent liabilities	$	18,493

(1) Of this amount $2.5 million was included in the deferred franchise revenue balance as of December 29, 2021.

We record contract assets related to incentives and subsidies provided to franchisees related to new unit openings and/or equipment upgrades. These amounts will be recognized as a component of franchise and license revenue over the remaining term of the related franchise agreements.The components of the change in contract assets are as follows:

	(In thousands)
Balance, December 29, 2021	$	—
Franchisee deferred costs	5,953
Contract asset amortization	(592)
Balance, December 28, 2022	5,361
Less current portion included in other current assets	580
Contract assets included in other noncurrent assets	$	4,781

During 2021 and 2022, the Company purchased equipment related to a kitchen modernization program for franchise restaurants. We bill our franchisees and recognize revenue when the related equipment is installed, less a total of approximately $5.7 million contributed from the Company, which has been deferred as contract assets and included as a component of franchisee deferred costs in the table above. We recognized $19.1 million and $0.4 million of revenue related to the sale of kitchen equipment to franchisees during the years ended December 28, 2022 and December 29, 2021, respectively. As of December 28, 2022, we had approximately $3.6 million in inventory and $6.6 million in receivables related to the kitchen equipment rollout. As of December 29, 2021, we had approximately $3.7 million in inventory and $0.4 million in receivables related to the kitchen equipment rollout.

As of December 28, 2022, deferred franchise revenue, net of contract asset amortization, expected to be recognized in the future is as follows:

	(In thousands)
2023	$	1,678
2024	1,655
2025	1,618
2026	1,540
2027	1,454
Thereafter	7,445
Deferred franchise revenue, net	$	15,390

Deferred gift card liabilities consist of the unredeemed portion of gift cards sold in company restaurants and at third party locations. The balance of deferred gift card liabilities represents our remaining performance obligations to customers. The balance of deferred gift card liabilities as of December 28, 2022 and December 29, 2021 was $7.7 million and $7.2 million, respectively. During the year ended December 28, 2022, we recognized revenue of $0.5 million from gift card redemptions at company restaurants.