7. Leases

The Company generally operates its restaurants in leased premises. Lease terms for traditional shopping center or building leases generally include combined initial and option terms of 20-25 years. Ground leases generally include combined initial and option terms of 30-40 years. The option terms in each of these leases are typically in five-year increments. Typically, the lease includes rent escalation terms every five years including fixed rent escalations, escalations based on inflation indexes, and fair market value adjustments. Certain leases contain contingent rental provisions based upon the sales of the underlying restaurants. The leases generally provide for the payment of common area maintenance, property taxes, insurance and various other use and occupancy costs by the Company. In addition, the Company is the lessee under non-cancelable leases covering certain offices.

Future minimum lease payments required under existing operating leases as of December 31, 2012 are as follows:



2013	$	158,981
2014		161,042
2015		161,971
2016		162,451
2017		163,511
Thereafter		1,658,347
Total minimum lease payments	$	2,466,303

Minimum lease payments have not been reduced by minimum sublease rentals of $6,099 due in the future under non-cancelable subleases.

Rental expense consists of the following:



	For the years ended December 31
	2012		2011		2010
Minimum rentals	$	152,935	$	130,827	$	114,750
Contingent rentals	$	1,917	$	1,754	$	1,602
Sublease rental income	$	(1,623)	$	(1,390)	$	(1,227)

The Company has six sales and leaseback transactions. These transactions do not qualify for sale leaseback accounting because of the Company’s deemed continuing involvement with the buyer-lessor due to fixed price renewal options, which results in the transaction being recorded under the financing method. Under the financing method, the assets remain on the consolidated balance sheet and the proceeds from the transactions are recorded as a financing liability. A portion of lease payments are applied as payments of deemed principal and imputed interest. The deemed landlord financing liability was $3,529 as of December 31, 2012. The future minimum lease payments for each of the next five years and thereafter for deemed landlord financing obligations are as follows:



2013	$	394
2014		394
2015		401
2016		421
2017		423
Thereafter		3,472
Total minimum lease payments		5,505
Less: Interest implicit in lease		(1,976)
Total deemed landlord financing	$	3,529