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Leases | 6 Months Ended
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Jun. 30, 2019
Leases [Abstract] |
Leases | 9. Leases We determine if a contract contains a lease at inception. Our material operating leases consist of restaurant locations and office space. Our leases generally have remaining terms of 1-20 years and most include options to extend the leases for additional 5-year periods. Generally, the lease term is the minimum of the noncancelable period of the lease or the lease term inclusive of reasonably certain renewal periods up to a term of 20 years. Operating lease assets and liabilities are recognized at the lease commencement date. Operating lease liabilities represent the present value of lease payments not yet paid. Operating lease assets represent our right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets. To determine the present value of lease payments not yet paid, we estimate incremental secured borrowing rates corresponding to the maturities of the leases. As we have no outstanding debt nor committed credit facilities, secured or otherwise, we estimate this rate based on prevailing financial market conditions, comparable company and credit analysis, and management judgment. Our leases typically contain rent escalations over the lease term. We recognize expense for these leases on a straight-line basis over the lease term. Additionally, tenant incentives used to fund leasehold improvements are recognized when earned and reduce our right-of-use asset related to the lease. These are amortized through the right-of-use asset as reductions of expense over the lease term. Some of our leases include rent escalations based on inflation indexes and fair market value adjustments. Certain leases contain contingent rental provisions that include a fixed base rent plus an additional percentage of the restaurant’s sales, generally in excess of a stipulated amount. Operating lease liabilities are calculated using the prevailing index or rate at lease commencement. Subsequent escalations in the index or rate and contingent rental payments are recognized as variable lease expenses. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Related to the adoption of Topic 842, our policy elections were as follows:
Separation of lease and non-lease components |  | We elected this expedient to account for lease and non-lease components as a single component for our entire population of operating lease assets.
Short-term policy |  | We have elected the short-term lease recognition exemption for all applicable classes of underlying assets. Short-term disclosures include only those leases with a term greater than one month and 12 months or less, and expense is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less, that do not include an option to purchase the underlying asset that we are reasonably certain to exercise, are not recorded on the balance sheet.
Supplemental balance sheet information related to leases was as follows:
|  | June 30,
Operating Leases | Classification | 2019
Right-of-use assets | Operating lease assets | $ | 2,370,710
Current lease liabilities | Current operating lease liabilities |  | 161,253
Non-current lease liabilities | Long-term operating lease liabilities |  | 2,534,769
Total lease liabilities |  | $ | 2,696,022
| June 30,
| 2019
Weighted average remaining lease term (years) |  | 13.4
Weighted average discount rate |  | 5.31%
The components of lease cost were as follows:
|  | Three months ended |  | Six months ended
|  | June 30, |  | June 30,
| Classification | 2019 |  | 2019
Operating lease cost | Occupancy, General and administrative expenses and Pre-opening costs | $ | 74,701 |  | $ | 151,506
Short-term lease cost | Other operating costs |  | 737 |  |  | 1,474
Variable lease cost | Occupancy |  | 9,276 |  |  | 18,380
Sublease income | General and administrative expenses |  | (909) |  |  | (1,675)
Total lease cost |  | $ | 83,805 |  | $ | 169,685
Supplemental disclosures of cash flow information related to leases were as follows:
| Three months ended |  | Six months ended
| June 30, |  | June 30,
| 2019 |  | 2019
Cash paid for operating lease liabilities | $ | 73,572 |  | $ | 145,404
Operating lease assets obtained in exchange for operating lease liabilities(1) |  | 64,807 |  |  | 2,466,046
(1) Amounts for the six months ended June 30, 2019 include the transition adjustment for the adoption of Topic 842 discussed in Note 2. "Recent Accounting Standards". |  |  |
Maturities of lease liabilities were as follows as of June 30, 2019:
| Operating Leases
Remainder of 2019 | $ | 122,750
2020 |  | 300,235
2021 |  | 297,968
2022 |  | 297,663
2023 |  | 293,305
Thereafter |  | 2,517,991
Total lease payments |  | 3,829,912
Less: imputed interest |  | 1,133,890
Present value of lease liabilities | $ | 2,696,022
As of June 30, 2019, the operating lease liability includes $2,085,168 related to options to extend lease terms that are reasonably certain of being exercised and exclude approximately $137,000 of legally binding minimum lease payments for leases signed but not yet commenced and $9,704 of future sublease income. As previously disclosed in our 2018 Annual Report on Form 10-K and under the previous lease accounting, maturities of lease liabilities were as follows as of December 31, 2018:
| Operating Leases
2019 | $ | 294,191
2020 |  | 296,579
2021 |  | 294,941
2022 |  | 295,290
2023 |  | 290,980
Thereafter |  | 2,478,397
Total minimum lease payments | $ | 3,950,378
As of December 31, 2018, maturities of lease liabilities have not been reduced by minimum sublease income of $11,790 due in the future under our subleases. As of December 31, 2018, we have $90,484 of legally binding minimum lease payments related to restaurant leases that have not yet commenced. We have six sale and leaseback transactions, which do not qualify for sale leaseback accounting due to fixed price renewal options prohibiting sale accounting. These transactions are accounted for under the financing method. Under the financing method, the assets remain on the condensed 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 $2,263 and $2,390 as of June 30, 2019 and December 31, 2018, respectively, with the current portion of the liability included in accrued liabilities, and the remaining portion included in other liabilities on the condensed consolidated balance sheet.

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- Definition The entire disclosure for lessee entity's leasing arrangements including, but not limited to, all of the following: (a.) The basis on which contingent rental payments are determined, (b.) The existence and terms of renewal or purchase options and escalation clauses, (c.) Restrictions imposed by lease agreements, such as those concerning dividends, additional debt, and further leasing. + References Reference 1: http://fasb.org/us-gaap/role/ref/otherTransitionRef -Publisher FASB -Name Accounting Standards Codification -Topic 840 -URI http://asc.fasb.org/topic&trid=2208923 + Details
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