Leases

12 Months Ended

Dec. 31, 2020

Lease Accounting

Components of Lease Expense


	2020		2019
Operating lease cost	$	137	$	115
Finance lease cost
Amortization of right-of-use assets	5		3
Interest on lease liabilities	3		3
Total finance lease cost	$	8	$	6
Sublease income	$	(60)	$	(69)

Rental expense related to operating leases was $151 million for the year ended December 31, 2018.

Supplemental Cash Flow Information


	2020		2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	133	$	104
Operating cash flows from finance leases	3		3
Financing cash flows from finance leases	5		4
Right-of-use assets obtained in exchange for lease obligations
Operating leases(a)	296		79
Finance leases	4		14

(a) The year ended December 31, 2020, includes right-of-use assets acquired as part of the acquisition of Habit Burger Grill of $196 million (See Note 3).

Supplemental Balance Sheet Information


	2020			2019			Consolidated Balance Sheet
Assets
Operating lease right-of-use assets	$	851		$	642		Other assets
Finance lease right-of-use assets	40			42			Property, plant and equipment, net
Total right-of-use assets(a)	$	891		$	684

Liabilities
Current
Operating	$	97		$	67		Accounts payable and other current liabilities
Finance	7			7			Short-term borrowings
Non-current
Operating	823			640			Other liabilities and deferred credits
Finance	65			70			Long-term debt
Total lease liabilities(a)	$	992		$	784

Weighted-average Remaining Lease Term (in years)
Operating leases	11.1			12.3
Finance leases	12.2			12.7

Weighted-average Discount Rate
Operating leases	5.1		%	5.6		%
Finance leases	6.5		%	6.6		%

(a) U.S. operating lease right-of-use assets and liabilities totaled $499 million and $556 million, respectively, as of December 31, 2020, and $283 million and $337 million, respectively, as of December 31, 2019. These amounts primarily related to Taco Bell U.S. and the Habit Burger Grill including leases related to Company-operated restaurants, leases related to franchise-operated restaurants we sublease and the Taco Bell restaurant support center.

Maturity of Lease Payments and Receivables

Future minimum lease payments, including rental payments for lease renewal options we are reasonably certain to exercise, and amounts to be received as lessor or sublessor as of December 31, 2020, were as follows:


	Commitments				Lease Receivables
	Finance		Operating		Direct Financing		Operating
2021	$	9	$	128	$	3	$	80
2022	10		133		4		82
2023	9		123		4		80
2024	8		115		4		76
2025	8		103		3		71
Thereafter	58		623		27		599
Total lease payments/receipts	102		1,225		45		$	988
Less imputed interest/unearned income	(30)		(305)		(18)
Total lease liabilities/receivables	$	72	$	920	$	27

As of December 31, 2020, we have executed real estate leases that have not yet commenced with estimated future nominal lease payments of approximately $100 million, which are not included in the tables above. These leases are expected to commence in 2021 and 2022 with lease terms of up to 20 years.