Leases

12 Months Ended

Dec. 31, 2021

Lease Accounting

Components of Lease Expense


	2021		2020		2019
Operating lease cost	$	145	$	137	$	115
Finance lease cost
Amortization of right-of-use assets	5		5		3
Interest on lease liabilities	4		3		3
Total finance lease cost	$	9	$	8	$	6
Sublease income	$	(59)	$	(60)	$	(69)

Supplemental Cash Flow Information


	2021		2020		2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	140	$	133	$	104
Operating cash flows from finance leases	4		3		3
Financing cash flows from finance leases	4		5		4
Right-of-use assets obtained in exchange for lease obligations
Operating leases(a)	119		296		79
Finance leases	5		4		14
Operating lease liabilities transferred through refranchising	(25)		(3)		(25)
Finance lease and other debt obligations transferred through refranchising	(2)		(1)		(1)

(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


	2021			2020			Consolidated Balance Sheet
Assets
Operating lease right-of-use assets	$	809		$	851		Other assets
Finance lease right-of-use assets	37			40			Property, plant and equipment, net
Total right-of-use assets(a)	$	846		$	891

Liabilities
Current
Operating	$	88		$	97		Accounts payable and other current liabilities
Finance	7			7			Short-term borrowings
Non-current
Operating	793			823			Other liabilities and deferred credits
Finance	57			65			Long-term debt
Total lease liabilities(a)	$	945		$	992

Weighted-average Remaining Lease Term (in years)
Operating leases	10.9			11.1
Finance leases	12.1			12.2

Weighted-average Discount Rate
Operating leases	4.9		%	5.1		%
Finance leases	6.4		%	6.5		%

(a) U.S. operating lease right-of-use assets and liabilities totaled $516 million and $577 million, respectively, as of December 31, 2021, and $499 million and $556 million, respectively, as of December 31, 2020. 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, 2021, were as follows:


	Commitments				Lease Receivables
	Finance		Operating		Direct Financing		Operating
2022	$	10	$	131	$	4	$	84
2023	9		128		3		81
2024	8		119		3		78
2025	7		109		3		68
2026	7		101		2		72
Thereafter	48		575		23		550
Total lease payments/receipts	89		1,163		38		$	933
Less imputed interest/unearned income	(25)		(282)		(14)
Total lease liabilities/receivables	$	64	$	881	$	24

As of December 31, 2021, we have executed real estate leases that have not yet commenced with estimated future nominal lease payments of approximately $125 million, which are not included in the tables above. These leases are expected to commence in 2022 and 2023 with lease terms of up to 20 years.