Leases

12 Months Ended

Dec. 31, 2023

Lease Accounting

Components of Lease Cost


	2023		2022		2021
Operating lease cost	$	130	$	133	$	145
Finance lease cost
Amortization of right-of-use assets	6		7		5
Interest on lease liabilities	2		3		4
Total finance lease cost	$	8	$	10	$	9
Sublease income	$	(51)	$	(55)	$	(59)

Supplemental Cash Flow Information


	2023		2022		2021
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	127	$	137	$	140
Operating cash flows from finance leases	2		3		4
Financing cash flows from finance leases	7		5		4
Right-of-use assets obtained in exchange for lease obligations
Operating leases	127		93		119
Finance leases	6		10		5
Operating lease liabilities transferred through refranchising	(14)		(14)		(25)
Finance lease and other debt obligations transferred through refranchising	(5)		—		(2)

Supplemental Balance Sheet Information


	2023			2022			Consolidated Balance Sheet
Assets
Operating lease right-of-use assets	$	764		$	742		Other assets
Finance lease right-of-use assets	29			33			Property, plant and equipment, net
Total right-of-use assets(a)	$	793		$	775

Liabilities
Current
Operating	$	79		$	79		Accounts payable and other current liabilities
Finance	8			8			Short-term borrowings
Non-current
Operating	757			731			Other liabilities and deferred credits
Finance	42			49			Long-term debt
Total lease liabilities(a)	$	886		$	867

Weighted-average Remaining Lease Term (in years)
Operating leases	10.6			10.8
Finance leases	11.4			11.6

Weighted-average Discount Rate
Operating leases	5.3		%	5.1		%
Finance leases	5.7		%	5.8		%

(a) U.S. operating lease right-of-use assets and liabilities totaled $541 million and $605 million, respectively, as of December 31, 2023, and $515 million and $575 million, respectively, as of December 31, 2022. 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 and Habit Burger Grill 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, 2023, were as follows:


	Commitments				Lease Receivables
	Finance		Operating		Direct Financing		Operating
2024	$	10	$	118	$	3	$	77
2025	8		124		3		72
2026	6		118		3		69
2027	6		109		3		62
2028	5		99		2		55
Thereafter	29		531		17		416
Total lease payments/receipts	64		1,099		31		$	751
Less imputed interest/unearned income	(14)		(263)		(11)
Total lease liabilities/receivables	$	50	$	836	$	20

As of December 31, 2023, we have executed real estate leases that have not yet commenced with estimated future nominal lease payments of approximately $75 million, which are not included in the tables above. These leases are expected to commence in 2024, 2025 and 2026 with lease terms of up to 20 years.