Leases

3 Months Ended

Mar. 28, 2021

8. Leases

The Company leases certai

retail store and supply chain center locations, supply chain vehicles, equipment and its corporate headquarters with expiration dates through 2041.

The components of operating and finance lease cost for the first quarter of 2021 and the first quarter of 2020 were as follows:


	Fiscal Quarter Ended
	March 28, 2021		March 22, 2020
Operating lease cost	$	10,424	$	9,582
Finance lease cost:
Amortization of right-of-use assets		919		249
Interest on lease liabilities		1,026		375

Total finance lease cost	$	1,945	$	624

Rent expense totaled $18.2 million and $16.4 million in the first quarter of 2021 and the first quarter of 2020, respectively. Rent expense includes operating lease cost, as well as expense for

non-lease

components including common area maintenance, real estate taxes and insurance for the Company’s real estate leases. Rent expense also includes the variable rate per mile driven and fixed maintenance charges for the Company’s supply chain center tractors and trailers and expense for short-term rentals. Variable rent expense and rent expense for short-term leases were immaterial in both the first quarter of 2021 and the first quarter of 2020.

Supplemental balance sheet information related to the Company’s finance leases as of March 28, 2021 and January 3, 2021 was as follows:


	March 28, 2021			January 3, 2021
Land and buildings	$	68,489		$	68,084
Accumulated depreciation and amortization		(10,973	)		(10,049	)

Finance lease assets, net	$	57,516		$	58,035

Current portion of long-term debt	$	2,931		$	2,855
Long-term debt, less current portion		57,338			57,700

Total principal payable on finance leases	$	60,269		$	60,555


	March 28, 2021						January 3, 2021
	Operating Leases			Finance Leases			Operating Leases			Finance Leases
Weighted average remaining lease term		7 years			16 years			7 years			16 years
Weighted average discount rate		3.7	%		6.8	%		3.7	%		6.8	%

Supplemental cash flow information related to leases for the first quarter of 2021 and the first quarter of 2020 was as follows:


	Fiscal Quarter Ended
	March 28, 2021		March 22, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	10,187	$	10,119
Operating cash flows from finance leases		1,026		375
Financing cash flows from finance leases		704		349
Right-of-use assets obtained in exchange for lease obligations:
Operating leases		4,672		8,982
Finance leases		399		—

Maturities of lease liabilities as of March 28, 2021 were as follows:


	Operating Leases			Finance Leases
2021	$	34,764		$	4,620
2022		43,209			6,754
2023		37,620			6,274
2024		36,260			6,732
2025		29,559			6,527
Thereafter		87,007			69,983

Total future minimum rental commitments		268,419			100,890
Less – amounts representing interest		(33,721	)		(40,621	)

Total lease liabilities	$	234,698		$	60,269

As of March 28, 2021, the Company has additional leases for certain supply chain tractors and trailers that had not yet commenced with estimated future minimum rental commitments of approximately $15.7 million. These leases are expected to commence in 2021 with lease terms of up to 9 years. These undiscounted amounts are not included in the table above.

The Company has guaranteed lease payments related to certain franchisees’ lease arrangements. The maximum amount of potential future payments under these guarantees was $12.0 million and $12.6 million as of March 28, 2021 and January 3, 2021, respectively. The Company does not believe these arrangements have or are likely to have a material effect on its results of operations, financial condition, revenues, expenses or liquidity.