XML 92 R16.htm IDEA: XBRL DOCUMENT

Leases

12 Months Ended

Dec. 31, 2019

(8) Leases

We recognize right-of-use assets and lease liabilities for both real estate and equipment leases that have a term in excess of one year. As of December 31, 2019, these amounts were as follows:


	Leases
	Real estate		Equipment		Total
Operating lease right-of-use assets	$	495,903	$	3,898	$	499,801

Current portion of operating lease liabilities		15,966		1,297		17,263
Operating lease liabilities, net of current portion		536,109		2,601		538,710
Total operating lease liabilities	$	552,075	$	3,898	$	555,973

Information related to our real estate leases as of and for the fiscal year ended December 31, 2019 was as follows (in thousands):


		Fiscal Year Ended
Real estate costs		December 31, 2019
Operating lease	$	54,844
Variable lease		1,590
Short-term lease		120
Total lease costs	$	56,554


Real estate lease liability maturity analysis		Total
2020	$	52,450
2021		53,393
2022		54,229
2023		54,268
2024		54,362
Thereafter		721,619
Total	$	990,321
Less interest		438,246
Total discounted operating lease liabilities	$	552,075


		Fiscal Year Ended
Real estate leases other information		December 31, 2019
Cash paid for amounts included in measurement of operating lease liabilities	$	49,018
Right-of-use assets obtained in exchange for new operating lease liabilities	$	51,220
Weighted-average remaining lease term (years)		17.82
Weighted-average discount rate		6.77

Operating lease payments exclude $32.6 million of minimum lease payments for executed real estate leases that we have not yet taken possession. In addition to the above operating leases, as of December 31, 2019 we had one finance lease with a right-of-use asset balance and lease liability balance of $1.7 million and $2.1 million, respectively. The

right-of-use asset balance is included as a component of other assets and the lease liability balance as a component of other liabilities in the consolidated balance sheets.

Beginning in 2019, we recognize operating lease right-of-use assets and operating lease liabilities for real estate leases, including our restaurant leases and Support Center lease, as well as certain restaurant equipment leases based on the present value of the lease payments over the lease term. We estimate the present value based on our incremental borrowing rate which corresponds to the underlying lease term. In addition, operating lease right-of-use assets are reduced for accrued rent and increased for any initial direct costs recognized at lease inception. For leases commencing in 2019 and later, we account for lease and non-lease components as a single lease component.

Certain of our operating leases contain predetermined fixed escalations of the minimum rent over the lease term. For these leases, we recognize the related rent expense on a straight-line basis over the lease term. We may receive rent concessions or leasehold improvement incentives upon opening a restaurant that is subject to a lease which we consider when determining straight-line rent expense. We also may receive rent holidays, which would begin on the possession date and end when the store opens, during which no cash rent payments are typically due under the terms of the lease. Rent holidays are included in the lease term when determining straight-line rent expense. In recognizing straight-line rent expense, we record the difference between amounts charged to operations and amounts paid as accrued rent. Straight-line rent expense is included as an operating lease cost in the table above.

Certain of our operating leases contain clauses that provide for additional contingent rent based on a percentage of sales greater than certain specified target amounts. We recognize contingent rent expense prior to the achievement of the specified target that triggers the contingent rent, provided achievement of the target is considered probable. In addition, certain of our operating leases have variable escalations of the minimum rent that depend on an index or rate. We recognize variable rent expense when the escalation is determinable. Contingent rent and variable rent expense are included as variable lease costs in the table above.

The following is a schedule of future minimum lease payments required for operating leases that have remaining terms in excess of one year as of December 25, 2018:


	Operating Leases
2019	$	50,030
2020		49,582
2021		49,917
2022		50,237
2023		49,854
Thereafter		677,710
Total	$	927,330

Rent expense for operating leases consisted of the following:


	Fiscal Year Ended
		December 25, 2018	December 26, 2017
Minimum rent—occupancy	$	47,741	$	43,621
Contingent rent		1,050		1,186
Rent expense, occupancy		48,791		44,807
Minimum rent—equipment and other		6,176		5,087
Rent expense	$	54,967	$	49,894