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LEASES | 12 Months Ended
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Jun. 29, 2022
Leases [Abstract] |
Leases, Lessee Disclosure | As of June 29, 2022, 1,136 of our 1,188 Company-owned restaurant facilities were leased. We typically lease our restaurant facilities through ground leases (where we lease land only, but construct the building and leasehold improvements) or retail leases (where we lease the land/retail space and building, but construct the leasehold improvements). As of June 29, 2022, the restaurant leases have cumulative renewal clauses of 2 to 40 years at our option. Our leased restaurants typically have an initial lease term of 10 to 20 years, with one or more renewal terms typically ranging from 1 to 10 years. The leases typically provide for a fixed rental or a fixed rental plus percentage rentals based on sales volume. In addition to our restaurant facilities, we also lease our corporate headquarters location and certain equipment. Our lease agreements do not contain any material residual value guarantees or material covenant restrictions. Consolidated Balance Sheet Disclosure of Lease Amounts The following table includes a detail of lease assets and liabilities included in the Consolidated Balance Sheets:
| June 29, 2022
| Finance Leases(1) |  | Operating Leases(2) |  | Total Leases
Lease assets | $ | 71.1 |  |  | $ | 1,160.5 |  |  | $ | 1,231.6 |
Current lease liabilities | 20.3 |  |  | 112.7 |  |  | 133.0 |
Long-term lease liabilities | 69.9 |  |  | 1,151.1 |  |  | 1,221.0 |
Total lease liabilities | $ | 90.2 |  |  | $ | 1,263.8 |  |  | $ | 1,354.0 |
| June 30, 2021
| Finance Leases(1) |  | Operating Leases(2) |  | Total Leases
Lease assets | $ | 98.2 |  |  | $ | 1,007.4 |  |  | $ | 1,105.6 |
Current lease liabilities | 21.5 |  |  | 97.7 |  |  | 119.2 |
Long-term lease liabilities | 99.8 |  |  | 1,006.7 |  |  | 1,106.5 |
Total lease liabilities | $ | 121.3 |  |  | $ | 1,104.4 |  |  | $ | 1,225.7 |
(1)Finance lease assets are recorded in Property and equipment, at cost, and the related current and long-term lease liabilities are recorded within Other accrued liabilities and Long-term debt and finance leases, less current installments, respectively. (2)Operating lease assets are recorded in Operating lease assets and the related current and long-term lease liabilities are recorded within Operating lease liabilities and Long-term operating lease liabilities, less current portion, respectively. Consolidated Statement of Comprehensive Income Disclosure of Lease Amounts The components of lease expenses, including variable lease costs primarily consisting of rent based on a percentage of sales, common area maintenance and real estate tax charges, and short-term lease expenses for leases with lease terms less than twelve months are included in the Consolidated Statements of Comprehensive Income as follows:
| Fiscal Years Ended
| June 29, 2022 |  | June 30, 2021 |  | June 24, 2020
Operating lease expenses (amortization and interest) | $ | 173.7 |  |  | $ | 167.2 |  |  | $ | 162.8 |
Finance lease amortization | 21.9 |  |  | 17.3 |  |  | 20.9 |
Finance lease interest | 5.5 |  |  | 5.9 |  |  | 4.6 |
Short-term lease cost | 0.6 |  |  | 0.5 |  |  | 1.4 |
Variable lease cost | 60.5 |  |  | 57.9 |  |  | 57.7 |
Sublease income | (4.2) |  |  | (4.4) |  |  | (4.6) |
Total lease costs, net | $ | 258.0 |  |  | $ | 244.4 |  |  | $ | 242.8 |
Consolidated Statement of Cash Flows Disclosure of Lease Amounts Supplemental cash flow information related to leases recorded in the Consolidated Statements of Cash Flows is as follows:
| Fiscal Years Ended
| June 29, 2022 |  | June 30, 2021 |  | June 24, 2020
Cash flows from operating activities |  |  |  |  |
Cash paid related to lease liabilities |  |  |  |  |
Operating leases(1) | $ | 171.1 |  |  | $ | 195.5 |  |  | $ | 159.6 |
Finance leases | 5.5 |  |  | 5.9 |  |  | 4.6 |
Cash flows from financing activities |  |  |  |  |
Cash paid related to lease liabilities |  |  |  |  |
Finance leases | 23.7 |  |  | 20.0 |  |  | 17.8 |
Non-cash lease assets obtained in exchange for lease liabilities(2) |  |  |  |  |
Operating leases(3) | 255.4 |  |  | 60.6 |  |  | 224.0 |
Finance leases | 13.4 |  |  | 29.8 |  |  | 73.2 |
(1)Cash paid related to lease liabilities for Operating leases increased in fiscal 2021 primarily due to the prepayment of July 2021 lease payments and lease payments made during fiscal 2021 for rents that were deferred in fiscal 2020 due to the impacts of the COVID-19 pandemic. (2)Non-cash lease assets obtained in exchange for lease liabilities were higher in fiscal 2020 primarily due to the new and assumed operating and finance leases from the fiscal 2020 Chili’s restaurant acquisition and the new Chili’s finance lease for table-top devices. Refer to Note 2 - Chili's Restaurant Acquisitions for more information. (3)Non-cash operating lease assets obtained in exchange for operating lease liabilities were higher in fiscal 2022 primarily due to the new and assumed operating lease additions associated with the 68 restaurants purchased from three former franchisees and the modifications of 25 leases. Refer to Note 2 - Chili's Restaurant Acquisitions and “Significant Changes in Leases in Fiscal 2022” section below for more information. Weighted Average Lease Term and Discount Rate Other information related to leases is as follows:
| Fiscal Years Ended
| June 29, 2022 |  | June 30, 2021
| Finance Leases |  | Operating Leases |  | Finance Leases |  | Operating Leases
Weighted average remaining lease term | 9.1 years |  | 12.0 years |  | 8.5 years |  | 11.0 years
Weighted average discount rate | 5.1 | % |  | 5.5 | % |  | 5.4 | % |  | 5.6 | %
Lease Maturity Analysis Finance leases and Operating leases total future lease payments represent the contractual obligations due under the lease agreements, including cancellable option periods where we are reasonably assured to exercise the options. As of June 29, 2022, the future minimum lease payments on finance and operating leases, as well as sublease income were as follows:
| June 29, 2022
Fiscal Year | Finance Leases |  | Operating Leases |  | Sublease Income
2023 | $ | 24.5 |  |  | $ | 177.6 |  |  | $ | 1.9 |
2024 | 15.6 |  |  | 176.3 |  |  | 1.2 |
2025 | 12.4 |  |  | 166.9 |  |  | 1.2 |
2026 | 8.2 |  |  | 153.2 |  |  | 0.7 |
2027 | 7.6 |  |  | 135.5 |  |  | 0.5 |
Thereafter | 47.5 |  |  | 950.6 |  |  | 0.5 |
Total future lease payments(1) | 115.8 |  |  | 1,760.1 |  |  | $ | 6.0 |
Less: Imputed interest | 25.6 |  |  | 496.3 |  |  |
Present value of lease liability | $ | 90.2 |  |  | $ | 1,263.8 |  |  |
(1)Total future lease payments as of June 29, 2022 included non-cancelable lease commitments of $90.1 million for finance leases and $1,110.4 million for operating leases. Pre-Commencement Leases In fiscal 2022, we executed fourteen leases for new Chili’s locations with undiscounted fixed payments over the initial term of $19.0 million. These leases are expected to commence in the next 12 months and are expected to have an economic lease term of 20 years. These leases will commence when the landlords make the property available to us for new restaurant construction. We will assess the reasonably certain lease term at the lease commencement date. Significant Changes in Leases in Fiscal 2022 In the first quarter of fiscal 2022, as part of the Chili’s Mid-Atlantic Region Acquisition, we assumed 11 new real estate operating leases. On June 29, 2022, the balances associated with these new leases in the Consolidated Balance Sheets include Operating lease assets of $22.9 million, Operating lease liabilities of $0.6 million, and Long-term operating lease liabilities, less current portion of $22.5 million. The leases were recorded net of prepaid rent at the date of acquisition. In the second quarter of fiscal 2022, as part of the Chili’s Great Lakes Region Acquisition, we assumed 26 new real estate operating leases. On June 29, 2022, the balances associated with these new leases in the Consolidated Balance Sheets include Operating lease assets of $46.1 million, Operating lease liabilities of $1.6 million, and Long-term operating lease liabilities, less current portion of $45.4 million. The leases were recorded net of purchase price accounting adjustments and prepaid rent at the date of acquisition. In the third quarter of fiscal 2022, we completed lease modifications related to 25 real estate leases that were previously classified as finance leases. As a result of the modifications, the lease terms are for 20 years, and the leases were reassessed as operating leases. On June 29, 2022, the balances associated with these leases in the Consolidated Balance Sheets include Operating lease assets of $47.9 million, Operating lease liabilities of $1.1 million, and Long-term operating lease liabilities, less current portion of $47.3 million. Also, as a result of these modifications, the finance lease asset and lease liability balances decreased in the Consolidated Balance Sheets including decreases to Buildings and leasehold improvements of $17.4 million, Other accrued liabilities of $2.8 million and Long-term debt and finance leases, less current installments of $15.0 million. Restaurant Properties Sale Leaseback Transaction In the first quarter of fiscal 2022, simultaneous with the Mid-Atlantic Region Acquisition, we completed sale leaseback transactions on six of the acquired restaurants. The properties were sold at their acquisition cost resulting in proceeds of $20.5 million with no gain or loss. The initial terms of all leases we entered into as part of the sale leaseback transactions are for 15 years, plus renewal options at our discretion. All of the leases were determined to be operating leases. Rent expenses associated with these operating leases are recognized on a straight-line basis over the lease terms under ASC 842. On June 29, 2022, the balances associated with these new leases in the Consolidated Balance Sheets include Operating lease assets of $17.8 million, Operating lease liabilities of $0.4 million, and Long-term operating lease liabilities, less current portion of $17.5 million.

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