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LEASES | 9 Months Ended
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Mar. 30, 2022
Leases [Abstract] |
Leases | We typically lease our restaurant facilities through ground leases (where we lease land only, but construct the building and improvements) or retail leases (where we lease the land/retail space and building). In addition to our restaurant facilities, we also lease our corporate headquarters location and certain equipment. Lease Amounts Included in the Consolidated Statements of Comprehensive Income (Unaudited) The components of lease expenses included in the Consolidated Statements of Comprehensive Income (Unaudited) were as follows:
| Thirteen Week Periods Ended |  | Thirty-Nine Week Periods Ended
| March 30, 2022 |  | March 24, 2021 |  | March 30, 2022 |  | March 24, 2021
Operating lease cost | $ | 44.1 |  |  | $ | 41.9 |  |  | $ | 128.7 |  |  | $ | 125.6 |
Variable lease cost | 13.9 |  |  | 14.6 |  |  | 44.1 |  |  | 43.5 |
Finance lease amortization | 5.9 |  |  | 4.2 |  |  | 17.6 |  |  | 12.4 |
Finance lease interest | 1.3 |  |  | 1.4 |  |  | 4.3 |  |  | 4.3 |
Short-term lease cost | 0.1 |  |  | 0.2 |  |  | 0.4 |  |  | 0.4 |
Sublease income | (0.9) |  |  | (1.0) |  |  | (3.3) |  |  | (3.2) |
Total lease costs, net | $ | 64.4 |  |  | $ | 61.3 |  |  | $ | 191.8 |  |  | $ | 183.0 |
Pre-Commencement Leases As of the end of the third quarter of fiscal 2022, we have 18 pre-commencement leases for new Chili’s locations with undiscounted fixed payments of $25.5 million over the initial term. 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 during the Period 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. At March 30, 2022, the balances associated with these new leases in the Consolidated Balance Sheets (Unaudited) include Operating lease assets of $23.1 million, Operating lease liabilities of $0.6 million, and Long-term operating lease liabilities, less current portion of $22.7 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. At March 30, 2022, the balances associated with these new leases in the Consolidated Balance Sheets (Unaudited) include Operating lease assets of $46.6 million, Operating lease liabilities of $1.6 million, and Long-term operating lease liabilities, less current portion of $45.8 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, as part of the Chili’s Northwest Region Acquisition, we assumed 3 new real estate operating leases. At March 30, 2022, the balances associated with these new leases in the Consolidated Balance Sheets (Unaudited) include Operating lease assets of $5.5 million, Operating lease liabilities of $0.1 million, and Long-term operating lease liabilities, less current portion of $5.4 million. The leases were recorded net of prepaid rent at the date of acquisition. Refer to Note 2 - Chili’s Restaurant Acquisitions for further details. 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. At March 30, 2022, the balances associated with these leases in the Consolidated Balance Sheets (Unaudited) include Operating lease assets of $48.3 million, Operating lease liabilities of $1.0 million, and Long-term operating lease liabilities, less current portion of $47.6 million. Also, as a result of these modifications, the finance lease asset and lease liability balances decreased in the Consolidated Balance Sheets (Unaudited) 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. At March 30, 2022, the balances associated with these new leases in the Consolidated Balance Sheets (Unaudited) include Operating lease assets of $17.9 million, Operating lease liabilities of $0.4 million, and Long-term operating lease liabilities, less current portion of $17.6 million.

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