LEASES

9 Months Ended

Mar. 27, 2024

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.

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 27, 2024		March 29, 2023		March 27, 2024		March 29, 2023
Operating lease cost	$	45.7	$	45.3	$	136.9	$	135.5
Variable lease cost	16.3		16.5		47.4		47.3
Finance lease amortization	3.0		4.9		8.8		15.0
Finance lease interest	1.0		1.0		2.8		3.1
Short-term lease cost	0.1		—		0.2		0.2
Sublease income	(0.3)		(0.8)		(1.1)		(2.3)
Total lease costs, net	$	65.8	$	66.9	$	195.0	$	198.8

Supplemental cash flow information related to leases:


	Thirty-Nine Week Periods Ended
	March 27, 2024		March 29, 2023
Operating lease assets obtained in exchange for operating lease liabilities	$	53.1	$	59.1
Finance leases assets obtained in exchange for finance lease liabilities	30.7		0.2

Finance lease assets are recorded in Property and equipment, at cost, and the net balance as of March 27, 2024 and June 28, 2023 was $73.5 million and $51.3 million, respectively.

Pre-Commencement Leases

In the third quarter of fiscal 2024, we executed one finance lease for Chili’s table-top devices with an initial term of 4 years after a rollout period, commencing as devices are installed. The undiscounted fixed payments over the initial term of the lease for the remaining devices not installed as of March 27, 2024 is $22.1 million.

Additionally, we have executed six leases for new Chili’s locations with undiscounted fixed payments over the initial term of $16.1 million. These leases are expected to commence during 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.