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Leases | 12 Months Ended
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Jan. 03, 2021
Leases [Abstract] |
Leases, Company as Lessee | Leases Nature of Leases The Company operates restaurants that are located on sites owned by us and sites leased by us from third parties. In addition, the Company owns sites and leases sites from third parties, which it leases and/or subleases to franchisees. At January 3, 2021, Wendy’s and its franchisees operated 6,828 Wendy’s restaurants. Of the 361 Company-operated Wendy’s restaurants, Wendy’s owned the land and building for 142 restaurants, owned the building and held long-term land leases for 149 restaurants and held leases covering the land and building for 70 restaurants. Wendy’s also owned 509 and leased 1,245 properties that were either leased or subleased principally to franchisees. The Company also leases restaurant, office and transportation equipment. Company as Lessee The components of lease cost for 2020 and 2019 are as follows:
| Year Ended
| 2020 |  | 2019
Finance lease cost: |  |  |
Amortization of finance lease assets | $ | 13,395 |  |  | $ | 11,241 |
Interest on finance lease liabilities | 40,682 |  |  | 37,012 |
| 54,077 |  |  | 48,253 |
Operating lease cost | 91,475 |  |  | 90,537 |
Variable lease cost (a) | 59,076 |  |  | 58,978 |
Short-term lease cost | 4,641 |  |  | 4,717 |
Total operating lease cost (b) | 155,192 |  |  | 154,232 |
Total lease cost | $ | 209,269 |  |  | $ | 202,485 |
_______________ (a)Includes expenses for executory costs of $38,652 and $37,758 for 2020 and 2019, respectively, for which the Company is reimbursed by sublessees. (b)Includes $125,553 and $123,899 for 2020 and 2019, respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees. Also includes $26,866 and $27,419 for 2020 and 2019, respectively, recorded to “Cost of sales” for leases for Company-operated restaurants. The components of rental expense for operating leases for 2018, as accounted for under previous guidance, were as follows:
| Year Ended
| 2018
Rental expense: |
Minimum rentals | $ | 95,749 |
Contingent rentals | 18,971 |
Total rental expense (a) | $ | 114,720 |
_______________ (a)Includes rental expense related to (1) leases for Company-operated restaurants recorded to “Cost of sales,” (2) leased properties that are subsequently leased to franchisees recorded to “Franchise rental expense” and (3) leases for corporate offices and equipment recorded to “General and administrative.” Amortization of finance lease assets was $11,603 for 2018. The following table includes supplemental cash flow and non-cash information related to leases:
| Year End
| 2020 |  | 2019
Cash paid for amounts included in the measurement of lease liabilities: |  |  |
Operating cash flows from finance leases | $ | 39,349 |  |  | $ | 39,887 |
Operating cash flows from operating leases | 85,689 |  |  | 91,824 |
Financing cash flows from finance leases | 8,383 |  |  | 6,835 |
Right-of-use assets obtained in exchange for lease obligations: |  |  |
Finance lease liabilities | 34,918 |  |  | 50,061 |
Operating lease liabilities | 18,327 |  |  | 15,411 |
The following table includes supplemental information related to leases:
| Year End
| January 3, 2021 |  | December 29, 2019
Weighted-average remaining lease term (years): |  |  |
Finance leases | 16.2 |  | 17.1
Operating leases | 14.6 |  | 15.4
Weighted average discount rate: |  |  |
Finance leases | 9.54 | % |  | 9.87 | %
Operating leases | 5.06 | % |  | 5.09 | %
Supplemental balance sheet information: |  |  |
Finance lease assets, gross | $ | 261,308 |  |  | $ | 242,889 |
Accumulated amortization | (55,155) |  |  | (42,745) |
Finance lease assets | 206,153 |  |  | 200,144 |
Operating lease assets | 821,480 |  |  | 857,199 |
The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of January 3, 2021:
| Finance Leases |  | Operating Leases
Fiscal Year | Company-Operated |  | Franchise and Other |  | Company-Operated |  | Franchise and Other
2021 (a) | $ | 4,779 |  |  | $ | 47,503 |  |  | $ | 19,195 |  |  | $ | 70,730 |
2022 | 4,963 |  |  | 49,000 |  |  | 19,010 |  |  | 70,633 |
2023 | 4,927 |  |  | 50,632 |  |  | 19,037 |  |  | 70,460 |
2024 | 5,045 |  |  | 51,007 |  |  | 19,111 |  |  | 70,328 |
2025 | 5,140 |  |  | 51,423 |  |  | 19,065 |  |  | 69,977 |
Thereafter | 59,126 |  |  | 628,162 |  |  | 167,441 |  |  | 699,756 |
Total minimum payments | $ | 83,980 |  |  | $ | 877,727 |  |  | $ | 262,859 |  |  | $ | 1,051,884 |
Less interest | (30,716) |  |  | (412,810) |  |  | (77,388) |  |  | (326,684) |
Present value of minimum lease payments (b) (c) | $ | 53,264 |  |  | $ | 464,917 |  |  | $ | 185,471 |  |  | $ | 725,200 |
_______________ (a)In addition to the 2021 future minimum rental payments, the Company expects to pay $5,439 primarily during 2021 related to rent deferrals obtained due to the COVID-19 pandemic. The related payable is included in “Accrued expenses and other current liabilities.” See Note 7 for further information. (b)The present value of minimum finance lease payments of $12,105 and $506,076 are included in “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” respectively. (c)The present value of minimum operating lease payments of $45,346 and $865,325 are included in “Current portion of operating lease liabilities” and “Long-term operating lease liabilities,” respectively.
Leases, Company as Lessor | Company as Lessor The components of lease income for 2020 and 2019 are as follows:
| Year Ended
| 2020 |  | 2019
Sales-type and direct-financing leases: |  |  |
Selling profit | $ | 1,995 |  |  | $ | 2,285 |
Interest income (a) | 29,067 |  |  | 26,333 |
Operating lease income | 174,452 |  |  | 176,629 |
Variable lease income | 58,196 |  |  | 56,436 |
Franchise rental income (b) | $ | 232,648 |  |  | $ | 233,065 |
_______________ (a)Included in “Interest expense, net.” (b)Includes sublease income of $169,921 and $171,126 recognized during 2020 and 2019, respectively. Sublease income includes lessees’ variable payments to the Company for executory costs of $38,636 and $37,739 for 2020 and 2019, respectively. The components of rental income for operating leases and subleases for 2018, as accounted for under previous guidance, were as follows:
| Year Ended
| 2018
Rental income: |
Minimum rentals | $ | 184,154 |
Contingent rentals | 19,143 |
Total rental income (a) | $ | 203,297 |
_______________ (a)Includes sublease income of $138,363. During 2018, the Company recognized $27,638 in interest income related to our direct financing leases, which is included in “Interest expense, net.” The following table illustrates the Company’s future minimum rental receipts for non-cancelable leases and subleases as of January 3, 2021:
| Sales-Type and Direct Financing Leases |  | Operating Leases
Fiscal Year | Subleases |  | Owned Properties |  | Subleases |  | Owned Properties
2021 (a) | $ | 31,128 |  |  | $ | 3,573 |  |  | $ | 110,920 |  |  | $ | 54,543 |
2022 | 31,953 |  |  | 2,037 |  |  | 111,605 |  |  | 56,017 |
2023 | 32,994 |  |  | 2,081 |  |  | 112,498 |  |  | 56,220 |
2024 | 34,965 |  |  | 2,089 |  |  | 112,541 |  |  | 57,311 |
2025 | 33,844 |  |  | 2,196 |  |  | 111,953 |  |  | 57,904 |
Thereafter | 440,802 |  |  | 21,231 |  |  | 1,115,693 |  |  | 743,814 |
Total future minimum receipts | 605,686 |  |  | 33,207 |  |  | $ | 1,675,210 |  |  | $ | 1,025,809 |
Unearned interest income | (348,692) |  |  | (16,015) |  |  |  |  |
Net investment in sales-type and direct financing leases (b) | $ | 256,994 |  |  | $ | 17,192 |  |  |  |  |
_______________ (a)In addition to the 2021 future minimum rental receipts, the Company expects to collect $5,226 primarily during 2021 related to the offer to defer base rent payments in response to the COVID-19 pandemic. The related receivable is included in “Accounts and notes receivable, net.” See Note 7 for further information. (b)The present value of minimum direct financing rental receipts of $5,965 and $268,221 are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. The present value of minimum direct financing rental receipts includes a net investment in unguaranteed residual assets of $215. Properties owned by the Company and leased to franchisees and other third parties under operating leases include:
|  | Year End
|  | January 3, 2021 |  | December 29, 2019
Land |  | $ | 279,956 |  |  | $ | 281,792 |
Buildings and improvements |  | 309,605 |  |  | 311,047 |
Restaurant equipment |  | 1,701 |  |  | 1,727 |
|  | 591,262 |  |  | 594,566 |
Accumulated depreciation and amortization |  | (170,722) |  |  | (157,130) |
|  | $ | 420,540 |  |  | $ | 437,436 |

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