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Leases | 12 Months Ended
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Jan. 02, 2022
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 2, 2022, Wendy’s and its franchisees operated 6,949 Wendy’s restaurants. Of the 408 Company-operated Wendy’s restaurants, Wendy’s owned the land and building for 159 restaurants, owned the building and held long-term land leases for 141 restaurants and held leases covering the land and building for 108 restaurants. Wendy’s also owned 485 and leased 1,235 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 2021, 2020 and 2019 are as follows:
| Year Ended
| 2021 |  | 2020 |  | 2019
Finance lease cost: |  |  |  |  |
Amortization of finance lease assets | $ | 13,992 |  |  | $ | 13,395 |  |  | $ | 11,241 |
Interest on finance lease liabilities | 41,419 |  |  | 40,682 |  |  | 37,012 |
| 55,411 |  |  | 54,077 |  |  | 48,253 |
Operating lease cost | 89,283 |  |  | 91,475 |  |  | 90,537 |
Variable lease cost (a) | 63,853 |  |  | 59,076 |  |  | 58,978 |
Short-term lease cost | 5,102 |  |  | 4,641 |  |  | 4,717 |
Total operating lease cost (b) | 158,238 |  |  | 155,192 |  |  | 154,232 |
Total lease cost | $ | 213,649 |  |  | $ | 209,269 |  |  | $ | 202,485 |
_______________ (a)Includes expenses for executory costs of $39,646, $38,652, and $37,758 for 2021, 2020 and 2019, respectively, for which the Company is reimbursed by sublessees. (b)Includes $132,158, $125,553 and $123,899 for 2021, 2020 and 2019, respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees. Also includes $23,558, $26,866 and $27,419 for 2021, 2020 and 2019, respectively, recorded to “Cost of sales” for leases for Company-operated restaurants. The following table includes supplemental cash flow and non-cash information related to leases:
| Year Ended
| 2021 |  | 2020 |  | 2019
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |  |
Operating cash flows from finance leases | $ | 42,277 |  |  | $ | 39,349 |  |  | $ | 39,887 |
Operating cash flows from operating leases | 91,930 |  |  | 85,689 |  |  | 91,824 |
Financing cash flows from finance leases | 13,640 |  |  | 8,383 |  |  | 6,835 |
Right-of-use assets obtained in exchange for lease obligations: |  |  |  |  |
Finance lease liabilities | 82,032 |  |  | 34,918 |  |  | 50,061 |
Operating lease liabilities | 58,770 |  |  | 18,327 |  |  | 15,411 |
The following table includes supplemental information related to leases:
| Year End
| January 2, 2022 |  | January 3, 2021
Weighted-average remaining lease term (years): |  |  |
Finance leases | 15.8 |  | 16.2
Operating leases | 14.1 |  | 14.6
Weighted average discount rate: |  |  |
Finance leases | 8.91 | % |  | 9.54 | %
Operating leases | 4.94 | % |  | 5.06 | %
Supplemental balance sheet information: |  |  |
Finance lease assets, gross | $ | 307,965 |  |  | $ | 261,308 |
Accumulated amortization | (63,686) |  |  | (55,155) |
Finance lease assets | 244,279 |  |  | 206,153 |
Operating lease assets | 812,620 |  |  | 821,480 |
The following table illustrates the Company’s future minimum rental payments for non-cancelable leases as of January 2, 2022:
| Finance Leases |  | Operating Leases
Fiscal Year | Company-Operated |  | Franchise and Other |  | Company-Operated |  | Franchise and Other
2022 | $ | 6,361 |  |  | $ | 51,720 |  |  | $ | 20,521 |  |  | $ | 69,692 |
2023 | 6,317 |  |  | 52,957 |  |  | 20,989 |  |  | 69,158 |
2024 | 6,410 |  |  | 53,383 |  |  | 20,956 |  |  | 69,133 |
2025 | 6,610 |  |  | 53,876 |  |  | 20,745 |  |  | 68,910 |
2026 | 6,754 |  |  | 55,117 |  |  | 21,198 |  |  | 68,093 |
Thereafter | 84,693 |  |  | 624,335 |  |  | 192,250 |  |  | 630,404 |
Total minimum payments | $ | 117,145 |  |  | $ | 891,388 |  |  | $ | 296,659 |  |  | $ | 975,390 |
Less interest | (41,554) |  |  | (391,879) |  |  | (82,860) |  |  | (288,546) |
Present value of minimum lease payments (a) (b) | $ | 75,591 |  |  | $ | 499,509 |  |  | $ | 213,799 |  |  | $ | 686,844 |
_______________ (a)The present value of minimum finance lease payments of $15,513 and $559,587 are included in “Current portion of finance lease liabilities” and “Long-term finance lease liabilities,” respectively. (b)The present value of minimum operating lease payments of $47,315 and $853,328 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 2021, 2020 and 2019 are as follows:
| Year Ended
| 2021 |  | 2020 |  | 2019
Sales-type and direct-financing leases: |  |  |  |  |
Selling profit | $ | 4,244 |  |  | $ | 1,995 |  |  | $ | 2,285 |
Interest income (a) | 30,648 |  |  | 29,067 |  |  | 26,333 |
Operating lease income | 173,442 |  |  | 174,452 |  |  | 176,629 |
Variable lease income | 63,213 |  |  | 58,196 |  |  | 56,436 |
Franchise rental income (b) | $ | 236,655 |  |  | $ | 232,648 |  |  | $ | 233,065 |
_______________ (a)Included in “Interest expense, net.” (b)Includes sublease income of $174,327, $169,921 and $171,126 recognized during 2021, 2020 and 2019, respectively. Sublease income includes lessees’ variable payments to the Company for executory costs of $39,650, $38,636 and $37,739 for 2021, 2020 and 2019, respectively. The following table illustrates the Company’s future minimum rental receipts for non-cancelable leases and subleases as of January 2, 2022:
| Sales-Type and Direct Financing Leases |  | Operating Leases
Fiscal Year | Subleases |  | Owned Properties |  | Subleases |  | Owned Properties
2022 | $ | 33,883 |  |  | $ | 2,543 |  |  | $ | 110,714 |  |  | $ | 53,076 |
2023 | 34,933 |  |  | 2,589 |  |  | 111,330 |  |  | 53,384 |
2024 | 36,929 |  |  | 2,599 |  |  | 111,591 |  |  | 54,490 |
2025 | 35,803 |  |  | 2,717 |  |  | 111,102 |  |  | 55,086 |
2026 | 36,950 |  |  | 2,887 |  |  | 110,537 |  |  | 56,845 |
Thereafter | 438,518 |  |  | 31,876 |  |  | 1,020,240 |  |  | 647,591 |
Total future minimum receipts | 617,016 |  |  | 45,211 |  |  | $ | 1,575,514 |  |  | $ | 920,472 |
Unearned interest income | (331,403) |  |  | (24,851) |  |  |  |  |
Net investment in sales-type and direct financing leases (a) | $ | 285,613 |  |  | $ | 20,360 |  |  |  |  |
_______________ (a)The present value of minimum sales-type and direct financing rental receipts of $6,266 and $299,707 are included in “Accounts and notes receivable, net” and “Net investment in sales-type and direct financing leases,” respectively. The present value of minimum sales-type and direct financing rental receipts includes a net investment in unguaranteed residual assets of $549. Properties owned by the Company and leased to franchisees and other third parties under operating leases include:
| Year End
| January 2, 2022 |  | January 3, 2021
Land | $ | 258,513 |  |  | $ | 279,956 |
Buildings and improvements | 288,782 |  |  | 309,605 |
Restaurant equipment | 1,701 |  |  | 1,701 |
| 548,996 |  |  | 591,262 |
Accumulated depreciation and amortization | (173,243) |  |  | (170,722) |
| $ | 375,753 |  |  | $ | 420,540 |

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- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=77888251 + Details
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