Operating Lease Agreements

12 Months Ended

Dec. 31, 2015

Operating lease agreements

At December 31, 2015, the Company was the lessee at 2,707 locations through ground leases (the Company leases the land and the Company or franchisee owns the building) and through improved leases (the Company leases land and buildings). Lease terms for most restaurants vary between 10 and 20 years and, in many cases, provide for rent escalations and renewal options, with certain leases providing purchase options. Escalations terms vary by reporting unit, with examples including fixed-rent escalations, escalations based on an inflation index, and fair value adjustments. According to rental terms, the Company pays monthly rent based on the greater of a fixed rent or a certain percentage of the Company’s gross sales. For most locations, the Company is obligated for the related occupancy costs including property taxes, insurance and maintenance. However, for franchised sites, the Company requires the franchisees to pay these costs. In addition, the Company is the lessee under non-cancelable leases covering certain offices and warehouses.

In March 2010, the Company entered into an aircraft operating lease agreement for a term of 8 years, which provides for quarterly payments of $690. The agreement includes a purchase option at the end of the lease term at fair market value and also an early purchase option at a fixed amount of $26,685 at maturity of the 24th quarterly payment. The Company was required to make a cash deposit of $5,325 as collateral for the obligations assumed under this agreement.

13. Operating lease agreements (continued)

At December 31, 2015, future minimum payments required under existing operating leases with initial terms of one year or more are:



	Restaurant		Other		Total
2016	$	116,233	$	6,140	$	122,373
2017	106,277		5,057		111,334
2018	95,030		2,321		97,351
2019	82,770		1,563		84,333
2020	73,057		1,418		74,475
Thereafter	349,179		2,712		351,891
Total minimum payment	$	822,546	$	19,211	$	841,757

The following table provides detail of rent expense for fiscal years 2015, 2014 and 2013:



	2015		2014		2013
Company-operated restaurants (i)	$	135,232	$	151,724	$	153,538
Franchised restaurants (ii)	36,381		48,814		48,911
Total rent expense	$	171,613	$	200,538	$	202,449


(i)	Included within “Occupancy and other operating expenses” in the consolidated statements of income.


(ii)	Included within “Franchised restaurants – occupancy expenses” in the consolidated statements of income.

The following table provides a breakdown detail of rent expense between minimum and contingent rentals for fiscal years 2015, 2014 and 2013:



	2015		2014		2013
Minimum rentals	$	122,110	$	131,463	$	126,329
Contingent rentals based on sales	49,503		69,075		76,120
Total rent expense	$	171,613	$	200,538	$	202,449