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Leases and Rental Expense

12 Months Ended

Sep. 30, 2023

Leases and Rental Expense [Abstract]

5. Leases and Rental Expense

The Company conducts part of its retail operations from leased facilities. The initial term of the leases is generally 20 years. The majority of the leases include one or more renewal options and provide that the Company pay property taxes, utilities, repairs and certain other costs incidental to occupation of the premises. Several leases contain clauses calling for percentage rentals based upon gross sales of the supermarket occupying the leased space. Step rent provisions, escalation clauses, capital improvements and other lease concessions are taken into account in computing lease payments. Operating lease expense is recognized on a straight-line basis over the minimum lease term.

Operating Leases - Rent expense for all operating leases of $10.6 million, $10.9 million and $11.1 million for fiscal years 2023, 2022 and 2021, respectively, is included in operating and administrative expenses. This amount included short-term (less than one year) leases, common area expenses, and variable lease costs, all of which are insignificant. Cash paid for lease liabilities in operating activities approximates operating lease cost. Sub-lease rental income of $0.3 million for each of fiscal years 2023, 2022 and 2021, is included as a reduction of rental expense.

Finance Leases – Finance lease cost of $270.7 thousand included amortization expense of $231.3 thousand, included in operating and administrative expense, and $87.2 thousand of interest expense for fiscal year 2023. No finance lease cost was incurred during fiscal years 2022 and 2021.

Future maturities of lease liabilities as of September 30, 2023 were as follows:



Fiscal Year		Operating Leases		Finance Leases
2024	$	8,752,051	$	840,000
2025		7,955,926		840,000
2026		6,673,979		840,000
2027		5,823,729		840,000
2028		4,281,763		840,000
Thereafter		19,744,205		101,500
Total lease payments		53,231,653		4,301,500
Less amount representing interest		11,620,013		606,003
Present value of lease liabilities	$	41,611,640	$	3,695,497

On the Consolidated Balance Sheets, lease extensions exercised during fiscal year 2023 increased the line items “Operating lease right of use assets” and “Noncurrent operating lease liabilities” by $7.9 million each during the year ended September 30, 2023. The weighted average remaining lease term for the Company’s operating leases is 12.2 years. New financing leases entered into during fiscal year 2023 increased the line item “Property and equipment” by $3.9 million and “Current portion of financing lease liabilities” by $0.6 million and “Noncurrent financing lease liabilities” by $3.1 million. The weighted average discount rate used to determine operating lease liability balances as of September 30, 2023 was 5.5%, and was 6.0% for finance lease liability balances.