XML 100 R20.htm IDEA: XBRL DOCUMENT
v3.19.3

Leases | 9 Months Ended
--- | ---
Sep. 29, 2019
Leases [Abstract] |
Leases | Leases The Company’s determination of whether an arrangement contains a lease is based on an evaluation of whether the arrangement conveys the right to use and control specific property or equipment. The Company leases restaurant and office facilities and certain equipment under operating leases primarily having initial terms expiring between one and 20 years. Restaurant facility leases generally have renewal periods totaling five to 20 years, exercisable at the option of the Company. Contingent rentals represent payment of variable lease obligations based on a percentage of gross revenues, as defined by the terms of the applicable lease agreement for certain restaurant facility leases. The Company also has certain leases, which reset periodically based on a specified index. Such leases are recorded using the index that existed at lease commencement. Subsequent changes in the index are recorded as variable rental payments. Variable rental payments are expensed as incurred in the Company’s Consolidated Statements of Operations and Comprehensive (Loss) Income and future variable rent obligations are not included within the lease liabilities on its Consolidated Balance Sheet. The depreciable life of lease assets and leasehold improvements are limited by the expected lease term. None of the Company’s leases contain any material residual value guarantees or material restrictive covenants. For restaurant facility leases executed subsequent to the adoption of ASU No. 2016-02, the Company accounts for fixed lease and non-lease components as a single lease component. Additionally, for certain equipment leases, the Company applies a portfolio approach to account for the lease assets and liabilities. Leases with an initial term of 12 months or less are not recorded on its Consolidated Balance Sheet, they are recognized on a straight-line basis over the lease term within Other restaurant operating expense in the Company’s Consolidated Statements of Operations and Comprehensive (Loss) Income. The following table includes a detail of lease assets and liabilities included on the Company’s Consolidated Balance Sheet as of the period indicated:
(dollars in thousands) | CONSOLIDATED BALANCE SHEET CLASSIFICATION |  | SEPTEMBER 29, 2019
Operating lease right-of-use assets | Operating lease right-of-use assets |  | $ | 1,262,449 |
Finance lease right-of-use assets (1) | Property, fixtures and equipment, net |  | 2,419 |
Total lease assets, net |  |  | $ | 1,264,868 |
Current operating lease liabilities (2) | Accrued and other current liabilities |  | $ | 170,849 |
Current finance lease liabilities | Current portion of long-term debt |  | 1,498 |
Non-current operating lease liabilities | Non-current operating lease liabilities |  | 1,273,904 |
Non-current finance lease liabilities | Long-term debt, net |  | 1,204 |
Total lease liabilities |  |  | $ | 1,447,455 |
________________
(1) | Net of accumulated amortization of $1.0 million.
(2) | Excludes accrued contingent percentage rent.
Following is a summary of expenses and income related to leases recognized in the Company’s Consolidated Statements of Operations and Comprehensive (Loss) Income for the periods indicated:
| CONSOLIDATED INCOME STATEMENT CLASSIFICATION |  | THIRTEEN WEEKS ENDED |  | THIRTY-NINE WEEKS ENDED
(dollars in thousands) |  | SEPTEMBER 29, 2019 |  | SEPTEMBER 29, 2019
Operating leases (1) | Other restaurant operating |  | $ | 45,948 |  |  | $ | 136,260 |
Variable lease cost | Other restaurant operating |  | 933 |  |  | 2,498 |
Finance leases |  |  |  |  |
Amortization of leased assets | Depreciation and amortization |  | 365 |  |  | 1,049 |
Interest on lease liabilities | Interest expense, net |  | 64 |  |  | 209 |
Sublease revenue (2) | Franchise and other revenues |  | (1,747 | ) |  | (4,853 | )
Lease costs, net (3) |  |  | $ | 45,563 |  |  | $ | 135,163 |
________________
(1) | Excludes rent expense for office facilities and Company-owned closed or subleased properties for the thirteen and thirty-nine weeks ended September 29, 2019 of $3.8 million and $11.0 million, respectively, which is included in General and administrative expense and certain supply chain related rent expense of $0.3 million and $0.9 million, respectively, which is included in Cost of sales.
(2) | Excludes rental income from Company-owned properties for the thirteen and thirty-nine weeks ended September 29, 2019 of $0.4 million and $1.8 million, respectively.
(3) | During the thirteen and thirty-nine weeks ended September 30, 2018, the Company recorded rent expense of $45.8 million and $138.8 million, respectively, including variable rent expense of $1.1 million and $3.4 million, respectively, and sublease revenue of $1.6 million and $4.7 million, respectively.
As of September 29, 2019, future minimum lease payments and sublease revenues under non-cancelable leases are as follows:
(dollars in thousands) | OPERATING LEASES |  | FINANCE LEASES |  | SUBLEASE REVENUES
Year 1 (1) | $ | 178,221 |  |  | $ | 1,558 |  |  | $ | (6,126 | )
Year 2 | 191,533 |  |  | 1,051 |  |  | (6,239 | )
Year 3 | 186,926 |  |  | 331 |  |  | (6,039 | )
Year 4 | 183,602 |  |  | 4 |  |  | (5,980 | )
Year 5 | 177,890 |  |  | 4 |  |  | (5,871 | )
Thereafter | 1,729,022 |  |  | 2 |  |  | (64,988 | )
Total minimum lease payments (receipts) (2) | $ | 2,647,194 |  |  | $ | 2,950 |  |  | $ | (95,243 | )
Less: Interest | (1,202,441 | ) |  | (248 | ) |  |
Present value of future lease payments | $ | 1,444,753 |  |  | $ | 2,702 |  |  |
____________________
(1) | Net of operating lease prepaid rent of $14.7 million.
(2) | Includes $1.0 billion related to options to extend operating lease terms and excludes $116.3 million of signed operating leases that have not yet commenced.
The following table is a summary of the weighted-average remaining lease terms and weighted-average discount rates of the Company’s leases as of the period indicated:
| SEPTEMBER 29, 2019
Weighted-average remaining lease term (1): |
Operating leases | 14.6 years |
Finance leases | 2.1 years |
Weighted-average discount rate (2): |
Operating leases | 8.56 | %
Finance leases | 9.07 | %
____________________
(1) | Includes lease renewal options that are reasonably certain of exercise.
(2) | Based on the Company’s incremental borrowing rate at lease commencement.
The following table is a summary of other impacts to the Company’s Consolidated Financial Statements related to its leases for the period indicated:
| THIRTY-NINE WEEKS ENDED
(dollars in thousands) | SEPTEMBER 29, 2019
Cash flows from operating activities: |
Cash paid for amounts included in the measurement of operating lease liabilities | $ | 143,630 |
Properties Leased to Third Parties - The Company leases certain owned land and buildings to third parties, generally related to closed or refranchised restaurants. The following table is a summary of assets leased to third parties as of the period indicated:
(dollars in thousands) | SEPTEMBER 29, 2019
Land | $ | 10,585 |
Buildings and building improvements | $ | 12,823 |
Less: accumulated depreciation | (6,239 | )
Buildings and building improvements, net | $ | 6,584 |
Leases | Leases The Company’s determination of whether an arrangement contains a lease is based on an evaluation of whether the arrangement conveys the right to use and control specific property or equipment. The Company leases restaurant and office facilities and certain equipment under operating leases primarily having initial terms expiring between one and 20 years. Restaurant facility leases generally have renewal periods totaling five to 20 years, exercisable at the option of the Company. Contingent rentals represent payment of variable lease obligations based on a percentage of gross revenues, as defined by the terms of the applicable lease agreement for certain restaurant facility leases. The Company also has certain leases, which reset periodically based on a specified index. Such leases are recorded using the index that existed at lease commencement. Subsequent changes in the index are recorded as variable rental payments. Variable rental payments are expensed as incurred in the Company’s Consolidated Statements of Operations and Comprehensive (Loss) Income and future variable rent obligations are not included within the lease liabilities on its Consolidated Balance Sheet. The depreciable life of lease assets and leasehold improvements are limited by the expected lease term. None of the Company’s leases contain any material residual value guarantees or material restrictive covenants. For restaurant facility leases executed subsequent to the adoption of ASU No. 2016-02, the Company accounts for fixed lease and non-lease components as a single lease component. Additionally, for certain equipment leases, the Company applies a portfolio approach to account for the lease assets and liabilities. Leases with an initial term of 12 months or less are not recorded on its Consolidated Balance Sheet, they are recognized on a straight-line basis over the lease term within Other restaurant operating expense in the Company’s Consolidated Statements of Operations and Comprehensive (Loss) Income. The following table includes a detail of lease assets and liabilities included on the Company’s Consolidated Balance Sheet as of the period indicated:
(dollars in thousands) | CONSOLIDATED BALANCE SHEET CLASSIFICATION |  | SEPTEMBER 29, 2019
Operating lease right-of-use assets | Operating lease right-of-use assets |  | $ | 1,262,449 |
Finance lease right-of-use assets (1) | Property, fixtures and equipment, net |  | 2,419 |
Total lease assets, net |  |  | $ | 1,264,868 |
Current operating lease liabilities (2) | Accrued and other current liabilities |  | $ | 170,849 |
Current finance lease liabilities | Current portion of long-term debt |  | 1,498 |
Non-current operating lease liabilities | Non-current operating lease liabilities |  | 1,273,904 |
Non-current finance lease liabilities | Long-term debt, net |  | 1,204 |
Total lease liabilities |  |  | $ | 1,447,455 |
________________
(1) | Net of accumulated amortization of $1.0 million.
(2) | Excludes accrued contingent percentage rent.
Following is a summary of expenses and income related to leases recognized in the Company’s Consolidated Statements of Operations and Comprehensive (Loss) Income for the periods indicated:
| CONSOLIDATED INCOME STATEMENT CLASSIFICATION |  | THIRTEEN WEEKS ENDED |  | THIRTY-NINE WEEKS ENDED
(dollars in thousands) |  | SEPTEMBER 29, 2019 |  | SEPTEMBER 29, 2019
Operating leases (1) | Other restaurant operating |  | $ | 45,948 |  |  | $ | 136,260 |
Variable lease cost | Other restaurant operating |  | 933 |  |  | 2,498 |
Finance leases |  |  |  |  |
Amortization of leased assets | Depreciation and amortization |  | 365 |  |  | 1,049 |
Interest on lease liabilities | Interest expense, net |  | 64 |  |  | 209 |
Sublease revenue (2) | Franchise and other revenues |  | (1,747 | ) |  | (4,853 | )
Lease costs, net (3) |  |  | $ | 45,563 |  |  | $ | 135,163 |
________________
(1) | Excludes rent expense for office facilities and Company-owned closed or subleased properties for the thirteen and thirty-nine weeks ended September 29, 2019 of $3.8 million and $11.0 million, respectively, which is included in General and administrative expense and certain supply chain related rent expense of $0.3 million and $0.9 million, respectively, which is included in Cost of sales.
(2) | Excludes rental income from Company-owned properties for the thirteen and thirty-nine weeks ended September 29, 2019 of $0.4 million and $1.8 million, respectively.
(3) | During the thirteen and thirty-nine weeks ended September 30, 2018, the Company recorded rent expense of $45.8 million and $138.8 million, respectively, including variable rent expense of $1.1 million and $3.4 million, respectively, and sublease revenue of $1.6 million and $4.7 million, respectively.
As of September 29, 2019, future minimum lease payments and sublease revenues under non-cancelable leases are as follows:
(dollars in thousands) | OPERATING LEASES |  | FINANCE LEASES |  | SUBLEASE REVENUES
Year 1 (1) | $ | 178,221 |  |  | $ | 1,558 |  |  | $ | (6,126 | )
Year 2 | 191,533 |  |  | 1,051 |  |  | (6,239 | )
Year 3 | 186,926 |  |  | 331 |  |  | (6,039 | )
Year 4 | 183,602 |  |  | 4 |  |  | (5,980 | )
Year 5 | 177,890 |  |  | 4 |  |  | (5,871 | )
Thereafter | 1,729,022 |  |  | 2 |  |  | (64,988 | )
Total minimum lease payments (receipts) (2) | $ | 2,647,194 |  |  | $ | 2,950 |  |  | $ | (95,243 | )
Less: Interest | (1,202,441 | ) |  | (248 | ) |  |
Present value of future lease payments | $ | 1,444,753 |  |  | $ | 2,702 |  |  |
____________________
(1) | Net of operating lease prepaid rent of $14.7 million.
(2) | Includes $1.0 billion related to options to extend operating lease terms and excludes $116.3 million of signed operating leases that have not yet commenced.
The following table is a summary of the weighted-average remaining lease terms and weighted-average discount rates of the Company’s leases as of the period indicated:
| SEPTEMBER 29, 2019
Weighted-average remaining lease term (1): |
Operating leases | 14.6 years |
Finance leases | 2.1 years |
Weighted-average discount rate (2): |
Operating leases | 8.56 | %
Finance leases | 9.07 | %
____________________
(1) | Includes lease renewal options that are reasonably certain of exercise.
(2) | Based on the Company’s incremental borrowing rate at lease commencement.
The following table is a summary of other impacts to the Company’s Consolidated Financial Statements related to its leases for the period indicated:
| THIRTY-NINE WEEKS ENDED
(dollars in thousands) | SEPTEMBER 29, 2019
Cash flows from operating activities: |
Cash paid for amounts included in the measurement of operating lease liabilities | $ | 143,630 |
Properties Leased to Third Parties - The Company leases certain owned land and buildings to third parties, generally related to closed or refranchised restaurants. The following table is a summary of assets leased to third parties as of the period indicated:
(dollars in thousands) | SEPTEMBER 29, 2019
Land | $ | 10,585 |
Buildings and building improvements | $ | 12,823 |
Less: accumulated depreciation | (6,239 | )
Buildings and building improvements, net | $ | 6,584 |

X
- References No definition available. + Details
Name: | us-gaap_LeasesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance 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
Name: | us-gaap_LesseeFinanceLeasesTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- 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
Name: | us-gaap_LesseeOperatingLeasesTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration