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Leases | 6 Months Ended
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Jun. 26, 2019
Leases [Abstract] |
Lessee and Lessor Disclosure [Text Block] | Leases Lessee We lease certain real estate and equipment for our restaurants and support facilities. At contract inception, we determine whether a contract is, or contains, a lease by determining whether it conveys the right to control the use of the identified asset for a period of time. We recognize a lease liability and an ROU asset at the lease commencement date. For operating leases, the lease liability is initially and subsequently measured at the present value of the unpaid lease payments at the lease commencement date. For finance leases, the lease liability is initially measured in the same manner and date as for operating leases, and is subsequently measured at amortized cost using the effective interest method. Operating lease ROU assets are initially and subsequently measured throughout the lease term at the carrying amount of the lease liability adjusted for initial direct costs, prepayments, accrued payments and lease incentives, if any. Lease cost is recognized on a straight-line basis over the lease term. Finance lease ROU assets are initially measured at cost and subsequently amortized on a straight-line basis over the lesser of the useful life or the lease term. ROU assets are assessed for impairment using the long-lived assets impairment guidance. The new lease guidance provides practical expedients and accounting elections for our ongoing accounting after adoption. We elected the practical expedient to not separate nonlease components (such as common area maintenance) from lease components in regard to all leases and the portfolio approach in applying the discount rate to our leases. Key estimates and judgments include how we determine (1) lease payments, (2) lease term and (3) the discount rate used to discount the unpaid lease payments to present value. We have certain lease agreements structured with both a fixed base rent and a contingent rent based on a percentage of sales over contractual levels, others with only contingent rent based on a percentage of sales and some with a fixed base rent adjusted periodically for inflation or changes in fair market value of the underlying real estate. Contingent rent is recognized as sales occur. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. The exercise of lease renewal options is at our sole discretion, except in certain sublease situations in which we have determined that it is reasonably certain that one or more options will be exercised, including where the exercise of a sublease option compels us to exercise the renewal option of the underlying master lease. Renewal option periods are included in the measurement of lease ROU asset and lease liability where the exercise is reasonably certain to occur. Initial terms of real estate leases generally range from 10 to 20 years, exclusive of options to renew, which are typically for five year periods. Leases of equipment consist primarily of restaurant equipment, computer equipment and vehicles. Initial terms of equipment leases generally range from three to five years. The discount rate used to determine the present value of the lease payments is our estimated collateralized incremental borrowing rate, based on the yield curve for the respective lease terms, as we generally cannot determine the interest rate implicit in the lease. Lessor We lease or sublease certain restaurant properties to our franchisees and occasionally to third parties. The lease descriptions, terms, variable lease payments and renewal options are the same as the lessee leases described above. Similar to our lessee accounting, we elected the lessor practical expedient to not separate nonlease components from lease components in regard to all leases. The components of lease costs were as follows:
|  |  | Quarter Ended |  | Two Quarters Ended
| Classification |  | June 26, 2019 |  | June 26, 2019
|  |  | (In thousands)
Lease costs |  |  |  |  |
Finance lease costs: |  |  |  |  |
Amortization of right-of-use assets | Depreciation and amortization |  | $ | 885 |  |  | $ | 1,881 |
Interest on lease liabilities | Interest expense, net |  | 1,318 |  |  | 2,834 |
Operating lease costs: |  |  |  |  |
Operating lease costs - company | Occupancy |  | 2,476 |  |  | 4,979 |
Operating lease costs - franchise | Costs of franchise and license revenue |  | 3,611 |  |  | 7,076 |
Operating lease costs - general and administrative | General and administrative expenses |  | 27 |  |  | 53 |
Variable lease costs: |  |  |  |  |
Variable lease costs - company | Occupancy |  | 1,812 |  |  | 3,668 |
Variable lease costs - franchise | Costs of franchise and license revenue |  | 1,512 |  |  | 2,938 |
Variable lease costs - general and administrative | General and administrative expenses |  | 5 |  |  | 10 |
Variable lease costs - closed stores | Restructuring charges and exit costs |  | — |  |  | 55 |
Sublease income | Franchise and license revenue |  | (6,249 | ) |  | (12,008 | )
Total lease costs |  |  | $ | 5,397 |  |  | $ | 11,486 |
Lease terms and discount rates were as follows:
| June 26, 2019
Weighted-average remaining lease term (in years) |
Finance leases | 9.0 |
Operating leases | 9.5 |
Weighted-average discount rate |
Finance leases | 24.3 | %
Operating leases | 6.4 | %
The components of lease income were as follows:
|  |  | Quarter Ended |  | Two Quarters Ended
| Classification |  | June 26, 2019 |  | June 26, 2019
|  |  | (In thousands)
Lease income |  |  |  |  |
Operating lease income - franchise | Franchise and license revenue |  | $ | 5,846 |  |  | $ | 11,271 |
Operating lease income - closed stores | Restructuring and exist costs |  | 66 |  |  | 132 |
Variable lease income - franchise | Franchise and license revenue |  | 2,280 |  |  | 4,400 |
Variable lease income - closed stores | Restructuring charges and exit costs |  | 12 |  |  | 24 |
Total lease income |  |  | $ | 8,204 |  |  | $ | 15,827 |
Cash and supplemental noncash amounts were as follows:
| Quarter Ended |  | Two Quarters Ended
| June 26, 2019 |  | June 26, 2019
| (In thousands)
Cash paid for amounts included in the measurement of lease liabilities: |  |  |
Operating cash flows from finance leases | $ | 1,318 |  |  | $ | 2,834 |
Operating cash flows from operating leases | 6,441 |  |  | 12,752 |
Financing cash flows from finance leases | 752 |  |  | 1,547 |
Right-of-use assets obtained in exchange for new finance lease liabilities | 305 |  |  | 305 |
Right-of-use assets obtained in exchange for new operating lease liabilities | 22,481 |  |  | 27,531 |
Maturities of lease liabilities and receipts in accordance with Topic 842 as of June 26, 2019 were as follows:
| Lease Liabilities |  | Lease Receipts
| Finance |  | Operating |  | Operating
| (In thousands)
Remainder of 2019 | $ | 3,554 |  |  | $ | 12,440 |  |  | $ | 13,070 |
2020 | 6,625 |  |  | 22,390 |  |  | 24,202 |
2021 | 6,101 |  |  | 19,576 |  |  | 22,100 |
2022 | 5,836 |  |  | 17,309 |  |  | 19,961 |
2023 | 5,149 |  |  | 14,536 |  |  | 17,012 |
Thereafter | 29,974 |  |  | 82,149 |  |  | 105,310 |
Total undiscounted cash flows | 57,239 |  |  | 168,400 |  |  | $ | 201,655 |
Less: interest | 34,118 |  |  | 44,033 |  |  |
Present value of lease liabilities | 23,121 |  |  | 124,367 |  |  |
Less: current lease liabilities | 2,651 |  |  | 16,999 |  |  |
Long-term lease liabilities | $ | 20,470 |  |  | $ | 107,368 |  |  |
Maturities of lease liabilities in accordance with Topic 840 as of December 26, 2018 were as follows:
| Commitments |  | Lease Receipts
| Capital |  | Operating |  | Operating
| (In thousands)
2019 | $ | 9,271 |  |  | $ | 23,504 |  |  | $ | 21,001 |
2020 | 8,664 |  |  | 20,161 |  |  | 18,493 |
2021 | 8,010 |  |  | 17,316 |  |  | 16,573 |
2022 | 7,320 |  |  | 14,646 |  |  | 14,887 |
2023 | 6,451 |  |  | 11,881 |  |  | 12,932 |
Thereafter | 33,670 |  |  | 49,004 |  |  | 65,273 |
Total | 73,386 |  |  | $ | 136,512 |  |  | $ | 149,159 |
Less imputed interest | 42,795 |  |  |  |  |
Present value of capital lease obligations | $ | 30,591 |  |  |  |  |

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- Definition The entire disclosure for operating and financing leases of lessee and lessor’s operating leases. Includes, but is not limited to, description of operating and financing leases and maturity analysis of operating and finance lease liabilities. + References No definition available. + Details
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