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Revenues
 9 Months Ended
Sep. 28, 2022
Revenue from Contract with Customer [Abstract]  
Revenues Revenues
Our revenues are derived primarily from two sales channels: company restaurants and franchised and licensed restaurants. The following table disaggregates our revenue by sales channel and type of good or service:

 Quarter EndedThree Quarters Ended
 September 28, 2022September 29, 2021September 28, 2022September 29, 2021
 (In thousands)
Company restaurant sales$52,211 $46,470 $145,354 $127,611 
Franchise and license revenue:
Royalties28,992 27,336 84,276 75,297 
Advertising revenue18,950 18,215 56,642 50,926 
Initial and other fees7,749 1,442 20,035 5,346 
Occupancy revenue 9,554 10,331 29,273 31,355 
Franchise and license revenue 
65,245 57,324 190,226 162,924 
Total operating revenue$117,456 $103,794 $335,580 $290,535 

Franchise occupancy revenue consisted of the following:

 Quarter EndedThree Quarters Ended
 September 28, 2022September 29, 2021September 28, 2022September 29, 2021
 (In thousands)
Operating lease revenue$7,074 $7,594 $21,745 $23,175 
Variable lease revenue
2,480 2,737 7,528 8,180 
Total occupancy revenue
$9,554 $10,331 $29,273 $31,355 

Balances related to contracts with customers consist of receivables, deferred franchise revenue and deferred gift card revenue. See Note 4 for details on our receivables.
The components of the change in deferred franchise revenue are as follows:

 (In thousands)
Balance, December 29, 2021$19,896 
Fees received from franchisees2,853 
Acquired deferred franchise revenue992 
Franchisee deferred costs (1)
(3,845)
Revenue recognized, net (2)
(2,184)
Balance, September 28, 202217,712 
Less current portion included in other current liabilities1,881 
Deferred franchise revenue included in other noncurrent liabilities$15,831 

(1)    Deferred costs are contract assets consisting of incentives given to franchisees related to the rollout of kitchen equipment to all franchise locations.
(2)    Of this amount $1.9 million was included in the deferred franchise revenue balance as of December 29, 2021.

Deferred franchise revenue consists primarily of the unamortized portion of initial franchise fees that are currently being amortized into revenue and amounts related to development agreements and unopened restaurants that we will begin amortizing into revenue when the related restaurants are opened net of certain deferred costs. Deferred franchise revenue represents our remaining performance obligations to our franchisees, excluding amounts of variable consideration related to sales-based royalties and advertising.
The Company has purchased equipment related to the rollout of kitchen equipment for franchise restaurants which is billed to the franchisee and recognized as revenue as the equipment is installed, less a total of $5.4 million in commitments from the Company, $3.9 million of which has been deferred as contract assets as of September 28, 2022. Amounts committed from the Company are contract assets that have been netted against deferred revenue and will be recognized as a component of franchise and license revenue over the remaining term of the related franchise agreements. For the quarter and three quarters ended September 28, 2022, we have recognized $5.6 million and $13.5 million of revenue, respectively. As of September 28, 2022, we had approximately $7.6 million in inventory and $8.6 million in receivables related to the kitchen equipment rollout. As of December 29, 2021, we had approximately $3.7 million in inventory and $0.4 million in receivables related to the kitchen equipment rollout.

Deferred gift card liabilities consist of the unredeemed portion of gift cards sold in company restaurants and at third party locations. The balance of deferred gift card liabilities represents our remaining performance obligations to our customers. The balance of deferred gift card liabilities as of September 28, 2022 and December 29, 2021 was $5.5 million and $7.2 million, respectively. During the year-to-date period ended September 28, 2022, we recognized revenue of $0.4 million from gift card redemptions at company restaurants.