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Revenues | 3 Months Ended
--- | ---
Mar. 29, 2023
Revenue from Contract with Customer [Abstract] |
Revenues | Revenues The following table disaggregates our revenue by sales channel and type of good or service:
|  |  | Quarter Ended
|  |  |  |  | March 29, 2023 |  | March 30, 2022
|  |  |  |  | (In thousands)
Company restaurant sales |  |  |  |  | $ | 53,452 |  |  | $ | 43,976 |
Franchise and license revenue: |  |  |  |  |  |  |
Royalties |  |  |  |  | 30,027 |  |  | 26,525 |
Advertising revenue |  |  |  |  | 19,668 |  |  | 18,206 |
Initial and other fees |  |  |  |  | 4,990 |  |  | 4,507 |
Occupancy revenue |  |  |  |  | 9,334 |  |  | 9,893 |
Franchise and license revenue |  |  |  |  | 64,019 |  |  | 59,131 |
Total operating revenue |  |  |  |  | $ | 117,471 |  |  | $ | 103,107 |
Franchise occupancy revenue consisted of the following:
|  |  | Quarter Ended
|  |  |  |  | March 29, 2023 |  | March 30, 2022
|  |  |  |  | (In thousands)
Operating lease revenue |  |  |  |  | $ | 6,871 |  |  | $ | 7,418 |
Variable lease revenue |  |  |  |  | 2,463 |  |  | 2,475 |
Total occupancy revenue |  |  |  |  | $ | 9,334 |  |  | $ | 9,893 |
Balances related to contracts with customers consists of receivables, contract assets, deferred franchise revenue and deferred gift card revenue. See Note 3 for details on our receivables. 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 will begin amortizing into revenue when the related restaurants are opened. Deferred franchise revenue represents our remaining performance obligations to our franchisees, excluding amounts of variable consideration related to sales-based royalties and advertising. The components of the change in deferred franchise revenue are as follows:
| (In thousands)
Balance, December 28, 2022 | $ | 20,751 |
Fees received from franchisees | 455 |
Revenue recognized (1) | (745) |
Balance, March 29, 2023 | 20,461 |
Less current portion included in other current liabilities | 2,210 |
Deferred franchise revenue included in other noncurrent liabilities | $ | 18,251 |
(1) Of this amount $0.7 million was included in the deferred franchise revenue balance as of December 28, 2022. We record contract assets related to incentives and subsidies provided to franchisees related to new unit openings and/or equipment upgrades. These amounts will be recognized as a component of franchise and license revenue over the remaining term of the related franchise agreements. The components of the change in contract assets are as follows:
| (In thousands)
Balance, December 28, 2022 | $ | 5,361 |
Franchisee deferred costs | 942 |
Contract asset amortization | (291) |
Balance, March 29, 2023 | 6,012 |
Less current portion included in other current assets | 839 |
Contract assets included in other noncurrent assets | $ | 5,173 |
During 2021, 2022 and 2023, the Company purchased equipment related to a kitchen modernization program for franchise restaurants. We bill our franchisees and recognize revenue when the related equipment is installed, less amounts contributed from the Company, which have been deferred as contract assets in the table above. We recognized $2.2 million of revenue related to the sale of kitchen equipment to franchisees during the quarters ended March 29, 2023 and March 30, 2022, respectively. As of March 29, 2023, we had $1.3 million in inventory and $4.7 million in receivables related to the kitchen equipment rollout. As of December 28, 2022, we had $3.6 million in inventory and $6.6 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 March 29, 2023 and December 28, 2022 was $6.3 million and $7.7 million, respectively. During the quarter ended March 29, 2023, we recognized revenue of $0.2 million from gift card redemptions at company restaurants.

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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI https://asc.fasb.org/topic&trid=49130388 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 10 -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130551-203045 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 13 -Subparagraph (b)(2) -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130556-203045 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 9 -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130550-203045 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (e) -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (d) -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 15 -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130558-203045 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (c) -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045 + Details
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