XML 27 R16.htm IDEA: XBRL DOCUMENT v3.24.2
Revenues
 6 Months Ended
Jun. 26, 2024
Revenue from Contract with Customer [Abstract]  
Revenues Revenues
The following table disaggregates our revenue by sales channel and type of good or service:
 Quarter EndedTwo Quarters Ended
 June 26, 2024June 28, 2023June 26, 2024June 28, 2023
 (In thousands)
Company restaurant sales$54,348 $54,881 $106,690 $108,333 
Franchise and license revenue:
Royalties30,014 30,376 59,320 60,403 
Advertising revenue20,788 19,853 38,926 39,521 
Initial and other fees2,448 2,616 4,264 7,606 
Occupancy revenue 8,329 9,189 16,701 18,523 
Franchise and license revenue 
61,579 62,034 119,211 126,053 
Total operating revenue$115,927 $116,915 $225,901 $234,386 

Franchise occupancy revenue consisted of the following:
 Quarter EndedTwo Quarters Ended
 June 26, 2024June 28, 2023June 26, 2024June 28, 2023
 (In thousands)
Operating lease revenue$6,071 $6,683 $12,199 $13,554 
Variable lease revenue
2,258 2,506 4,502 4,969 
Total occupancy revenue
$8,329 $9,189 $16,701 $18,523 
Balances related to contracts with customers consist 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 27, 2023$19,150 
Fees received from franchisees459 
Revenue recognized (1)
(1,591)
Balance, June 26, 202418,018 
Less current portion included in other current liabilities2,098 
Deferred franchise revenue included in other noncurrent liabilities$15,920 
(1)    Of this amount $1.4 million was included in the deferred franchise revenue balance as of December 27, 2023.

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 27, 2023$6,608 
Franchisee deferred costs293 
Contract asset amortization(684)
Balance, June 26, 20246,217 
Less current portion included in other current assets982 
Contract assets included in other noncurrent assets$5,235 

The Company purchases equipment related to various programs for franchise restaurants, including kitchen and point-of-sale system equipment. 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 $0.2 million and $0.5 million of revenue, recorded as a component of initial and other fees, related to the sale of equipment to franchisees during the quarter and year-to-date period ended June 26, 2024, respectively. We recognized $0.5 million and $2.9 million of revenue, recorded as a component of initial and other fees, related to the sale of equipment to franchisees during the quarter and year-to-date period ended June 28, 2023, respectively. As of June 26, 2024, we had $0.3 million in inventory and $0.3 million in receivables related to the purchased equipment. As of December 27, 2023, we had $0.6 million in inventory and $0.3 million in receivables related to the purchased equipment.

As of June 26, 2024, deferred franchise revenue, net of contract asset amortization, expected to be recognized in the future is as follows:
(In thousands)
Remainder of 2024$558 
20251,117 
20261,117 
20271,086 
2028960 
Thereafter6,963 
Deferred franchise revenue, net$11,801 
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 June 26, 2024 and December 27, 2023 was $6.4 million and $7.8 million, respectively. During the quarter ended June 26, 2024, we recognized revenue of $0.3 million from gift card redemptions at company restaurants.