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Revenues
 3 Months Ended
Mar. 26, 2025
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 26, 2025March 27, 2024
 (In thousands)
Company restaurant sales$53,900 $52,342 
Franchise and license revenue:
Royalties27,837 29,306 
Advertising revenue19,073 18,138 
Initial and other fees2,874 1,816 
Occupancy revenue 7,953 8,372 
Franchise and license revenue 
57,737 57,632 
Total operating revenue$111,637 $109,974 

Franchise occupancy revenue consisted of the following:
 Quarter Ended
 March 26, 2025March 27, 2024
 (In thousands)
Operating lease revenue$5,986 $6,128 
Variable lease revenue
1,967 2,244 
Total occupancy revenue
$7,953 $8,372 

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 25, 2024$16,968 
Fees received from franchisees337 
Revenue recognized (1)
(866)
Balance, March 26, 202516,439 
Less current portion included in other current liabilities2,001 
Deferred franchise revenue included in other noncurrent liabilities$14,438 
(1)    Of this amount $0.8 million was included in the deferred franchise revenue balance as of December 25, 2024.

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 25, 2024$6,706 
Franchisee deferred costs3,285 
Contract asset amortization(322)
Balance, March 26, 20259,669 
Less current portion included in other current assets1,316 
Contract assets included in other noncurrent assets$8,353 

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 $0.5 million of revenue, recorded as a component of initial and other fees, related to the sale of equipment to franchisees during the quarter ended March 26, 2025. We recognized $0.3 million of revenue, recorded as a component of initial and other fees, related to the sale of equipment to franchisees during the quarter ended March 27, 2024. As of March 26, 2025, we had $0.2 million in inventory and $0.6 million in receivables related to the purchased equipment. As of December 25, 2024, we had $0.2 million in inventory and $0.4 million in receivables related to the purchased equipment.

As of March 26, 2025, deferred franchise revenue, net of contract asset amortization, expected to be recognized in the future is as follows:
(In thousands)
Remainder of 2025$465 
2026875 
2027851 
2028731 
2029631 
Thereafter3,217 
Deferred franchise revenue, net$6,770 
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 26, 2025 and December 25, 2024 was $6.9 million and $8.4 million, respectively. During the quarter ended March 26, 2025, we recognized revenue of $0.2 million from gift card redemptions at company restaurants.