v3.25.0.1
Leases
 12 Months Ended
Dec. 29, 2024
Leases [Abstract]  
Leases Leases
The Company has various lease agreements related to real estate, vehicles, and equipment. Its operating leases include real estate (buildings and ground), vehicles, and equipment. Operating lease right of use assets and operating lease liabilities are recognized based on the present value of the future lease payments over the term. The operating lease right of use asset also includes accrued lease expense resulting from the straight-line accounting under prior accounting methods, which is now being amortized over the remaining life of the lease.
The Company is the lessee on a number of ground leases and multiple building leases, which were classified as operating leases prior to the adoption of ASC 842. As the Company elected the package of practical expedients upon adoption of ASC 842, the Company was not required to reassess the classification of these existing leases and as such, these leases continue to be accounted for as operating leases. In the event the Company modifies the existing leases or enters into new ground or building leases in the future, such leases may be classified as finance leases.
The Company’s finance leases relate primarily to vehicles and equipment. The lease payments are largely fixed in nature. The Company is generally obligated for the cost of property taxes, insurance, and common area maintenance relating to its leases, which are variable in nature. The Company determines the variable payments based on invoiced amounts from lessors. The Company has elected to not apply the recognition requirements to leases of 12 months or less. These leases will be expensed on a straight-line basis, and no operating lease liability will be recorded.
The Company included the following amounts related to operating and finance lease assets and liabilities within the Consolidated Balance Sheets:
As of
December 29, 2024December 31, 2023
Assets
Classification
Operating lease (1)
Operating lease right of use asset, net
$409,869 $456,964 
Finance lease
Property and equipment, net
72,221 41,411 
Total leased assets
$482,090 $498,375 
Liabilities
Current
Operating lease (2)
Current operating lease liabilities
$46,620 $50,365 
Finance lease
Current portion of long-term debt
16,356 8,631 
Noncurrent
Operating lease (3)
Noncurrent operating lease liabilities
405,366 454,583 
Finance lease
Long-term debt, less current portion
63,369 38,486 
Total leased liabilities
$531,711 $552,065 
(1)Operating lease right of use asset, net was impacted by a reduction of $62.6 million in the fiscal year ended December 29, 2024 related to the divestiture of Insomnia Cookies.
(2)Current operating lease liabilities were impacted by a reduction of $8.6 million in the fiscal year ended December 29, 2024 related to the divestiture of Insomnia Cookies.
(3)Noncurrent operating lease liabilities were impacted by a reduction of $58.7 million in the fiscal year ended December 29, 2024 related to the divestiture of Insomnia Cookies.
The Company has long-term contractual obligations primarily in the form of lease obligations related to Company-operated restaurants and franchised restaurants. Interest expense associated with the finance lease obligations is computed using the IBR at the time the lease is entered into and is based on the amount of the outstanding lease obligation.
The weighted-average remaining lease term and weighted-average discount rate for operating and finance leases were as follows:
As of
December 29, 2024December 31, 2023
Weighted average remaining lease term:
Operating lease
10.6 years10.8 years
Finance lease
5.9 years7.7 years
Weighted average discount rate:
Operating lease
7.04 %7.03 %
Finance lease
6.58 %7.29 %
Lease costs were as follows:
Fiscal Years Ended
December 29, 2024December 31, 2023January 1, 2023
Lease cost
Classification
Operating lease cost
Selling, general and administrative expense$3,445 $3,541 $3,390 
Operating lease cost
Operating expenses92,281 89,539 85,173 
Short-term lease cost
Operating expenses5,210 5,064 5,234 
Variable lease costs
Operating expenses27,941 31,726 23,996 
Sublease income
Royalties and other revenues(259)(140)(210)
Finance lease cost:
Amortization of right of use assets
Depreciation and amortization expense$13,313 $7,639 $5,027 
Interest on lease liabilities
Interest expense, net3,849 2,709 1,958 
Supplemental disclosures of cash flow information related to leases were as follows:
Fiscal Years Ended
December 29, 2024December 31, 2023January 1, 2023
Other information
Cash paid for leases:
Operating cash flows for operating leases (1)
$112,250 $117,977 $104,506 
Operating cash flows for finance leases3,846 2,649 2,116 
Financing cash flows for finance leases12,528 8,442 4,681 
Right of use assets obtained in exchange for new lease liabilities:
Operating leases$60,183 $86,549 $50,368 
Finance leases43,832 22,785 8,158 
(1)Operating cash flows for operating leases include variable rent payments which are not included in the measurement of lease liabilities. For the fiscal years ending December 29, 2024, December 31, 2023, and January 1, 2023, variable rent payments were $27.9 million, $31.7 million, and $24.0 million, respectively.
A majority of the leases include options to extend the lease. If the Company is reasonably certain to exercise an option to extend a lease, the extension period is included as part of the right of use asset and the lease liability. The Company’s leases do not contain restrictions or covenants that restrict the Company from incurring other financial obligations. The Company also does not provide any residual value guarantees for the leases or have any significant leases that have yet to be commenced.
At the inception of the contract, management determines if the contract is or contains a lease. A contract is or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The IBR reflects a fully secured rate based on the credit rating taking into consideration the repayment timing of the lease and any impacts due to the economic environment in which the lease operates. The estimate of the IBR reflects considerations such as market rates for the outstanding debt, interpolations of rates for leases with terms that differ from the outstanding debt, and market rates for debt of companies with similar credit ratings.
Future lease commitments to be paid by the Company as of December 29, 2024 were as follows:
Fiscal yearOperating LeasesFinance Leases
2025$76,193 $20,982 
202679,596 21,809 
202765,540 17,542 
202855,723 12,931 
202953,598 5,743 
Thereafter333,602 18,007 
Total lease payments664,252 97,014 
Less: Interest(212,266)(17,289)
Present value of lease liabilities$451,986 $79,725 
In the fiscal year ended December 29, 2024, the Company completed sale-leaseback transactions whereby it disposed of the land at two real estate properties for proceeds of $6.3 million. The Company subsequently leased back the properties, which are accounted for as operating leases. The Company recognized cumulative gains on sale of $1.6 million, which are included in Other (income)/expenses, net on the Consolidated Statements of Operations.
In the fiscal year ended December 31, 2023, the Company completed a sale-leaseback transaction whereby it disposed of the land at one real estate property for proceeds of $10.0 million. The Company subsequently leased back the property, which is accounted for as an operating lease. The Company recognized a gain on sale of $9.6 million, which is included in Other (income)/expenses, net on the Consolidated Statements of Operations.
In fiscal year ended January 1, 2023, the Company completed sale-leaseback transactions whereby it disposed of the land at three real estate properties for proceeds of $8.4 million. The Company subsequently leased back the properties, which are accounted for as operating leases. The Company recognized cumulative gains on sale of $6.5 million, which are included in Other (income)/expenses, net on the Consolidated Statements of Operations.
Leases Leases
The Company has various lease agreements related to real estate, vehicles, and equipment. Its operating leases include real estate (buildings and ground), vehicles, and equipment. Operating lease right of use assets and operating lease liabilities are recognized based on the present value of the future lease payments over the term. The operating lease right of use asset also includes accrued lease expense resulting from the straight-line accounting under prior accounting methods, which is now being amortized over the remaining life of the lease.
The Company is the lessee on a number of ground leases and multiple building leases, which were classified as operating leases prior to the adoption of ASC 842. As the Company elected the package of practical expedients upon adoption of ASC 842, the Company was not required to reassess the classification of these existing leases and as such, these leases continue to be accounted for as operating leases. In the event the Company modifies the existing leases or enters into new ground or building leases in the future, such leases may be classified as finance leases.
The Company’s finance leases relate primarily to vehicles and equipment. The lease payments are largely fixed in nature. The Company is generally obligated for the cost of property taxes, insurance, and common area maintenance relating to its leases, which are variable in nature. The Company determines the variable payments based on invoiced amounts from lessors. The Company has elected to not apply the recognition requirements to leases of 12 months or less. These leases will be expensed on a straight-line basis, and no operating lease liability will be recorded.
The Company included the following amounts related to operating and finance lease assets and liabilities within the Consolidated Balance Sheets:
As of
December 29, 2024December 31, 2023
Assets
Classification
Operating lease (1)
Operating lease right of use asset, net
$409,869 $456,964 
Finance lease
Property and equipment, net
72,221 41,411 
Total leased assets
$482,090 $498,375 
Liabilities
Current
Operating lease (2)
Current operating lease liabilities
$46,620 $50,365 
Finance lease
Current portion of long-term debt
16,356 8,631 
Noncurrent
Operating lease (3)
Noncurrent operating lease liabilities
405,366 454,583 
Finance lease
Long-term debt, less current portion
63,369 38,486 
Total leased liabilities
$531,711 $552,065 
(1)Operating lease right of use asset, net was impacted by a reduction of $62.6 million in the fiscal year ended December 29, 2024 related to the divestiture of Insomnia Cookies.
(2)Current operating lease liabilities were impacted by a reduction of $8.6 million in the fiscal year ended December 29, 2024 related to the divestiture of Insomnia Cookies.
(3)Noncurrent operating lease liabilities were impacted by a reduction of $58.7 million in the fiscal year ended December 29, 2024 related to the divestiture of Insomnia Cookies.
The Company has long-term contractual obligations primarily in the form of lease obligations related to Company-operated restaurants and franchised restaurants. Interest expense associated with the finance lease obligations is computed using the IBR at the time the lease is entered into and is based on the amount of the outstanding lease obligation.
The weighted-average remaining lease term and weighted-average discount rate for operating and finance leases were as follows:
As of
December 29, 2024December 31, 2023
Weighted average remaining lease term:
Operating lease
10.6 years10.8 years
Finance lease
5.9 years7.7 years
Weighted average discount rate:
Operating lease
7.04 %7.03 %
Finance lease
6.58 %7.29 %
Lease costs were as follows:
Fiscal Years Ended
December 29, 2024December 31, 2023January 1, 2023
Lease cost
Classification
Operating lease cost
Selling, general and administrative expense$3,445 $3,541 $3,390 
Operating lease cost
Operating expenses92,281 89,539 85,173 
Short-term lease cost
Operating expenses5,210 5,064 5,234 
Variable lease costs
Operating expenses27,941 31,726 23,996 
Sublease income
Royalties and other revenues(259)(140)(210)
Finance lease cost:
Amortization of right of use assets
Depreciation and amortization expense$13,313 $7,639 $5,027 
Interest on lease liabilities
Interest expense, net3,849 2,709 1,958 
Supplemental disclosures of cash flow information related to leases were as follows:
Fiscal Years Ended
December 29, 2024December 31, 2023January 1, 2023
Other information
Cash paid for leases:
Operating cash flows for operating leases (1)
$112,250 $117,977 $104,506 
Operating cash flows for finance leases3,846 2,649 2,116 
Financing cash flows for finance leases12,528 8,442 4,681 
Right of use assets obtained in exchange for new lease liabilities:
Operating leases$60,183 $86,549 $50,368 
Finance leases43,832 22,785 8,158 
(1)Operating cash flows for operating leases include variable rent payments which are not included in the measurement of lease liabilities. For the fiscal years ending December 29, 2024, December 31, 2023, and January 1, 2023, variable rent payments were $27.9 million, $31.7 million, and $24.0 million, respectively.
A majority of the leases include options to extend the lease. If the Company is reasonably certain to exercise an option to extend a lease, the extension period is included as part of the right of use asset and the lease liability. The Company’s leases do not contain restrictions or covenants that restrict the Company from incurring other financial obligations. The Company also does not provide any residual value guarantees for the leases or have any significant leases that have yet to be commenced.
At the inception of the contract, management determines if the contract is or contains a lease. A contract is or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The IBR reflects a fully secured rate based on the credit rating taking into consideration the repayment timing of the lease and any impacts due to the economic environment in which the lease operates. The estimate of the IBR reflects considerations such as market rates for the outstanding debt, interpolations of rates for leases with terms that differ from the outstanding debt, and market rates for debt of companies with similar credit ratings.
Future lease commitments to be paid by the Company as of December 29, 2024 were as follows:
Fiscal yearOperating LeasesFinance Leases
2025$76,193 $20,982 
202679,596 21,809 
202765,540 17,542 
202855,723 12,931 
202953,598 5,743 
Thereafter333,602 18,007 
Total lease payments664,252 97,014 
Less: Interest(212,266)(17,289)
Present value of lease liabilities$451,986 $79,725 
In the fiscal year ended December 29, 2024, the Company completed sale-leaseback transactions whereby it disposed of the land at two real estate properties for proceeds of $6.3 million. The Company subsequently leased back the properties, which are accounted for as operating leases. The Company recognized cumulative gains on sale of $1.6 million, which are included in Other (income)/expenses, net on the Consolidated Statements of Operations.
In the fiscal year ended December 31, 2023, the Company completed a sale-leaseback transaction whereby it disposed of the land at one real estate property for proceeds of $10.0 million. The Company subsequently leased back the property, which is accounted for as an operating lease. The Company recognized a gain on sale of $9.6 million, which is included in Other (income)/expenses, net on the Consolidated Statements of Operations.
In fiscal year ended January 1, 2023, the Company completed sale-leaseback transactions whereby it disposed of the land at three real estate properties for proceeds of $8.4 million. The Company subsequently leased back the properties, which are accounted for as operating leases. The Company recognized cumulative gains on sale of $6.5 million, which are included in Other (income)/expenses, net on the Consolidated Statements of Operations.