Leases (Tables)

6 Months Ended

Jul. 02, 2023

The components of lease cost are as follows:


	Three Months Ended				Six Months Ended
	July 2, 2023		July 3, 2022		July 2, 2023		July 3, 2022
Finance lease cost:
Amortization of finance lease assets	$	4,058	$	4,106	$	8,121	$	8,170
Interest on finance lease liabilities	10,743		10,693		21,493		21,338
	14,801		14,799		29,614		29,508
Operating lease cost	21,429		22,324		42,878		42,985
Variable lease cost (a)	17,519		16,456		33,600		31,259
Short-term lease cost	1,461		1,405		2,967		2,838
Total operating lease cost (b)	40,409		40,185		79,445		77,082
Total lease cost	$	55,210	$	54,984	$	109,059	$	106,590

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(a)Includes expenses for executory costs of $10,172 and $9,245 for the three months ended July 2, 2023 and July 3, 2022, respectively, and $20,020 and $18,853 for the six months ended July 2, 2023 and July 3, 2022, respectively, for which the Company is reimbursed by sublessees.

(b)Includes $32,329 and $32,071 for the three months ended July 2, 2023 and July 3, 2022, respectively, and $62,927 and $60,996 for the six months ended July 2, 2023 and July 3, 2022, respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees. Also includes $7,546 and $7,479 for the three months ended July 2, 2023 and July 3, 2022, respectively, and $15,411 and $14,773 for the six months ended July 2, 2023 and July 3, 2022, respectively, recorded to “Cost of sales” for leases for Company-operated restaurants.

Lease, Income

The components of lease income are as follows:


	Three Months Ended				Six Months Ended
	July 2, 2023		July 3, 2022		July 2, 2023		July 3, 2022
Sales-type and direct-financing leases:
Selling profit	$	1,072	$	1,677	$	1,201	$	2,157
Interest income (a)	7,868		7,753		15,730		15,493

Operating lease income	40,629		42,174		82,785		85,488
Variable lease income	17,404		16,436		33,055		30,993
Franchise rental income (b)	$	58,033	$	58,610	$	115,840	$	116,481

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(a)Included in “Interest expense, net.”

(b)Includes sublease income of $42,961 and $43,689 recognized during the three months ended July 2, 2023 and July 3, 2022, respectively, and $85,912 and $86,854 recognized during the six months ended July 2, 2023 and July 3, 2022, respectively. Sublease income includes lessees’ variable payments to the Company for executory costs of $10,115 and $9,250 for the three months ended July 2, 2023 and July 3, 2022, respectively, and $19,893 and $18,785 for the six months ended July 2, 2023 and July 3, 2022, respectively.