v3.25.2
Revenues
 6 Months Ended
Jun. 25, 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 EndedTwo Quarters Ended
 June 25, 2025June 26, 2024June 25, 2025June 26, 2024
 (In thousands)
Company restaurant sales$58,395 $54,348 $112,295 $106,690 
Franchise and license revenue:
Royalties29,091 30,014 56,928 59,320 
Advertising revenue19,490 20,788 38,563 38,926 
Initial and other fees2,804 2,448 5,678 4,264 
Occupancy revenue 7,877 8,329 15,830 16,701 
Franchise and license revenue 
59,262 61,579 116,999 119,211 
Total operating revenue$117,657 $115,927 $229,294 $225,901 

Franchise occupancy revenue consisted of the following:
 Quarter EndedTwo Quarters Ended
 June 25, 2025June 26, 2024June 25, 2025June 26, 2024
 (In thousands)
Operating lease revenue$5,848 $6,071 $11,834 $12,199 
Variable lease revenue
2,029 2,258 3,996 4,502 
Total occupancy revenue
$7,877 $8,329 $15,830 $16,701 

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 franchisees589 
Revenue recognized (1)
(1,654)
Balance, June 25, 202515,903 
Less current portion included in other current liabilities1,985 
Deferred franchise revenue included in other noncurrent liabilities$13,918 
(1)    Of this amount $1.4 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 costs4,604 
Contract asset amortization(712)
Balance, June 25, 202510,598 
Less current portion included in other current assets1,264 
Contract assets included in other noncurrent assets$9,334 

The Company purchases equipment related to various programs 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 $0.4 million and $1.0 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 periods ended June 25, 2025, respectively. 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 periods ended June 26, 2024, respectively. As of June 25, 2025, we had $0.5 million in inventory and $0.4 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 June 25, 2025, deferred franchise revenue, net of contract asset amortization, expected to be recognized in the future is as follows:
(In thousands)
Remainder of 2025$301 
2026833 
2027808 
2028687 
2029589 
Thereafter2,087 
Deferred franchise revenue, net$5,305 
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 25, 2025 and December 25, 2024 was $6.8 million and $8.4 million, respectively. During the year-to-date period ended June 25, 2025, we recognized revenue of $0.4 million from gift card redemptions at company restaurants.