Note 10.

Leases

 

The Company determines if a contract contains a lease at inception. The Company’s material long-term operating lease agreements are for the land and buildings for our restaurants as well as our corporate office. The initial lease terms range from 10 to 20 years, most of which include renewal options of 10 to 15 years.

 

Components of operating lease costs are as follows for the fiscal quarters ended June 30, 2026 and July 1, 2025:

 

Lease cost		Classification		June 30, 2026				July 1, 2025
Operating lease cost		Occupancy, Other restaurant operating costs and General and administrative expenses, net		$	1,836			$	1,832
Variable lease cost		Occupancy			(15	)			11
Sublease income		Occupancy			(124	)			(123	)
				$	1,697			$	1,720

 

Weighted average lease term and discount rate are as follows:

		June 30, 2026				July 1, 2025
Weighted average remaining lease term (in years)			6.51				6.82
Weighted average discount rate			5.6	%			5.3	%

 

Supplemental cash flow disclosures:

		June 30, 2026				July 1, 2025
Cash paid for operating lease liabilities		$	5,929			$	6,053
Non-cash operating lease assets obtained in exchange for operating lease liabilities		$	1,235			$	1,086

 

Future minimum rent payments for our operating leases as of June 30, 2026 are as follows:

 

		Total
One Year		$	7,966
Two Years			7,541
Three Years			6,259
Four Years			5,591
Five Years			4,594
Thereafter			10,772
Total minimum lease payments			42,723
Less: imputed interest			(7,170	)
Present value of lease liabilities		$	35,553

 

The above future minimum rental amounts exclude the amortization of deferred lease incentives, renewal options that are not reasonably assured of renewal, and contingent rent. The Company generally has escalating rents over the term of the leases and records rent on a straight-line basis.