Annual report pursuant to Section 13 and 15(d)

Commitments and Contingencies

v3.8.0.1
Commitments and Contingencies
12 Months Ended
Dec. 31, 2017
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies
Commitments and Contingencies
Commitments
Leasing Activities—The Company leases land, buildings, and equipment used in its operations under operating leases. The Company’s operating leases have remaining non-cancelable terms ranging from less than one year to more than 15 years. These leases generally contain renewal options which permit the Company to renew the leases at defined contractual rates or prevailing market rates. Certain equipment leases also include options to purchase equipment at the end of the lease term. Certain leases provide for contingent rents, which are determined as a percentage of adjusted restaurant sales in excess of specified levels. The Company records a contingent rent liability and the corresponding rent expense when specified levels have been achieved or when management determines that achieving the specified levels during the fiscal year is probable. Certain lease agreements also require the Company to pay maintenance, insurance, and property tax costs. Rental expense related to land, building, and equipment leases for the fiscal years ended December 31, 2017, December 25, 2016, and December 27, 2015, which is recorded under Occupancy on the consolidated statements of operations, are as follows (in thousands):
 
 
2017
 
2016
 
2015
Minimum rent
 
$
77,778

 
$
73,605

 
$
67,078

Contingent rent
 
1,604

 
1,676

 
2,264

Equipment rent under operating leases
 
1,024

 
1,052

 
791

 
 
$
80,406

 
$
76,333

 
$
70,133


The Company leases certain of its owned land, buildings, and equipment to outside parties under non-cancelable operating leases. Rental income was immaterial for 2017, 2016, and 2015.
Future minimum lease commitments under all leases as of December 31, 2017 are as follows (in thousands):
 
 
Capital
Leases
 
Operating
Leases
2018
 
$
1,234

 
$
75,613

2019
 
1,234

 
72,328

2020
 
1,238

 
67,568

2021
 
1,240

 
61,375

2022
 
1,063

 
52,754

Thereafter
 
8,570

 
224,517

Total
 
14,579

 
$
554,155

Less amount representing interest
 
(3,641
)
 
 

Present value of future minimum lease payments
 
10,938

 
 

Less current portion
 
(741
)
 
 

Long-term capital lease obligations
 
$
10,197

 
 


At the end of 2017 and 2016, property and equipment included $29.9 million and $29.3 million of assets under capital lease, and $12.3 million and $10.5 million of related accumulated depreciation.
Future minimum rental income is immaterial.
Contingencies
In the normal course of business, there are various claims in process, matters in litigation, and other contingencies. These include claims resulting from “slip and fall” accidents, employment related claims and claims alleging illness, injury, or other food quality, health, or operational issues. Evaluating contingencies related to litigation is a complex process involving subjective judgment on the potential outcome of future events, and the ultimate resolution of litigated claims may differ from our current analysis. We review the adequacy of accruals and disclosures pertaining to litigation matters each quarter and year end in consultation with legal counsel, and we assess the probability and range of possible losses associated with contingencies for potential accrual in the consolidated financial statements. While it is not possible to predict the outcome of these other suits, legal proceedings, and claims with certainty, management is of the opinion that adequate provision for potential losses associated with these other matters has been made in the consolidated financial statements.