Lease Assets and Obligations
Lease obligations include the following.
| | | | | | | | | | | |
| December 31, |
| 2025 | | 2024 |
| Current portion of lease obligations | | | |
| Finance lease liabilities | $ | 1,233 | | | $ | 1,250 | |
| Finance obligations | 4,486 | | | 4,664 | |
| Operating lease liabilities | 8,227 | | | 8,535 | |
| Total current portion of lease obligations | $ | 13,946 | | | $ | 14,449 | |
| | | |
| Long-term lease obligations | | | |
| Finance lease liabilities | $ | 6,157 | | | $ | 2,747 | |
| Finance obligations | 57,881 | | | 60,386 | |
| Operating lease liabilities | 33,663 | | | 27,606 | |
| Total long-term lease obligations | $ | 97,701 | | | $ | 90,739 | |
Nature of Leases
Steak n Shake and Western Sizzlin operate restaurants that are located on sites owned by us and leased from third parties. In addition, they own sites and lease sites from third parties that are leased and/or subleased to franchisees.
Lease Costs
A significant portion of our operating and finance lease portfolio includes restaurant locations. We recognize fixed lease expense for operating leases on a straight-line basis over the lease term. For finance leases, we recognize amortization expense on the right-of-use asset and interest expense on the lease liability over the lease term.
Total lease costs consist of the following.
| | | | | | | | | | | | | | | | | |
| 2025 | | 2024 | | 2023 |
| Finance lease costs: | | | | | |
| Amortization of right-of-use assets | $ | 1,057 | | | $ | 918 | | | $ | 949 | |
| Interest on lease liabilities | 537 | | | 318 | | | 345 | |
| Operating and variable lease costs | 11,720 | | | 11,531 | | | 12,158 | |
| Sublease income | (10,682) | | | (11,895) | | | (11,874) | |
| Total lease costs | $ | 2,632 | | | $ | 872 | | | $ | 1,578 | |
Supplemental cash flow information related to leases is as follows.
| | | | | | | | | | | |
| Year Ended December 31, |
| 2025 | | 2024 |
| Cash paid for amounts included in the measurement of lease liabilities: | | | |
| Financing cash flows from finance leases | $ | 1,213 | | | $ | 1,226 | |
| Operating cash flows from finance leases | $ | 537 | | | $ | 318 | |
| Operating cash flows from operating leases | $ | 10,988 | | | $ | 10,831 | |
Supplemental balance sheet information related to leases is as follows.
| | | | | | | | | | | |
| December 31, |
| 2025 | | 2024 |
| Finance leases: | | | |
| Property and equipment, net | $ | 6,420 | | | $ | 2,980 | |
Weighted-average lease terms and discount rates are as follows.
| | | | | |
| 2025 |
| Weighted-average remaining lease terms: | |
| Finance leases | 13.50 years |
| Operating leases | 6.86 years |
| |
| Weighted-average discount rates: | |
| Finance leases | 7.0% |
| Operating leases | 7.0% |
Maturities of lease liabilities as of December 31, 2025, are as follows.
| | | | | | | | | | | | | | |
| Year | | Operating Leases | | Finance
Leases |
| 2026 | | $ | 10,795 | | | $ | 1,703 | |
| 2027 | | 8,698 | | | 1,422 | |
| 2028 | | 7,606 | | | 1,010 | |
| 2029 | | 6,217 | | | 755 | |
| 2030 | | 4,988 | | | 621 | |
| After 2030 | | 14,129 | | | 6,204 | |
| Total lease payments | | 52,433 | | | 11,715 | |
| Less interest | | 10,543 | | | 4,325 | |
| Total lease liabilities | | $ | 41,890 | | | $ | 7,390 | |
Rent expense is presented below.
| | | | | | | | | | | | | | | | | |
| 2025 | | 2024 | | 2023 |
| Minimum rent | $ | 12,658 | | | $ | 12,284 | | | $ | 12,712 | |
| Contingent rent | 72 | | | 8 | | | 73 | |
| Rent expense | $ | 12,730 | | | $ | 12,292 | | | $ | 12,785 | |
Lease Income
The components of lease income are as follows.
| | | | | | | | | | | | | | | | | |
| 2025 | | 2024 | | 2023 |
| Operating lease income | $ | 15,861 | | | $ | 16,863 | | | $ | 16,343 | |
| Variable lease income | 8,850 | | | 7,115 | | | 7,349 | |
| Total lease income | $ | 24,711 | | | $ | 23,978 | | | $ | 23,692 | |
The following table displays the Company’s future minimum rental receipts for non-cancelable leases and subleases as of December 31, 2025. Franchise partner leases and subleases are short-term leases and have been excluded from the table. | | | | | | | | | | | | | | |
| | Operating Leases |
| Year | | Subleases | | Owned Properties |
| 2026 | | $ | 622 | | | $ | 649 | |
| 2027 | | 544 | | | 660 | |
| 2028 | | 424 | | | 672 | |
| 2029 | | 338 | | | 687 | |
| 2030 | | 338 | | | 697 | |
| After 2030 | | 19 | | | 2,857 | |
| Total future minimum receipts | | $ | 2,285 | | | $ | 6,222 | |
| | | | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.