The Company is the lessee in a significant real estate portfolio, primarily through ground leases (the Company leases the land and generally owns the building) and through improved leases (the Company leases the land and buildings). The Company determines whether an arrangement is a lease at inception. Lease terms for most restaurants, where market conditions allow, are generally for 20 years and, in many cases, provide for rent escalations and renewal options. Renewal options are typically solely at the Company’s discretion. Escalation terms vary by market with examples including fixed-rent escalations, escalations based on an inflation index and fair-value market adjustments. The timing of these escalations generally range from annually to every five years.

Rent expense included variable lease payments in excess of minimum rents (in millions) as follows–Company-owned and operated restaurants: 2025–$46; 2024–$55; 2023–$56. Franchised restaurants: 2025–$285; 2024–$271; 2023–$261. These variable lease payments are primarily based on a percent of sales.

The Lease right-of-use asset and Lease liability reflect the present value of the Company's estimated future minimum lease payments over the lease term, which includes options that are reasonably certain of being exercised, discounted using a collateralized incremental borrowing rate. Typically, renewal options are considered reasonably certain of being exercised if the associated asset lives of the building or leasehold improvements exceed that of the initial lease term, and the sales performance of the restaurant remains strong. Therefore, the Lease right-of-use asset and Lease liability include an assumption on renewal options that have not yet been exercised by the Company, and are not currently a future obligation.


December 31, 2025
In millions	Operating		Finance		Total
Lease right-of use asset, net	$	12,438	$	2,168	$	14,606
Current lease liability	671		23		694
Long-term lease liability	11,817		2,329		14,147


December 31, 2024
In millions	Operating		Finance		Total
Lease right-of use asset, net	$	11,319	$	2,020	$	13,339
Current lease liability	625		11		636
Long-term lease liability	11,118		1,770		12,888

As the rate implicit in each lease is not readily determinable, the Company uses an incremental borrowing rate to calculate the lease liability that represents an estimate of the interest rate the Company would incur to borrow on a collateralized basis over the term of a lease within a particular currency environment.


	2025		2024
Weighted-average remaining lease term - operating leases	16 years		17 years
Weighted-average remaining lease term - finance leases	28 years		28 years
Weighted-average discount rate - operating leases	4.2	%	4.1	%
Weighted-average discount rate - finance leases	4.4	%	4.0	%

The Company makes cash payments related to its operating and finance lease liabilities, of which the majority are recorded within operating activities on the Consolidated Statement of Cash Flows. For each of the three years reflected within its cash flow statement, the Company made total payments of approximately $1.7 billion. Of these total payments, approximately 4% related to the Company’s repayment of the principal portion of finance lease liabilities, and were recorded within financing activities on the Consolidated Statement of Cash Flows. Lease right-of-use assets obtained in exchange for operating and finance lease liabilities totaled approximately $765 million and $468 million, respectively, during the year ended December 31, 2025.


In millions	Operating		Finance		Total*
2026	$	1,200	$	120	$	1,321
2027	1,166		123		1,289
2028	1,115		124		1,239
2029	1,076		125		1,201
2030	1,029		127		1,156
Thereafter	10,977		3,443		14,420
Total lease payments	$	16,564	$	4,062	$	20,626
Less: imputed interest	4,075		1,710		5,785
Present value of lease liability	$	12,488	$	2,352	$	14,840

The increase in the present value of the lease liability since December 31, 2024 is approximately $1.3 billion. The lease liability will continue to be impacted by new leases, lease modifications, lease terminations, reevaluation of lease terms, and foreign currency.