FDD Talk 2.0: The Pita Pit’s Average Annual Net Sales, and Food and Labor Cost Percentages (2012 FDD)

(Ambrosio’s note:  Welcome to FDD Talk 2.0, a more comprehensive version of our flagship content, featuring not only the Item 19 financial performance representations of select franchises, but their estimated initial investment, unit growth, and other key items of their 2012 FDD as well.)

Highlights of The Pita Pit’s 2012 Franchise Disclosure Document – Part 2

Average Annual Net Sales, and Food and Labor Cost Percentages for 23 The Pita Pit Restaurants

• The following actual financial performance representations for Multi-Unit Operators are derived from 23 of The Pita Pit’s franchised restaurants and the original 3 corporately developed, owned, and operated The Pita Pit restaurants. The financial performance representations set out (i) the historical Average Annual Net Sales, and (ii) the historical Average Annual Food and Labor Cost Percentages for these 23 The Pita Pit restaurants.

• On December 31, 2011, there were 182 The Pita Pit franchised and corporately owned restaurants in the United States, of which 45 restaurants were owned by Multi-Unit Operators, and the restaurants (i) had either received store evaluations greater than 80% since 2010 or had not been evaluated in that time period, (ii) had reported 2011 sales to the franchisor by January 11, 2012, and (iii) were current in their monthly Continuing Royalty Fee payments and General Advertising Fund contributions.

• Multi-Unit Operators were defined as having two or more The Pita Pit restaurants. Multi-Unit Operators are typically proven and experienced franchisees that firmly adhere to The Pita Pit system in the operation of their restaurants. These attributes likely lead to a more favorable financial performance.

• The Pita Pit’s Franchise Development Specialists requested either in person, by phone, or email, on a voluntary basis, that the franchisees for these 45 restaurants send in their financial statements for the 2011 calendar year. 23 of these 45 restaurants responded to this request within the required time period. There was no uniform method of financial statement preparation or presentation by franchisees.

• 22 of the 45 The Pita Pit restaurants did not provide their detailed 2011 financial statements within the required time period. Accordingly, The Pita Pit only had their 2011 Net Sales as reported through the POS System and franchisee reports, but not their Food and Labor Costs. Because of this, The Pita Pit was not able to calculate their Average Annual Food and Labor Cost, and did not include them in the Summary of Net Sales Data nor in the Summary of Food and Labor Cost Data below.

• Your actual Net Sales and Food and Labor Costs are likely to differ from the information presented.

Summary of Net Sales Data for Multi-Unit Operators