Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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FDD Talk 2013: Average Net Revenue, Expenses, and Operating Profits for Company-Operated Corner Bakery Cafes (2013 FDD)

by Franchise Chatter on June 8, 2013

in Bakery Franchise, Franchise Earnings

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Highlights of Corner Bakery Cafe’s Item 19 Financial Performance Representations (2013 FDD)

  • Corner Bakery Cafe has prepared the following statement to reflect average annual sales volumes, operating expenses, and location cash flow for company-operated Corner Bakery Cafes, exclusive of development fees, franchise fees, and royalty fees, and expenses arising from the opening of a Corner Bakery Cafe, and personal or corporate interest and taxes which may arise from the financing and operation of a Franchised Cafe. These items are not included in the calculation of average results set forth below because Corner Bakery Cafe’s company-operated restaurants do not incur these expenses.
  • Scrambled Eggs at Corner Bakery CafeTypically, company-operated Corner Bakery Cafes are located in both urban and suburban metropolitan areas. Many of the company’s urban locations are considered “limited hour” in that they are open only during breakfast and lunch day parts or they are open only five days a week.
  • The information presented represents the performance of 83 company-operated Corner Bakery Cafes that have been in operation for at least 18 months. The company has not included information related to 16 “limited hour” cafes. All cafes in this statement offer substantially the same products and services to the public that Franchised Cafes are expected to offer.

Explanatory Notes for Statement of Average Net Revenue and Expenses of Company-Operated Corner Bakery Cafes

  • Average Annual Net Revenue Volume (AAV) includes (1) Net Sales from all in-restaurant, “to go,” and catering food and beverage sales, and (2) Catering Delivery Fees. It does not include sales or service taxes.
  • Cost of Goods Sold includes the total costs of all in-restaurant, “to go,” and catering food and beverage sales as well as the cost of paper and packaging supplies. Corner Bakery Cafe purchases many items used in the operation of company-operated cafes under arrangements and contracts that it negotiates with suppliers and distributors, which may have permitted it to purchase and have those items delivered at a volume discount. To the extent these purchasing and distribution arrangements are changed, are not available to you, or you have additional transportation costs, then you should expect to experience higher costs.
  • Labor includes the cost for Hourly Management and Labor as well as that of the Catering Sales force, but does not include any salary and overhead for above the store field supervision (e.g. Area and Regional Operations management). Labor costs include employee wages and benefits, employee training expenses, payroll taxes, corporate insurance allocations for group health, workers’ compensation, and vacation pay. Other benefits which you elect to provide your employees, such as the amount of vacation time and vacation pay, are factors that will affect labor cost.
  • Other Operating Expenses include restaurant expenses, facility costs, office costs, and miscellaneous operating expenses. Restaurant expenses include items like restaurant supplies, tableware and menus, linen, uniforms, armored car, credit card fee, and bank charges. Facility costs include items like telephone expenses, dues and licenses, variable repair and maintenance expenses, maintenance contracts, utilities, trash removal, exterminators, and catering van rentals (including gas and maintenance).
  • Fixed Costs and Depreciation includes fixed expenses like security services and significant repair and maintenance expenses, restaurant evaluation and guest satisfaction services, and store depreciation. Depreciation consists of depreciation of property, equipment, and leasehold improvements.
  • Occupancy Costs include rent, property taxes, property insurance, general liability insurance, and miscellaneous items. Rent consists of minimum rents, percentage rents, common area maintenance charges, and any sales and other taxes imposed thereon and paid by the company. Property taxes are real estate taxes and assessments levied against the property upon which the restaurant is located.
  • Restaurant Contribution is the pre-tax profit for the company-operated Corner Bakery Cafes and is calculated by subtracting Cost of Goods Sold, Labor, Other Operating Expenses, Advertising Expenses, Fixed Costs and Depreciation, and Occupancy Costs from Net Revenue.
  • Restaurant Adjusted EBITDA is earnings before interest, taxes, depreciation, and amortization.

Statement of Average Net Revenue and Expenses of 83 Company-Operated Corner Bakery Cafes (January 2012 – December 2012, 52 Fiscal Weeks)

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