Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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FDD Talk 2013: Profit and Loss Statement for the HuHot Mongolian Grill Restaurant in Colorado Springs, Colorado (2013 FDD)

by Franchise Chatter on August 27, 2013

in Fast Casual Restaurant Franchise, Franchise Earnings

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Highlights of HuHot Mongolian Grill’s Item 19 Financial Performance Representations (2013 FDD) – Part 1

  • The following represents the actual sales, expenses, and net income for the HuHot Mongolian Grill Restaurant operated in Colorado Springs, Colorado by Top Tier Colorado, LLC, an affiliate of HuHot, for 2012. The revenues and expenses are actual numbers from this store, but the franchisor did not include interest, depreciation, amortization, income taxes, debt service, and owner’s draw.
  • The HuHot Mongolian Grill Restaurant in Colorado Springs, Colorado, for which the financial performance representations are provided, is substantially identical to the HuHot Restaurant concept being offered to you.
  • HuHot Mongolian Grill Photo by Fox Valley Technical CollegeThe restaurant for which earnings data is being furnished is located in a big box strip center in NW Colorado Springs. A second HuHot Mongolian Grill, also owned by Top Tier Colorado, LLC, is located about 8 miles away in the SE portion of Colorado Springs.
  • The Colorado Springs Metropolitan Statistical Area, as defined by the U.S. Office Management and Budget, has an estimated population of approximately 575,000 people.
  • The HuHot Mongolian Grill Restaurant is approximately 5,500 square feet in area with seating for 185 customers, and has the same menu items that the franchisor requires you to offer.
  • The restaurant opened in 2010, so these figures are from its 2nd full calendar year of operations.
  • “Gross Revenues” does not include sale taxes, customer refunds, or promotional rebates paid or given by HuHot Mongolian Grill.
  • Cost of Goods Sold figures include sales taxes and shipping of all food, ingredients, soft and alcoholic beverages, paper goods, and logo-ed items such as t-shirts and caps and other items sold at retail in the restaurant.
  • Top Tier Colorado, LLC, also owns 2 other HuHot Mongolian Grill restaurants, another location in Colorado Springs and a location in Westminster, Colorado.  It incurs office salaries for employees performing supervisory, bookkeeping, and other administrative functions for the HuHot Mongolian Grill Restaurants.
  • The labor costs associated with these employees are not included in the costs from which the labor cost percentage is calculated for HuHot Mongolian Grill. In your HuHot franchised Restaurant, those functions could be performed by you, a manager, or outside accounting or bookkeeping service. If these functions are not performed by you or by someone else whose salary is already included in your expenses, you will incur additional costs to have these functions performed.

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