Highlights of Zaxby’s Item 19 Financial Performance Representations (2013 FDD) – Part 2

Explanatory Notes for Schedule 1 (see Part 1) and Table 1 (Average, Minimum, and Maximum Gross Revenues System-wide and By Quartile)

• For purposes of Item 19, the term “gross revenues” means all revenues received by a Restaurant as payment for all sales generated through the Restaurant, whether such payment is in cash, by exchange, or for credit (and, if for credit, regardless of collection), including revenues received from the operation of vending machines or other mechanical devices, less any taxes collected and transmitted to appropriate taxing authorities.

• 
  
  
  
  Zaxby’s Item 19 was prepared utilizing data the franchisor received in the periodic sales reports provided to it by its licensees and through daily polling of Point of Sale (POS) data. The franchisor has not independently verified any of the data provided to it, but its licensees pay their licensing fees based on such reports. Additionally, the franchisor cannot verify that the information it received from its licensees is prepared uniformly or that its licensees properly allocate costs to a particular category.

• The cost and expense information in Item 19 pertains only to the cost of goods sold, labor costs, and other operating expenses experienced by the Measured Restaurants for the period of December 26, 2011 to December 30, 2012.

• You may experience capitalized or other balance sheet expenditures that are not included in this cost and expense information. Costs and expenses in the operation of a Restaurant will vary from licensee to licensee and from location to location and will depend on seasonal, local, and other factors, like the licensee’s efficiency in the utilization of products, the cost of transportation, and the fluctuation in representations, predictions, promises, or guarantees with respect to the actual expenses you likely will experience.

• With respect to labor costs, because you will need a certain number of employees to open and operate a Restaurant regardless of its gross revenues, Restaurants that have lower than average gross revenues probably will experience higher than average labor costs as a percentage of gross revenues.

• Labor costs in Schedule 1 do not include officer’s salaries and benefits for any Restaurant that captures or recognizes that expense.

• Except where otherwise specifically indicated, Zaxby’s Item 19 utilizes data for the 53-week period beginning on December 26, 2011 and ending on December 30, 2012.

Explanatory Notes for Table 2 (Same-Store Comparable Sales Growth)

• Increases or decreases in same-store comparable sales represent the percentage change in gross revenues for Restaurants open and operating for at least one week of the period beginning on January 3, 2011 and ending on January 1, 2012 (a weighted average was used for Restaurants not open for such entire period) and for such same Restaurants open and operating for the entire 52-week period beginning on January 2, 2012 and ending on December 30, 2012.

• The franchisor included all Restaurants that were open and operating for these time periods without regard to when such Restaurant opened. No seasoning period was required for any Restaurant’s inclusion in this calculation as most franchise systems typically require.

Explanatory Notes for Table 3 (Day Part Analysis – Daily Averages Per Restaurant)

• Day Parts are defined as follows:

• All Day:  6:00 am until 11:00 pm;
• Lunch:  11:00 am until 2:00 pm;
• Afternoon Snack:  2:00 pm until 5:00 pm;
• Dinner:  5:00 pm until 8:00 pm; and
• Evening Snack:  8:00 pm until 10:00 pm.

• Please note that any Gross Revenues from 6:00 am to 11:00 am and from 10:00 pm to 11:00 pm are included only in the All Day column.

Table 1 – Average, Minimum, and Maximum Gross Revenues System-wide and By Quartile

Total System

🎯Find Good Franchises That Are Still AVAILABLE in Your Target Area (Free Tool)

🚀How to Find, Vet & FUND a Good Franchise. Watch Our Webinar Live or the Recording Later (Register Now – It's Free)

💵How Much Franchise Can You AFFORD? Use Our Free Financial Calculator

🎯Find Good Franchises That Are Still AVAILABLE in Your Target Area (Free Tool)

🚀How to Find, Vet & FUND a Good Franchise. Watch Our Webinar Live or the Recording Later (Register Now – It's Free)

💵How Much Franchise Can You AFFORD? Use Our Free Financial Calculator