Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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FDD Talk: Our Latest Views on the Operational Results of the Top 40% of Franchised Huddle House Restaurants (2014 FDD)

by Franchise Chatter on February 28, 2015

in Casual-Dining Restaurant Franchise, Franchise Earnings



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Huddle House Photo from huddlehousefranchising.com

Highlights of Huddle House’s Item 19 Financial Performance Representations (2014 FDD) – Part 2 of 5

  • The following terms are used in Tables 1, 2, and 3, and have the following meanings:
  • Sales is equal to Gross Sales excluding sales tax paid, and is more commonly called “Net Sales,” which means the entire amount of the actual sales price of all merchandise and services sold and all other receipts by sale, barter, or otherwise conducted by the Huddle House Restaurant for the entire year, less any cash discounts or coupon discounts.
  • It excludes any cash refunds and any sums collected and paid for any sales tax or excise tax based upon sales, and required by law to be paid by the Huddle House Restaurant operator or collected from its customers, to the extent that such taxes have been included in the actual sales price.
  • The tables are based on a 365-day calendar (fiscal) year, and are shown on an average annualized basis. Some units, however, were not open all 365 days of the year. Therefore, for comparison purposes in this Item 19, the results of reporting units are (to the extent applicable) annualized as follows:
  • The Annualized Sales are based on a unit’s 2014 fiscal year DSA (as reported to Huddle House for the periods May 2013 through April 2014) multiplied by 365 days. “DSA” is the acronym for Daily Sales Average. It is determined as a unit’s Sales divided by the number of days the unit was open.
  • When the term is applied to a group of units in a tier, the DSA is calculated by taking the sum of those units’ reported Sales, divided by, the number of periods reported times 30.4 days.
  • This average DSA is then multiplied by 365 days to get the average annualized Sales.
  • “COGS” means the cost of food, beverage, paper, and other operating supplies used in the operation of the Huddle House Restaurant.
  • “Crew Labor” means the hourly labor cost of non-managerial staff working at the Huddle House Restaurant, including overtime.
  • “Salaries, Medical Insurance, Workers’ Compensation, Payroll Taxes” means the salary, benefits, and other costs associated with the employment of managerial staff working at the Huddle House Restaurant, including all payroll taxes, medical insurance, and all workers’ compensation insurance.
  • “Advertising” includes Advertising Fund contributions and local store marketing expenditures.
  • “Operating Expense” includes Royalty, maintenance, utility, and other controllable expenses.
  • “Occupancy” includes rent, property taxes, and business licenses.
  • “General and Administrative Expense” includes bank and credit card fees, property insurance, legal, and other fixed expenses.
  • “EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization)” equals Sales (as defined above) less (COGS + Crew Labor + Salaries, Medical Insurance, Workers’ Compensation, Payroll Taxes + Advertising + Operating Expense + Occupancy + General and Administrative Expense).
  • “EBITDAR” equals EBITDA + Rent
  • “Rent” (included as part of the “Occupancy”) is as follows:


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