How does 7 Brew define 'Total Labor Expense'?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
Gross Profit means Net Sales less Costs of Goods Sold.
- v. "Total Labor Expense" is defined as actual Store-level payroll, including the Store's general manager and benefits, payroll taxes, and bonus expense.
It does not include any area manager salary or incentives.
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 61–73)
What This Means (2025 FDD)
According to 7 Brew's 2025 Franchise Disclosure Document, Total Labor Expense is defined as the actual payroll at the store level. This includes the store's general manager, employee benefits, payroll taxes, and any bonus expenses. However, it's important to note that the definition explicitly excludes any salary or incentives paid to area managers.
For a prospective 7 Brew franchisee, understanding this definition is crucial for accurately budgeting and forecasting operating expenses. Labor costs are a significant component of a store's expenses, and this definition clarifies exactly what should be included under this category. By excluding area manager costs, 7 Brew ensures that franchisees are only accounting for the labor directly involved in the store's day-to-day operations.
The FDD also provides data on Total Labor Expense margins for both company-owned and franchised stores during Fiscal Year 2024. For the 180 measured stores, the average Total Labor Expense margin was 22.93%, with the median at 22.72%. For the 18 company stores, the average Total Labor Expense margin was 21.05%, with the median at 20.98%. For the 162 franchised stores, the average Total Labor Expense margin was 23.19%, with the median at 22.96%. This data can be used by potential franchisees to benchmark their own labor costs and assess the efficiency of their store's operations.