How does Beef O Bradys recognize revenue from sales at company-owned restaurants?
Beef_O_Bradys Franchise · 2025 FDDAnswer from 2025 FDD Document
g the standard as of January 1, 2023. The Company's adoption of this ASU impacted the Company's method for calculating and estimating the Company's allowance for credit losses but did not have a material impact to the Company's financial position or results of operations.
Notes to Consolidated Financial Statements December 31, 2023 and 2022
Revenue Recognition
The Company's revenues consist of sales by company-owned restaurants, royalties and technology fees from franchised stores, and franchise and termination fees.
Under Accounting Standard Codification (ASC) 606, Revenue from Contracts with Customers (ASC 606), the amount of revenue recognized for any goods or services reflects the consideration that the Company expects to be entitled to receive in exchange for these goods or services. To achieve this core principle, the Company applies the following five-step approach: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to performance obligations in the contract; and (5) recognize revenue when or as a performance obligation is satisfied (over time or at a point in time).
ASC 606 provides that revenues are to be recognized when control of promised goods or services is transferred to a customer in an amount that reflects the consideration expected to be received for those goods or services.
The recognition of revenue for
Source: Item 23 — RECEIPTS. (FDD pages 66–330)
What This Means (2025 FDD)
According to Beef O Bradys's 2025 Franchise Disclosure Document, the company recognizes revenue from sales at its company-owned restaurants when the product is delivered to the customers. This is considered a point-in-time recognition. The sales figures presented are net of sales tax. Any promotional discounts or sales allowances are subtracted from the gross sales and are recognized as they are incurred. For the years ending 2023 and 2022, these promotional discounts and sales allowances totaled $3,207,490 and $2,124,521, respectively.
For a prospective franchisee, this accounting practice is important to understand because it directly impacts how Beef O Bradys reports its financial performance. The consistent application of these revenue recognition principles ensures that financial statements accurately reflect the company's sales and profitability. Understanding that sales are reported net of taxes and discounts provides a clearer picture of the actual revenue generated from restaurant operations.
This approach aligns with standard accounting practices, ensuring that Beef O Bradys's financial reporting is transparent and consistent. Franchisees can use this information to better understand the financial health of the company and to compare its performance against other similar businesses in the restaurant industry. Knowing the specific amounts of promotional discounts and sales allowances also gives franchisees insight into the types of promotions and pricing strategies that Beef O Bradys employs to attract and retain customers.