For Better Blend, what is included in 'Cost of Goods Sold'?

According to Better Blend's 2024 Franchise Disclosure Document, Cost of Goods Sold includes the direct costs of producing the goods sold. Specifically, this refers to the expenses for food, beverage, and other inventory items. This is a standard accounting practice where the cost of goods sold reflects the direct expenses tied to the products a business sells.

Understanding what is included in the Cost of Goods Sold is crucial for a prospective Better Blend franchisee because it directly impacts the calculation of gross profit. By deducting the Cost of Goods Sold from total sales, a franchisee can determine the gross profit margin, which is a key indicator of the store's profitability and efficiency in managing its inventory and production costs.

For example, in 2023, the average Cost of Goods Sold for all company-owned Better Blend locations was $227,427, representing 33% of sales. This means that for every dollar of revenue, approximately 33 cents was spent on food, beverages, and inventory. Monitoring and managing these costs effectively is essential for maximizing profitability as a Better Blend franchisee.