What was the amount of variable lease payments for Burger King in 2023?
Burger_King Franchise · 2025 FDDAnswer from 2025 FDD Document
e we are the lessor and which are included within our property and equipment, net are as follows (in millions):
| | | | As of December 31, | | | |-------------------------------------------|------|-------|--------------------|-------|--| | | 2024 | | | | | | Land | $ | 779 | $ | 856 | | | Buildings and improvements | | 962 | | 1,102 | | | Restaurant equipment | | 20 1,761 | | 27 1,985 | | | Accumulated depreciation and amortization | | (582) | | (656) | | | Property and equipment leased, net | $ | 1,179 | $ | 1,329 | | Our net investment i
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 109–124)
What This Means (2025 FDD)
According to Burger King's 2025 Franchise Disclosure Document, the variable lease payments in 2023 were $452. This figure reflects income Burger King received from variable lease arrangements with its franchisees. Variable lease payments typically fluctuate based on the franchisee's sales performance, often calculated as a percentage of gross sales. This arrangement allows Burger King to share in the financial success of its franchisees, while also providing some flexibility in lease costs for the franchisee, particularly during periods of lower sales.
For a prospective Burger King franchisee, understanding the breakdown between minimum and variable lease payments is crucial. The minimum lease payment provides a fixed cost baseline, while the variable component introduces a performance-based element. Franchisees should carefully analyze their projected sales figures to estimate potential variable lease payments and assess the overall affordability of the lease. It's also important to understand how the variable percentage is calculated and what factors might influence changes in this percentage over the term of the lease.
The FDD also lists the minimum lease payments and other lease-related income. In 2023, minimum lease payments were $385, amortization of favorable and unfavorable income lease contracts, net was $2, subtotal lease income from operating leases was $839, earned income on direct financing and sales-type leases was $12, and total property revenues were $851. Reviewing these figures over the three years presented (2022-2024) can help potential franchisees identify trends and better understand the financial dynamics of leasing a Burger King restaurant location.
Understanding these lease payment structures is essential for franchisees to accurately forecast their expenses and manage their cash flow. Prospective franchisees should consult with financial advisors and experienced Burger King operators to gain further insights into the practical implications of these lease terms and how they might impact their profitability.