How is 'Total Prime Cost' calculated for a Capriottis Sandwich Shop restaurant?

According to Capriottis Sandwich Shop's 2025 Franchise Disclosure Document, Total Prime Cost is the sum of the Cost of Goods Sold plus Total Payroll & Related expenses. Cost of Goods Sold includes the total cost of all food, beverages, and paper goods used in the restaurants. Total Payroll & Related includes all salary and hourly wages, bonuses, taxes, and benefits paid at each affiliate-owned Capriottis Sandwich Shop restaurant.

For a prospective franchisee, understanding Total Prime Cost is crucial because it represents a significant portion of the restaurant's expenses. Managing these costs effectively can directly impact profitability. The FDD notes that a franchisee in a new market with less than 3 open restaurants could expect a higher Cost of Goods Sold, likely ranging between an additional 1% and 2% of total sales. This increase could be due to factors like higher freight costs if proprietary items are not stocked by the local distributor.

The document provides additional context by detailing other expense categories, such as Total Operating Expense (which includes items like cleaning supplies, repairs, marketing, and delivery expenses) and Total Non-Controllable Expense (including rent, utilities, and certain fees). It also defines EBITDA, which is calculated by subtracting Total Prime Cost, Total Operating Expense, and Total Non-Controllable Expense from Total Sales.

Capriottis Sandwich Shop provides this information to give potential franchisees insight into the key financial components of operating a restaurant. However, the FDD also cautions that individual results may vary, and there is no assurance that a franchisee will achieve the same financial performance as the affiliate-owned restaurants used in the financial performance representation. Therefore, it is essential for prospective franchisees to conduct their own due diligence and seek professional financial advice.