When calculating Restaurant EBITDAR for a Carls restaurant, what expenses are specifically excluded in addition to interest, taxes, depreciation, amortization, asset retirement, and rent?

According to Carls's 2024 Franchise Disclosure Document, Restaurant EBITDAR is defined as Restaurant Level Earnings Before Interest, Taxes, Depreciation, Amortization, Asset Retirement and Rent. In addition to these items, the calculation of Restaurant EBITDAR for a Carls Jr. franchised restaurant excludes common area maintenance charges, general and administrative expenses above the restaurant level, franchise royalties, and other miscellaneous expenses a franchisee may incur.

For a prospective franchisee, understanding which expenses are excluded from the EBITDAR calculation is crucial for accurately assessing the financial performance of a Carls franchise. EBITDAR is a key metric used to evaluate a restaurant's profitability, and knowing what costs are not factored into this calculation provides a more transparent view of the restaurant's operational efficiency.

By excluding items like common area maintenance, general and administrative overhead, and franchise royalties, the EBITDAR focuses on the earnings directly generated at the restaurant level. This allows franchisees to better compare the performance of different locations and understand the impact of day-to-day operations on profitability. However, it's important to remember that these excluded expenses still represent real costs that franchisees must account for in their overall financial planning.