What were the total company-operated restaurant operating costs and expenses for Hardee's Restaurants LLC, which is affiliated with Carls?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
| ,652) | (27,320) | — | — | (61,863) | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Other income (loss), net | 3,589 | 112,499 | 61,153 | 406 | 81,860 | 36,915 | (291,632) | 4,790 | ||
| Income (loss) before income taxes | 118,236 | 66,269 | 61,153 | 82,120 | 41,798 | 36,915 | (291,632) | 114,859 | ||
| Income tax expense | 4,453 | — | — | 1,461 | — | — | — | 5,914 | ||
| Net income (loss) | $ 113,783 $ | 66,269 $ | 61,153 $ | 80,659 $ | 41,798 $ | 36,915 $ | (291,632) $ | 108,945 | ||
THE CKE SECURITIZATION ENTITIES COMBINING CONSOLIDATING STATEMENT OF OPERATIONS (In thousands)
Fiscal 2023
| Carl's Jr. Restaurants LLC | Carl's Jr. Funding LLC | Carl's Jr. SPV Guarantor LLC | Hardee's Restaurants LLC | Hardee's Funding LLC | Hardee's SPV Guarantor LLC | Eliminations | The CKE Securitization Entities | |
|---|---|---|---|---|---|---|---|---|
| Revenue: | ||||||||
| Company-operated restaurants | $ 111,433 $ | — $ | — $ | 242,820 $ | — $ | — $ | — $ | 354,253 |
| Franchised restaurants and other | 168,244 | 5,579 | — | 122,587 | 11,835 | — | (17,414) | 290,831 |
| Total revenue | 279,677 | 5,579 | — | 365,407 | 11,835 | — | (17,414) | 645,084 |
| Operating costs and expenses: | ||||||||
| Company-operated restaurants: | ||||||||
| Food and packaging | 28,226 | — | — | 70,215 | — | — | — | 98,441 |
| Payroll and other employee benefits | 32,897 | — | — | 80,466 | — | — | — | 113,363 |
| Occupancy and other | 35,240 | — | — | 82,317 | — | — | (17,414) | 100,143 |
| Total company-operated restaurants | 96,363 | — | — | 232,998 | — | — | (17,414) | 311,947 |
| Franchised restaurants and other | 66,917 | — | — | 24,089 | — | — | — | 91,006 |
| Advertising | 6,774 | — | — | 12,502 | — | — | — | 19,276 |
| General and administrative | 6,694 | 23,462 | 1 | (724) | 26,515 | — | — | 55,948 |
| Facility action charges, net | 526 | — | — | 3,063 | — | — | — | 3,589 |
| Total operating costs and expenses | 177,274 | 23,462 | 1 | 271,928 | 26,515 | — | (17,414) | 481,766 |
| Operating income (loss) | 102,403 | (17,883) | (1) | 93,479 | (14,680) | — | — | 163,318 |
| Interest expense | (1,557) | (27,649) | — | (6,021) | (27,525) | — | — | (62,752) |
| Other income (loss), net | 1,131 | 96,478 | 60,645 | 690 | 80,449 | 33,389 | (270,725) | 2,057 |
| Income (loss) before income taxes | 101,977 | 50,946 | 60,644 | 88,148 | 38,244 | 33,389 | (270,725) | 102,623 |
| Income tax expense | 3,282 | — | — | 1,544 | — | — | — | 4,826 |
| Net income (loss) | $ 98,695 $ | 50,946 $ | 60,644 $ | 86,604 $ | 38,244 $ | 33,389 $ | (270,725) $ | 97,797 |
Carl's Jr. SPY Guarantor LLC and subsidiaries, and Hardee's SPY Guarantor LLC and subsidiaries (the "CKE Securitization Entities")
Combined Consolidated Financial Statements for the fiscal years ended January 30, 2023 and January 31, 2022
(With Independent Auditors' Report Thereon)
KPMG LLP 1201 Demonbreun Street Suite 1100 Nashville, TN 37203
Independent Auditors' Report
Managing Member Carl's Jr. SPV Guarantor LLC and Hardee's SPV Guarantor LLC:
Opinion
We have audited the combined consolidated financial statements of Carl's Jr. SPV Guarantor LLC and its subsidiaries, and Hardee's SPV Guarantor LLC and its subsidiaries (the Company), which comprise the combined consolidated balance sheets as of January 30, 2023 and January 31 , 2022, and the related combined consolidated statements of income, members' deficit, and cash flows for each of the fiscal years then ended, and the related notes to the combined consolidated financial statements.
In our opinion, the accompanying combined consolidated financial statements present fairly, in all material respects , the financial position of the Company as of January 30, 2023 and January 31 , 2022, and the results of its operations and its cash flows for each of the fiscal years then ended in accordance with U.S. generally accepted accounting principles.
Basis for Opinion
We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Combined Consolidated Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities , in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Emphasis of Matter
As discussed in Note 9 to the combined consolidated financial statements, in fiscal 2023, the Company adopted new accounting guidance to account for leases in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 842, Leases. Our opinion is not modified with respect to this matter.
Responsibilities of Management for the Combined Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the combined consolidated financial statements in accordance with U.S. generally accepted accounting principles, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of combined consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the combined consolidated financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for one year after the date that the combined consolidated financial statements are available to be issued.
Auditors' Responsibilities for the Audit of the Combined Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the combined consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute
assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the combined consolidated financial statements.
In performing an audit in accordance with GAAS, we:
- Exercise professional judgment and maintain professional skepticism throughout the audit.
- Identify and assess the risks of material misstatement of the combined consolidated financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the combined consolidated financial statements.
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. Accordingly, no such opinion is expressed.
- Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the combined consolidated financial statements.
- Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings , and certain internal control related matters that we identified during the audit.
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 79–80)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, Hardee's Restaurants LLC, had total company-operated restaurant expenses of $232,998 in one table and $243,756 in another table. These figures represent the costs associated with food and packaging, payroll and other employee benefits, and occupancy and other expenses for company-operated restaurants.
Specifically, the first table shows the breakdown of these costs as follows: Food and packaging costs were $70,215, payroll and other employee benefits amounted to $80,466, and occupancy and other expenses totaled $82,317. The second table shows the breakdown of these costs as follows: Food and packaging costs were $69,234, payroll and other employee benefits amounted to $88,269, and occupancy and other expenses totaled $86,253.
It is important to note that these figures do not include expenses related to franchised restaurants, advertising, general and administrative costs, or facility action charges. These costs are listed separately in the financial statements. A prospective franchisee should carefully review these figures to understand the specific costs associated with operating a company-owned Hardee's restaurant and how they contribute to the overall financial performance of Hardee's Restaurants LLC.