What was the total interest expense for Carls in fiscal year 2022?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
| | Carl's Jr. Restaurants LLC | Carl's Jr. FundingLLC | Carl's Jr. SPY Guarantor LLC | Hardee's Restaurants LLC | Hardee's FundingLLC | Hardee's SPY 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 | 34,365 | | | 81 ,844 | | | | I 16,209 | | Occupancy and other | 33,772 | | | 80,939 | | | (17,414) | 97,297 | | 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 | I | (724) | 26,515 | | | 55,948 | | Facility action charges, net | 526 | | | 3,063 | | | | 3,589 | | Total operating costs and expenses | 177,274 | 23,462 | I | 271 ,928 | 26,515 | | (17,414) | 481 ,766 | | Operating income (loss) | 102,403 | (17,883) | (I) | 93,479 | (14,680) | | | 163,318 | | Interest expense | (1 ,557) | (27,649) | | (6,021) | (27,525) | | | (62,752) | | Other income (loss), net | 1,13 I | 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 | $ ~270,7251 $ | 97,797 |
THE CKE SECURITIZA TION ENTITIES COMBINING CONSOLIDATING STATEMENT OF OPERATIONS (In thousands)
Fiscal 2022 The CKE Carl's Jr. Carl's Jr. Carl's Jr. SPY Hardee's Hardee's Hardee's SPY Securitization Restaurants LLC FundingLLC Guarantor LLC Restaurants LLC FundingLLC Guarantor LLC Eliminations Entities Revenue: Company-operated restaurants ....................................................... $ I 14,008 $ $ $ 241 ,909 $ $ $ $ 355,917 Franchised restaurants and other .................................................... 166,547 5,699 123,880 11,759 (17,458) 290,427 Total revenue ........................................................................ 280,555 5,699 365,789 11 ,759 (17,458) 646,344 Operating costs and expenses: Company-operated restaurants: Food and packaging .................................................................. 28,251 72,327 100,578 Payroll and other employee benefits ......................................... 33,201 77,325 I 10,526 Occupancy and other. ................................................................ 32,695 72,348 (17,458) 87,585 Total company-operated restaurants .................................... 94,147 222,000 (17,458) 298,689 Franchised restaurants and other .................................................... 68,839 26,809 95,648 Advertising ..................................................................................... 6,990 12,414 19,404 General and administrative ............................................................. 13,775 23,930 (I) (1 ,222) 26,866 63,348 Facility action charges, net ............................................................. (4,4 I I) 1,458 (2,953) Total operating costs and expenses ...................................... 179,340 23,930 (I) 261 ,459 26,866 (17,458) 474,136 Operating income (loss) .........................................
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 79–80)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, the total interest expense for the CKE Securitization Entities in fiscal year 2022 was ($63,236) in thousands. This figure is derived from the combining consolidating statement of operations. This includes interest expenses from Carl's Jr. Restaurants LLC, Carl's Jr. Funding LLC, Carl's Jr. SPV Guarantor LLC, Hardee's Restaurants LLC, Hardee's Funding LLC and Hardee's SPV Guarantor LLC.
For a prospective Carls franchisee, understanding the interest expenses of the CKE Securitization Entities is crucial because it reflects the financial health and debt management of the overall organization. High-interest expenses could indicate a higher debt burden, which might affect the franchisor's ability to support franchisees or invest in the brand. Conversely, lower interest expenses could suggest better financial stability and more resources available for franchisee support and growth initiatives.
It is important to note that these figures are presented in thousands, so the actual interest expense is $63,236,000. Additionally, the statement includes interest expenses from various entities within the CKE Securitization structure, including both Carl's Jr. and Hardee's. A potential franchisee should investigate further to understand how these interest expenses are allocated and how they might impact the financial performance of individual franchise locations.
Prospective franchisees should also consider these interest expenses in the context of the overall revenue and operating income of the CKE Securitization Entities. A high operating income could offset high-interest expenses, indicating that the organization is still profitable despite its debt obligations. Therefore, a comprehensive analysis of the financial statements is necessary to assess the true financial health and stability of Carls.