What was the total operating lease cost for Carls?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
January 31, 2024, future minimum lease and sublease rent revenue expected to be received, are as follows:
Finance Leases Operating Leases Subleases Subleases Owned Properties Fiscal: 2025 $ 246 $ 77,732 $ 7,595 2026 245 69,733 8,191 2027 213 60,351 8,202 2028 190 52,474 7,853 2029 97 41,874 7,129 Thereafter 202 119,002 45,439 Total future minimum lease and sublease rent revenue 1,193 $ 421,166 $ 84,409 Unearned interest income (229) Present value of leases receivable 964 Less current portion (180) Leases recei
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 79–80)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, the total operating lease cost for fiscal year 2024 was $86,496. This figure includes both the operating lease cost of $85,267 and a variable lease cost of $1,229.
For a prospective Carls franchisee, understanding the operating lease costs is crucial as it represents a significant portion of ongoing expenses. These costs cover the expenses associated with leasing the property where the restaurant operates. The variable lease cost component may fluctuate based on factors such as sales performance or other operational metrics, adding an element of unpredictability to the overall lease expense.
It is also useful to compare the 2024 operating lease cost with the previous year. In fiscal year 2023, the total operating lease cost was $86,025, comprising an operating lease cost of $84,890 and a variable lease cost of $1,135. The total lease cost which includes both finance and operating leases was $89,666 in 2024 and $89,914 in 2023. This slight decrease in total operating lease costs from 2023 to 2024 could be due to various factors, such as renegotiated lease terms or changes in the composition of the lease portfolio.
Prospective franchisees should carefully review the specific lease terms for their location and factor these costs into their financial projections. Understanding the components of the operating lease, particularly the variable lease cost, is essential for accurate financial planning and risk assessment.