What was the amount of variable lease cost for Carvel in 2024?

According to Carvel's 2025 Franchise Disclosure Document, the variable lease cost for the fiscal year ended in 2024 was $3,516. Variable lease costs primarily consist of common area maintenance, real estate taxes, and contingent rent based on a percentage of SBR (Store, Bakery, and Restaurant) sales.

For a prospective Carvel franchisee, understanding variable lease costs is crucial because these expenses can fluctuate based on the performance of the store and changes in property taxes or common area maintenance fees. Unlike fixed rent, which remains constant, variable lease costs can impact profitability, especially if sales targets are not met or if there are unexpected increases in property-related expenses.

Carvel's FDD also indicates that total operating lease costs include rental expenses related to leases for Company SBRs, leased properties subleased to franchisees, and leases for corporate offices. This comprehensive approach to lease accounting provides transparency into the various components that make up Carvel's overall lease obligations. Franchisees should carefully review these figures to understand the potential financial implications of leasing a Carvel location.

Therefore, a prospective franchisee should consider these variable costs when projecting their potential earnings and conduct thorough due diligence to understand the factors that could influence these costs in their specific location. This will help in making informed financial decisions and managing the business effectively.