What was the depreciation expense associated with Checkers' property and equipment for the fiscal year ended December 30, 2024?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
| | (Successor) | | | | | | | |-----------------------------------|-------------|--------------|----|------------|--------------|--|--| | | | December 30, 2024 | | January 1, 2024 | Estimated Useful Lives | | | | Land | $ | 5,922 | $ | 6,735 | | | | | Leasehold and land improvements | | 2,270 | | 804 | 1-10 years | | | | Buildings | | 6,779 | | 3,617 | 5-30 years | | | | Equipment, furniture and fixtures | | 22,181 | | 19,689 | 3-10 years | | | | Construction in progress | | 3,141 40,293 | | 1,320 32,165 | | | | | Less: accumulated depreciation | | (8,614) | | (2,856) | | | | | Property and equipment, net | $ | 31,679 | $ | 29,309 | | | | Depreciation expense associated with prope
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, the depreciation expense associated with property and equipment was $6.0 million for the fiscal year ended December 30, 2024. It is important to note that this figure pertains to the 'Successor' period following a recapitalization agreement. The FDD also provides depreciation figures for earlier periods under both 'Successor' and 'Predecessor' designations, reflecting changes in the company's structure and ownership.
For a prospective Checkers franchisee, understanding depreciation expense is crucial for assessing the profitability and financial health of the franchise system. Depreciation represents the reduction in value of assets like equipment and buildings over time, and it's a non-cash expense that impacts the company's net income. A higher depreciation expense can indicate significant investments in property and equipment, while a lower expense might suggest older assets or less capital expenditure.
It's also worth noting that Checkers' capitalized software amortization expense was $0.4 million for the fiscal year ended December 30, 2024, which is recorded within general and administrative expenses. Additionally, the company recorded impairment charges related to property and equipment amounting to $1.9 million for the same fiscal year, primarily due to store closures. These figures provide further insight into the factors affecting Checkers' financial performance and asset management strategies.
Franchisees should consider these depreciation and amortization figures in conjunction with other financial data in the FDD, such as revenue, operating expenses, and capital expenditures, to gain a comprehensive understanding of Checkers' financial performance and investment requirements. Consulting with a financial advisor is recommended to interpret these figures in the context of their own investment goals and risk tolerance.