How does Checkers recognize revenue from restaurant sales at Company-operated restaurants?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
zed $0.1 million of financing costs associated with the New Money Loans and Second Out Loans issued under the Out-of-Court Restructuring. For the same fiscal period, the Company amortized $0.1 million of financing costs associated with the unfunded commitment associated with the New Money Loans.
Revenue Recognition
"Restaurant sales" includes revenues recognized upon delivery of food to the customer at Company-operated restaurants. "Restaurant sales" are recognized upon sale and are presented net of coupons and discounts, sales tax and other sales-related taxes. Revenue is recognized when the food is purchased by the customer, which is when our performance obligation is satisfied. "Restaurant sales" also includes revenues recognized upon delivery of food to a third-party delivery company. The revenue is recognized as a receivable from the third-party delivery service and collection is made within three to seven business days. Delivery sales are recognized net of commissions, fees, taxes, and discounts.
"Franchise and retail royalty revenue" includes royalties on sales by franchised restaurants and sales of licensed products in retail stores. Royalties are based on a percentage of sales of the franchised restaurant and sales of licensed products in retail stores which are recognized as earned.
"Franchise fees and other income" is comprised of franchise fees, transfer fees, and area development fees that are generated from the sale of rights to develop, own and operate restaurants, as well as sublease rental income and revenues from advertising cooperative funds. As a sublessor for the operation of certain franchised restaurants, fees for sublease income are also included within "franchise fees and other income." The Company accounts for leases using the guidance in ASC 842, Leases, as well as ASC 606, Revenue from Contracts with Customers. See the Note 16. Leases for a discussion on leases.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, revenue from restaurant sales at company-operated restaurants is recognized upon delivery of food to the customer. These sales are presented net of coupons, discounts, sales tax, and other sales-related taxes. Checkers recognizes revenue when the food is purchased, as this is when the performance obligation is satisfied.
For food delivered through third-party delivery companies, Checkers recognizes revenue as a receivable from the delivery service, with collection typically occurring within three to seven business days. These delivery sales are recognized net of commissions, fees, taxes, and discounts. The payment terms for restaurant sales are immediate upon delivery of the food to the customer, with consideration being variable due to coupons and discounts recorded at the time of delivery.
This means that for a traditional sale at a Checkers company-operated restaurant, revenue is recorded the moment the customer receives their order. For delivery sales, there is a slight delay in revenue recognition as Checkers waits for payment from the third-party delivery service. This distinction is important for understanding Checkers' financial reporting and how sales are accounted for in different channels.