How does Checkers recognize revenue from restaurant sales, including sales through third-party delivery companies?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
Company adopted this pronouncement effective January 3, 2023 and determined that it had no material impact on the consolidated financial statements and related disclosures.
NOTE 3 - REVENUE
Performance Obligations in Contracts with Customers
The restaurant sales performance obligation is satisfied upon the delivery of food to the customer at Company-operated restaurants. The payment terms are immediately satisfied upon the delivery of the food to the customer. The consideration is variable generally due to coupons and discounts which are recorded at the time of food delivery.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The delivery sales performance obligation is satisfied upon the delivery of food to a third-party delivery partner. The Company acts as an agent in delivery sales and, therefore, records the revenue net of costs which include commissions, fees, and in certain cases taxes.
The franchise fees performance obligation is satisfied over the terms of the franchise agreement between the Company and the related franchisees.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, the company recognizes revenue from restaurant sales when food is delivered to the customer at company-operated restaurants. These sales are recorded at the point of sale, net of coupons, discounts, sales tax, and other sales-related taxes. The payment terms are immediate upon delivery of the food. The consideration is variable generally due to coupons and discounts which are recorded at the time of food delivery.
For sales made through third-party delivery companies, Checkers recognizes revenue upon delivery of the food to the third-party delivery partner. Checkers acts as an agent in these delivery sales, recording revenue net of costs such as commissions, fees, and, in some cases, taxes. The delivery partner manages the web and mobile applications, interacts directly with the end customer, and schedules the restaurant to prepare and deliver the food to their employees. The net revenue from these delivery sales is typically paid within 2 to 7 days from the end of the week of the sale, and the revenue varies based on the costs of the service and the specific delivery partner.
In summary, Checkers distinguishes between direct restaurant sales and delivery sales, with revenue recognition occurring upon delivery in both scenarios. However, delivery sales are treated differently due to the involvement of a third-party, resulting in revenue being recorded net of associated costs and a slightly delayed payment timeline.