What expenses are included within "restaurant food and paper costs" in the accompanying consolidated statements of operations for Checkersrallys?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company and its franchisees each pay charges based on volumes of products purchased from suppliers to Checkers and Rally's Distribution and Services, Inc. ("CDSI"), established for the purpose of providing procurement services and quality assurance support for the benefit of both Company-operated and franchised restaurants. During the period from June 17, 2023 through January 1, 2024 (Successor) and the period from January 3, 2023 through June 16, 2023 (Predecessor) and for the year ended January 2, 2023 (Predecessor), only one member, representing 25% of the CDSI Board of Directors is an employee of the Company. CDSI is not included in the accompanying consolidated financial statements, although the company's contributions to CDSI are included within "restaurant food and paper costs" in the accompanying consolidated statements of operations.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, the "restaurant food and paper costs" line item in the consolidated statements of operations includes the company's contributions to Checkers and Rally's Distribution and Services, Inc. (CDSI). CDSI is established to provide procurement services and quality assurance support for both company-operated and franchised restaurants.
The FDD notes that Checkersrallys and its franchisees pay charges based on the volume of products purchased from suppliers to CDSI. Although CDSI is not included in the consolidated financial statements, the contributions to CDSI are specifically allocated to the "restaurant food and paper costs" line item.
For a prospective franchisee, this means that a portion of their expenses for food and paper products will be directed through CDSI, which is designed to ensure quality and potentially leverage volume discounts. It is important to note that CDSI has a board of directors, with one member representing 25% of the board being an employee of Checkersrallys during the periods specified in the FDD.