What was the operating lease expense for Checkersrallys for the period from January 3, 2023 through June 16, 2023?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
ort and services expenses," "general and administrative expenses" and "restaurant retirement costs" within the accompanying consolidated statement of operations.
(Tabular Dollars in Thousands, Except Share and per Share Data)
The following table provides quantitative information concerning the Company's leases under ASC 842, Leases.
| For the | Periods | For the Year Ended | ||||
|---|---|---|---|---|---|---|
| th Jar | June 17, 2023 through January 1, 2024 (Successor) January 3, 2023 through June 16, 2023 (Predecessor) | January 2, 2023 (Predecessor) | ||||
| Finance lease cost | $ | 1,201 | $ | 674 | $ | 329 |
| Amortization of right-of-use assets | 455 | 237 | 204 | |||
| Interest expense on lease liabilities | 746 | 437 | 125 | |||
| Operating lease cost | 9,117 | 8,801 | 19,351 | |||
| Variable lease cost | 1,171 | 920 | 2,333 | |||
| Sublease income | (1,858) | (1,029) | (3,691) | |||
| Total net lease cost | $ | 9,631 | $ | 9,366 | $ | 18,322 |
| Other lease information: | ||||||
| Cash paid for amounts included in the measurement of lease liabilities | ||||||
| Operating cash flows from finance leases | $ | 746 | $ | 437 | $ | 125 |
| Operating cash flows from operating lease |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, the operating lease cost for the period from January 3, 2023 through June 16, 2023 (Predecessor) was $9,117.
This figure represents the expense Checkersrallys incurred for the use of properties under operating leases during this specific timeframe. Operating leases are typically for shorter terms than finance leases and do not transfer ownership of the asset to the lessee by the end of the lease term. The operating lease cost includes expenses such as rent for restaurant locations.
For a prospective franchisee, understanding the operating lease costs is crucial because it directly impacts the profitability of their restaurant. Higher lease costs can reduce profit margins, while lower costs can improve them. This information helps franchisees assess the financial viability of potential locations and negotiate lease terms effectively. It is important to note that this figure represents the operating lease cost for the entire company, not an individual franchise location. Franchisees should review their specific lease agreements and consult with financial advisors to understand their individual obligations.