What costs are specifically excluded from 'Cost of Goods Sold' (COGS) for a Chop5 Salad Kitchen?
Chop5_Salad_Kitchen Franchise · 2024 FDDAnswer from 2024 FDD Document
- "Cost of Goods Sold" or "COGS" includes variable costs that are directly associated with the provision and delivery of goods and services, and which includes costs of food and beverage as well as paper costs.
COGS do not include: (a) fixed costs; (b) overhead costs; (c) Labor Expenses, (d) Marketing Expenses or (e) Excluded Expenses.
- "Excluded Expenses" means interest paid on debt, taxes, depreciation, amortization expenses and certain other expenses incurred by Qualifying Restaurants that are not accounted for in this FPR, including: 3rd party delivery charges; kitchen expenses (supplies, smallwares, etc.); payroll processing/service fees; employee uniforms; food license fees; and any other miscellaneous expenses not included in COGS, Labor Expenses or Marketing Expenses.
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 45–48)
What This Means (2024 FDD)
According to Chop5 Salad Kitchen's 2024 Franchise Disclosure Document, Cost of Goods Sold (COGS) includes variable costs directly associated with providing and delivering goods and services, such as the costs of food, beverages, and paper products. However, certain expenses are specifically excluded from COGS.
These exclusions encompass several categories of costs. Fixed costs and overhead costs are not included in COGS. Additionally, Labor Expenses and Marketing Expenses are excluded from the COGS calculation.
Furthermore, 'Excluded Expenses' are not included in COGS. These 'Excluded Expenses' consist of interest paid on debt, taxes, depreciation, amortization expenses, third-party delivery charges, kitchen expenses (supplies, smallwares, etc.), payroll processing/service fees, employee uniforms, food license fees, and any other miscellaneous expenses not included in COGS, Labor Expenses, or Marketing Expenses. Therefore, a Chop5 Salad Kitchen franchisee should be aware of these specific exclusions when analyzing the financial performance representations provided in the FDD.