What was the net cash provided by operating activities for Churchs Chicken as of December 31, 2023?
Churchs_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
nce at December 31, 2023 | S | 122,652 | 5 | 33,814 | $ | 156,466 |
| Dec | ember 31, | December 25 | 5, | |
|---|---|---|---|---|
| 2023 | 2022 | |||
| Operating activities | _ | |||
| Net income | S | 18,850 | $ 12,30 | 00 |
| Adjustments to reconcile net income to net cash | ||||
| provided by operating activities: | ||||
| Depreciation and amortization | 26,220 | 24,0 | 18 | |
| Loss (gain) on asset dispositions | 3,076 | (1,6 | 56) | |
| Non-cash increase in debt obligation | 9 | 8 | ||
| Non-cash operating lease adjustments | (420) | (2: | 51) | |
| Non-cash finance lease adjustments | 233 | -1 | 87 | |
| Changes in operating assets and liabilities: | ||||
| Accounts receivable, net | 1,037 | (2) | 74) | |
| Inventory | (35) | 1 | ||
| Prepaid expenses and other | (3,558) | 1,46 | 64 | |
| Accounts payable and due from member | (20,341) | (33,2 | 71) | |
| Accrued liabilities | 450 | (1,60 | 67) | |
| Total change in net working capital | (22,447) | (33,7- | 47) | |
| Other long-term assets and liabilities | (1,712) | (33 | 58) | |
| Net cash provided by operating activities | 23,809 | 01 | ||
| Investing activities | ||||
| Capital expenditures | (8,498) | (6,2) | 80) | |
| Net cash used in investing activities | 7 | (8,498) | (6,2) | |
| Financing activities | ||||
| Debt borrowing | 23,000 | 32,00 | 00 | |
| Principal payments on long-term debt | (20,440) | (29,9) | 32) | |
| Cash dividends to Member | (17,225) | - | ||
| Net cash (used in) provided by financing activities | - | (14,665) | 2,00 | 68 |
| Net increase (decrease) in cash, cash equivalents and restricted cash | 646 | (3,8 | 11) | |
| Cash, cash equivalents and restricted cash at beginning of period | 5,706 | 9, |
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 35–43)
What This Means (2025 FDD)
According to Churchs Chicken's 2025 Franchise Disclosure Document, the net cash provided by operating activities as of December 31, 2023, was $23,809. This figure represents the cash flow generated from the company's normal business operations during that period. It's a key indicator of Churchs Chicken's ability to generate sufficient cash to maintain and grow its operations.
Several factors contributed to this net cash flow. These include net income of $18,850, adjustments for depreciation and amortization totaling $26,220, and a loss on asset dispositions of $3,076. These adjustments reconcile net income to the actual cash generated by operating activities by accounting for non-cash expenses and gains/losses.
However, changes in operating assets and liabilities also impacted the net cash provided. For example, there were changes in accounts receivable ($1,037), inventory (-$35), prepaid expenses and other (-$3,558), accounts payable and due from member (-$20,341), and accrued liabilities ($450). These changes reflect how Churchs Chicken managed its working capital during the year. A decrease in accounts payable, for instance, means the company paid off more of its short-term debts, which reduces cash flow.
For a prospective franchisee, understanding these figures is crucial. Positive net cash from operating activities indicates financial health and stability. It suggests that Churchs Chicken is capable of supporting its franchisees and investing in the brand's future. However, franchisees should also examine the components of this cash flow to understand the underlying factors driving it and to assess the sustainability of these cash flows.