What costs are included in the 'COGS' calculation for Cicis restaurants?

According to Cicis's 2025 Franchise Disclosure Document, 'COGS' or Cost of Goods Sold, includes the aggregate delivered cost of food and beverage sold at the restaurant, as well as related paper supplies. This figure is a key component in calculating the financial performance of Cicis restaurants. COGS is subtracted from Net Company Sales, along with other expenses, to determine Restaurant EBITDA Before. Net Company Sales is the sum of Fee Based Net Sales plus Game Room Sales. Fee Based Net Sales means all sales, revenues, charges and receipts received by the restaurants in the Data Set including all business insurance proceeds, whether from cash, check, credit or debit card, gift cards, barter exchange, trade credit or other credit transactions, but excludes (i) sales tax and other related taxes collected from the customers and paid to the applicable federal, state, municipal, or local authority, (ii) any refunds made to customers, (iii) receipts from the sale of products from vending machines, and (iv) revenue that is generated from the operation of video game machines (including bulk machines). Game Room Sales means aggregate revenue derived by the restaurants in the Data Set from the operation of the game room and video game machines.

For a prospective Cicis franchisee, understanding the components of COGS is crucial for managing expenses and forecasting profitability. By carefully tracking and managing food and beverage costs, as well as paper supplies, franchisees can directly impact their bottom line. The FDD provides average and median figures for COGS, allowing potential franchisees to benchmark their performance against existing Cicis restaurants. For example, the 2024 average annual COGS was $384,960, representing 27.4% of Net Company Sales. The 2024 average monthly COGS was $32,080, representing 27.4% of Net Company Sales.

It's important to note that COGS does not include other significant expenses such as payroll costs, controllable expenses (utilities, repairs & maintenance, etc.), advertising, or non-controllable expenses (occupancy costs, property tax, etc.). These are separate line items in the financial performance representation. Franchisees should develop strategies to optimize all these expense categories to maximize profitability. The FDD also mentions that written substantiation for the financial performance representation will be made available to you upon reasonable request, which can provide further clarity on these figures.

Prospective franchisees should pay close attention to how Cicis defines and calculates COGS, as this can influence financial planning and operational decisions. Understanding the relationship between COGS and other financial metrics, such as Net Company Sales and EBITDA, is essential for assessing the overall financial health of a Cicis franchise. By carefully analyzing these figures and implementing effective cost management strategies, franchisees can improve their chances of success within the Cicis system.