What method does Crave Cookies use to determine the costs of cookie boxes?

According to Crave Cookies' 2025 Franchise Disclosure Document, the company uses the first-in, first-out (FIFO) method to determine the costs of cookie boxes. This accounting method assumes that the first units purchased are the first ones sold.

For a prospective Crave Cookies franchisee, this means that the cost of goods sold will be calculated based on the cost of the oldest cookie boxes in inventory. In an inflationary environment where prices are rising, FIFO can result in a higher reported profit because the cost of goods sold reflects older, cheaper prices, while revenue reflects current prices. This can impact the franchisee's financial statements and tax obligations.

It's important to note that inventories are stated at the lower of cost or net realizable value. This means that if the market value of the cookie boxes falls below their cost, Crave Cookies will write down the inventory to its net realizable value, which is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.