How does Del Taco define 'Operating Profit' in Item 19?

According to Del Taco's 2025 Franchise Disclosure Document, 'Operating Profit' is defined in Item 19 as all ordinary and recurring operating expenses minus interest, income taxes, depreciation, and amortization. This definition is crucial for prospective franchisees to understand as it provides a clear picture of how Del Taco calculates the profitability of its company-owned restaurants. The operating profit figures presented in the FDD exclude several key expenses, such as rent, real estate taxes, and overhead costs, which franchisees will need to factor into their own financial projections.

It is important to note that the operating profit figures presented in Item 19 are based on the performance of company-owned Del Taco restaurants. While Del Taco asserts that there are generally no material differences in costs or expenses between company-owned and franchised locations, franchisees should still conduct their own independent investigation to determine their potential profitability. Factors such as local market conditions, management experience, and the ability to control costs can significantly impact a franchisee's financial performance.

Prospective franchisees should carefully review the tables and notes in Item 19 to understand the components of operating profit and the various factors that could affect their own results. They should also consider consulting with financial advisors and experienced Del Taco franchisees to gain a more comprehensive understanding of the financial aspects of operating a Del Taco franchise. By thoroughly analyzing the information provided in Item 19 and conducting their own due diligence, prospective franchisees can make informed decisions about whether to invest in a Del Taco franchise.