For the purposes of Item 19 in the Del Taco FDD, what is included in the definition of "Sales"?

According to Del Taco's 2025 Franchise Disclosure Document, the term "Sales" within Item 19 refers to the total net cash sales for all restaurants in each category presented. This includes revenue from all food, beverages, and promotional items, net of sales taxes. This definition is important for prospective franchisees because it clarifies what constitutes the revenue on which royalties are based. The Franchise Agreement stipulates that franchisees must pay a 5% royalty on Sales. Company-owned restaurants, unlike franchised locations, do not pay royalties.

Understanding the components of "Sales" is crucial for interpreting the financial performance representations in Item 19. The average sales figures presented for both franchised and company-owned Del Taco restaurants are calculated using this definition. Specifically, "Average Sales" is determined by dividing the total Sales figure for all surveyed restaurants in each category by the total number of restaurants surveyed. This metric provides a benchmark for franchisees to evaluate their potential revenue.

Prospective franchisees should note that the "Sales" figures do not reflect costs of sales, operating expenses, or other costs that must be deducted to determine net cash sales. These figures are gross sales figures. While franchisees report sales data to Del Taco, they are not required to report cost and expense data, so franchisees should conduct their own independent investigation of costs and expenses they will incur in operating their Del Taco Restaurant.