For the purposes of Item 19, what does 'Sales' mean for Del Taco restaurants?

According to Del Taco's 2025 Franchise Disclosure Document, 'Sales' within Item 19 refers to the total net cash sales for all restaurants in each category. This figure encompasses the sales of all food, beverages, and promotional items, with sales taxes deducted. This definition is crucial for understanding the financial performance representations provided in Item 19, as it forms the basis for calculating average sales and other financial metrics.

For a prospective Del Taco franchisee, understanding this definition is essential because royalties are calculated as a percentage of these sales. The Franchise Agreement stipulates a 5% royalty on Sales. However, it's important to note that company-owned restaurants, unlike franchised locations, do not pay royalties. This distinction can impact the financial comparisons between company-owned and franchised restaurant performance.

The Item 19 data includes average sales figures for both franchised and company-owned Del Taco restaurants. For example, Table 19-1 presents average sales figures for freestanding franchised Del Taco restaurants that have been operating for at least 12 months. Similarly, Table 19-2 provides average sales figures for freestanding company-owned Del Taco restaurants meeting the same criteria. These figures are used to calculate metrics such as average sales, median sales, highest sales, and lowest sales, offering a comprehensive view of potential revenue generation.

Therefore, when reviewing the financial performance representations in Item 19, a potential franchisee should keep in mind that 'Sales' represents the net revenue from all products sold, excluding sales taxes, and that this figure is the basis for royalty calculations in franchised locations. Understanding this definition is key to accurately interpreting the financial data and assessing the potential profitability of a Del Taco franchise.