FDD Talk: Capriotti’s Franchise Costs, Fees, Average Revenues and/or Profits (2022 Review)

In this FDD Talk post, you’ll learn the following:

Section I – Estimated initial investment (franchise costs) for a Capriotti’s franchise, based on Item 7 of the company’s 2022 FDD

Section II – Initial franchise fee, royalty fee, and marketing fee for a Capriotti’s franchise, based on Items 5 and 6 of the company’s 2022 FDD

Section III – Number of franchised and company-owned Capriotti’s outlets at the start of the year and the end of the year for 2019, 2020, and 2021, based on Item 20 of the company’s 2022 FDD

Section IV – Background information on the Capriotti’s franchise opportunity, including relevant news updates

Section V – Presentation and analysis of Capriotti’s financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2022 FDD, including information on the:

2021 average, median, highest, and lowest unit volume for all franchised Capriotti’s Restaurants open during all of 2021, all franchised Capriotti’s Restaurants in “mature markets” as of December 31, 2021, all franchised Capriotti’s Restaurants open more than 2 years as of December 31, 2021, and all franchised Capriotti’s Restaurants open more than 10 years as of December 31, 2021, respectively

2021 average, median, highest, and lowest unit volume for all affiliate-owned Capriotti’s Restaurants open during all of 2021, all affiliate-owned Capriotti’s Restaurants in “mature markets” as of December 31, 2021, all affiliate-owned Capriotti’s Restaurants open more than 2 years as of December 31, 2021, and all affiliate-owned Capriotti’s Restaurants open more than 10 years as of December 31, 2021, respectively

2021 average and median total sales, prime cost, cost of goods sold, store level salary, store level bonus – salary, payroll and related expenses, operating expense, non-controllable expense, rent, royalty fee, national marketing fees, local marketing cooperative fees, and EBITDA for the 11 affiliate-owned Capriotti’s Restaurants in the State of Nevada that operated during all of 2021

Section VI – Key ratios, comparables, computations, and analyses for the Capriotti’s franchise opportunity (exclusive content for Platinum subscribers)

Section I – Capriotti’s Franchise Costs

Capriotti’s franchise costs, based on Item 7 of the company’s 2022 FDD:

Franchise Fee: $40,000
Development Services Fee: $10,000
Architectural/Engineering Fees and Project Management: $15,000 to $32,500
Professional Services: $2,000 to $8,000
Permits and Licensing: $3,000 to $17,000
Rent: amount not specified
Security Deposits: $3,100 to $15,000
Leasehold Improvements: $142,000 to $290,000
Furniture, Fixtures, Equipment, and Smallwares: $100,000 to $175,000
Interior Décor: $4,000 to $13,000
Exterior Signage: $5,000 to $21,000
Menu Boards: $800 to $2,000
POS System: $6,200 to $20,000
Training: $15,000
Opening Inventory: $7,000 to $15,000
Shop Launch Marketing Plan: $30,000
Pre-Opening Mock Operations: $3,000
Insurance (3 months): $1,000 to $2,000
Additional Funds (3 months): $30,000 to $40,000
Total Estimated Capriotti’s Franchise Costs (excluding real estate purchase and lease costs): $417,100 to $748,500

Section II – Capriotti’s Initial Franchise Fee, Royalty Fee, and Marketing Fee

Capriotti’s initial franchise fee, royalty fee, and marketing fee, based on Items 5 and 6 of the company’s 2022 FDD:

Initial Franchise Fee: $40,000
Royalty Fee: 6% to 7% of monthly Gross Sales
Marketing Fund: up to 4% of monthly Gross Sales. Capriotti’s currently charges 2% of monthly Gross Sales.
Cooperative Advertising: up to 2% of monthly Gross Sales. Capriotti’s currently requires you to contribute the full 2%.

Section III – Number of Franchised and Company-Owned Capriotti’s Outlets

Franchised

2019

Outlets at the Start of the Year: 88
Outlets at the End of the Year: 92
Net Change: +4

2020

Outlets at the Start of the Year: 92
Outlets at the End of the Year: 100
Net Change: +8

2021

Outlets at the Start of the Year: 100
Outlets at the End of the Year: 110
Net Change: +10

Company-Owned

2019

Outlets at the Start of the Year: 9
Outlets at the End of the Year: 13
Net Change: +4

2020

Outlets at the Start of the Year: 13
Outlets at the End of the Year: 15
Net Change: +2

2021

Outlets at the Start of the Year: 15
Outlets at the End of the Year: 14
Net Change: -1

Section IV – Background Information on the Capriotti’s Franchise

21 Things You Need to Know About the Capriotti’s Franchise

Continues to Expand National Footprint

1. At the end of September 2021, Capriotti’s and Wing Zone announced that the brands were on pace for an even better second half of the year with the signing of 16 area development agreements in Q3 which will bring an additional 39 new stores to communities across the U.S.

2. Existing locations have maintained strong sales as the brand continues to attract investors in markets across the country. The 39 units sold in Q3 – 25 Capriotti’s shops and 14 Wing Zone locations – follow the remarkable signing of 89 units in the first two quarters of the year, bringing the total new shop count to 128 for the year.

3. Third quarter signings for Capriotti’s include:

Austin/Houston, TX
N. Dallas, TX
Dallas/Fort Worth, TX
Fresno, CA
Louisville, KY
Maryland
Honolulu, HI
Indianapolis, IN
San Diego, CA
Myrtle Beach, SC

4. David Bloom, chief development and operating officer for Capriotti’s and Wing Zone, said, “Our teams have been extremely busy pushing Capriotti’s and Wing Zone to new heights through innovation and technology enhancements while simultaneously attracting new investors. This, paired with our recent rebranding of the Wing Zone concept, has created an opportune time for both existing and prospective franchisees to grow with our brands.”

5. Last year brought positive developments for Capriotti’s and Wing Zone alike, including recognition in Franchise Update Magazine’s Marketing Innovation Awards, utilization of ghost kitchens which has allowed both brands to break into new, untapped markets, and the addition of team members to help expedite the brand’s growth and provide additional support to franchise partners.

6. Bloom added, “Wing Zone and Capriotti’s have remained incredibly flexible during the pandemic – remaining true to our values, investing in our people and building and maintaining a robust innovation pipeline – and we are confident that will continue to serve our brands well for years to come.”

Capriotti’s Sandwich Shop Franchisee Awarded Franchisee of the Year by International Franchise Association

7. At the beginning of March 2022, the International Franchise Association (IFA) named Javier Gomez of Capriotti’s Sandwich Shop in Fresno, California as Franchisee of the Year. Gomez was honored at IFA’s 62nd Annual Convention in San Diego, California, for being an outstanding franchise establishment owner-operator.

8. The Franchisee of the Year Award, sponsored by IFA’s partner Paychex, recognizes leading franchisees who exemplify at least one of IFA’s “Open for Opportunity” core pillars: Community, Workforce, Diversity, Equity and Inclusion, and Veterans.

9. “Franchisee of the Year Awards are the highest honors presented to individual franchisees,” said Matthew Haller, president and CEO of the International Franchise Association. “These local business owners, like Javier, represent some of the best entrepreneurs in the country, and we are proud to recognize their contributions to their communities, their employees, and all those they serve.”

10. With more than 30 years of experience working in the franchise restaurant industry, Gomez opened his Capriotti’s Sandwich Shop in Fresno, CA in April 2021, helping to bring over 20 new jobs to the community during a very challenging economic time. He’s a familiar face to the local restaurant scene, as he also owns 12 Rally’s restaurants, and has quickly become a shining star in the Capriotti’s franchise system. Gomez was born in Mexico and came to the U.S. at the age of four, and understands the meaning of hard work and perseverance.

11. As an entrepreneur, he is committed to investing in a diverse pool of employees, giving them the tools to succeed, and making sure to be there on the frontlines alongside them to give credit where credit is due. Not only is Gomez dedicated to creating jobs in his community, but he strives to make a difference by giving back. Since April, his restaurant group has donated $5,000 to the Central California Food Bank along with Catholic Charities. He also sponsors an annual golf tournament to benefit area veterans, Fresno Police, and the Fresno County Sheriff’s Department.

12. Ashley Morris, CEO of Capriotti’s, said, “Javier embodies every quality that makes not only a fantastic franchise partner but a wonderful human being. We could not be prouder of his accomplishments and we are eager to see where his journey takes him. There isn’t anyone that deserves this recognition more than Javier.”

Announce First-of-Its-Kind Partnership with RaaS

13. At the beginning of August 2022, Capriotti’s and Wing Zone announced a partnership with RaaS (Restaurant as a Service). This news comes not long after both Capriotti’s Sandwich Shop and Wing Zone unveiled development plans that will expand each brand’s brick and mortar footprint in states across the country. The RaaS deal demonstrates yet another move towards industry dominance within both the sandwich and wing categories.

14. RaaS supports existing restaurant concepts by managing operations inside a ghost kitchen facility. The group partners with distinctive and celebrated brands to help them operate profitably by leveraging experience and maximizing revenue within the delivery channel.

15. Since 2017, RaaS’s primary focus has been fulfilling demand and helping expand its partner brands to new territories. This most recent deal with Capriotti’s and Wing Zone began with the acquisition of two ghost kitchens in Los Angeles, followed closely by the development of two more locations in the LA market. The acquisitions are complete and RaaS will have the ghost kitchen locations in Anaheim and Glendale, California open by the end of July.

16. “RaaS is the pre-eminent management company for ghost kitchens and we are eager to partner with an industry leader to help expand our brands into even more territories across the country,” said David Bloom, chief development and operating officer for Capriotti’s and Wing Zone.

17. RaaS operates its own brands, however, the development agreement with Capriotti’s and Wing Zone represents a unique move for the company as they are just beginning to partner with franchise brands. “Capriotti’s is an ideal partner to help anchor our ghost kitchen units given its standing as best in category and we are excited to help expand it and the Wing Zone brand into new locations,” said Drew Padnick, president of RaaS.

Company History

18. Capriotti’s was founded in 1976 by siblings Lois and Alan Margolet in the Little Italy neighborhood of Wilmington, Delaware. In order to stand out among the numerous sandwich shops in Little Italy, the Margolets set out to create a high quality sandwich for “real turkey lovers.” The Margolets roasted whole fresh turkeys overnight then used the meat, along with fresh produce and high quality cheese and bread. The sandwich was a hit and the Margolets eventually added other sandwiches to the menu.

19. In 1987, the Margolets’ cousin, Diane Rizzo, joined Capriotti’s and they began opening additional restaurants in the Delaware area. The Margolets decided to push further expansion through franchising and sold the first franchise in 1991. Capriotti’s continued to grow around the United States over the next few decades.

20. In 2004, future Capriotti’s owners and executives, Ashley Morris and Jason Smylie, opened a franchise in Las Vegas. After gathering some other investors, Morris and Smylie bought Capriotti’s in 2008. At the time, the chain had 44 locations. Today, Capriotti’s has over 120 locations across more than 16 states.

Entrepreneur’s Franchise 500

21. Capriotti’s did not rank on Entrepreneur’s 2022 Franchise 500 list.

Section V – Financial Performance Representations (Average Revenues and/or Profits) for the Capriotti’s Franchise (Item 19, 2022 FDD)

This historical financial performance representation reflects certain actual operating results of the franchised and affiliate-owned Capriotti’s Restaurants described below during the 2021 calendar year.

All of the Capriotti’s Restaurants (both franchised and affiliate-owned) whose information is included in this Item 19 are substantially similar to one another in terms of products and services offered and substantially similar to the Capriotti’s Restaurants for which Capriotti’s is offering franchises in the disclosure document.

Capriotti’s has not materially changed the Capriotti’s Restaurant franchise concept or business model due to the COVID-19 pandemic. Capriotti’s continues to shore up national distribution, improve operational efficiency and performance, enhance training programs, sign competitive vendor contracts, negotiate national pricing with delivery service providers, and enhance national and local marketing efforts.

The “traditional” or “brick and mortar” Capriotti’s Restaurants disclosed in this Item 19 operate within a retail center, on a stand-alone basis, or at an in-line location with other businesses and have prominent exterior and interior branding. These Capriotti’s Restaurants operate a minimum of 10 hours per day, 7 days a week.

The operational system is consumer-facing, directly serving products to consumers through dine-in and carryout options and indirectly serving consumers through delivery-service providers.

This financial performance representation discloses the actual historical average, median, and high/low annual gross sales of all franchised (a total of 89 in 2021) and affiliate-owned (a total of 12 in 2021) traditional Capriotti’s Restaurants in the United States that were open and operating during all of 2021.

It also discloses the average, median, and high/low annual gross sales during 2021 of: (i) the franchised (a total of 60 in 2021) and affiliate-owned (a total of 11 in 2021) Capriotti’s Restaurants that operate in “mature markets” (defined in the tables below); (ii) the franchised (a total of 80 in 2021) and affiliate-owned (a total of 11 in 2021) Capriotti’s Restaurants that had been open for more than 2 full years as of December 31, 2021; and (iii) the franchised (a total of 45 in 2021) and affiliate-owned (a total of 6 in 2021) Capriotti’s Restaurants that had been open for more than 10 full years as of December 31, 2021.

This financial performance representation does not include the results of the following 76 Restaurants operating under the Capriotti’s mark: (a) 15 traditional franchised Restaurants that opened during 2021 (and therefore were not open for the full calendar year); (b) 6 traditional franchised Restaurants that permanently closed during 2021 (and therefore were not open for the full 2021 calendar year); (c) 3 franchised Restaurants that operated at non-traditional locations that permanently closed during 2021 (but would not have been included in this Item 19 in any event because they operated at non-traditional locations and therefore are not Capriotti’s prototypical franchised Restaurant); (d) 2 franchised Restaurants that operated at non-traditional locations during 2021 and had limited operating hours and therefore are not Capriotti’s prototypical franchised Restaurant; and (e) 50 locations (47 licensed under the licensee’s own form of contract and 3 franchised) operated in “ghost kitchens” that first opened in 2021.

A “ghost kitchen” or “dark kitchen” operates within a non-branded, non-retail facing, or non-consumer facing facility. It operates within a facility where multiple other restaurant businesses run separate operations. This operational system indirectly serves products to consumers principally through delivery-service providers. It is a type of non-traditional location and not Capriotti’s prototypical Restaurant.

Of the franchised and affiliate-owned Capriotti’s Restaurants that were open during all of 2021, a few experienced to varying degrees temporary closures, reduced operating hours, or reduced or no dine-in capacity due to COVID-19 restrictions. Capriotti’s has not modified any of the 2021 financial performance information disclosed in this portion of Item 19 to account for those disruptions.

Besides the annual gross sales of all traditional franchised and affiliate-owned Capriotti’s Restaurants in the United States that were open and operating during all of 2021, this financial performance representation contains the actual average partial operating financial statement for 2021 for 11 affiliate-owned and operated traditional Capriotti’s Restaurants.

Capriotti’s obtained the gross sales information for franchised Restaurants from sales reports submitted by franchisees. Capriotti’s has not independently audited that information.

“Gross Sales” is defined in Capriotti’s Franchise Agreement as the total of all revenue derived from operating the Restaurant, whether from sales for cash or credit, and irrespective of collection, including sales of merchandise, products, and services, but excluding sales tax, proceeds from the sale of equipment not in the ordinary course of business, franchisor pre-approved promotional discounts (provided physical evidence of the promotion/coupon is retained), and food purchased by employees for their own consumption as outlined in the Manual.

The actual average, median, and high/low annual gross sales volumes reported below do not reflect the costs of sales, operating expenses, or other costs or expenses that must be deducted from the gross sales figures to obtain your net income or profit.

The franchise program for Capriotti’s Restaurants is structured to provide to franchisees, in Capriotti’s capacity as franchisor, some of the services that Capriotti’s provides to the affiliate-owned Capriotti’s Restaurants identified below. However, Capriotti’s does not provide certain services to franchisees that the business owner normally provides, such as financing, accounting, legal, personnel, and management services. The availability, cost, and quality of these services to a franchisee likely will affect operations.

Part 1 – Sales Volume Information

Franchised Restaurants

2021 Results for All Franchised Restaurants Open During All of 2021

Number of Restaurants in Range: 89
Average Unit Volume: $913,683
Highest Sales: $1,765,805
Lowest Sales: $415,662
Number and Percentage of Restaurants Exceeding Average: 36/40%
Median Unit Volume: $855,868
Average Unit Volume of Top 25th Percentile: $1,308,067
Highest Sales: $1,765,805
Lowest Sales: $1,073,650
Number and Percentage of Restaurants in Top 25th Percentile Exceeding Average: 8/36%
Median Unit Volume of Top 25th Percentile: $1,213,659
Average Unit Volume of Bottom 25th Percentile: $604,190
Highest Sales: $712,121
Lowest Sales: $415,662
Number and Percentage of Restaurants in Bottom 25th Percentile Exceeding Average: 11/50%
Median Unit Volume of Bottom 25th Percentile: $635,192

2021 Results for All Franchised Restaurants Open in Mature Markets as of December 31, 2021

Mature markets in this table are the States of Delaware, Maryland, Nevada, and Pennsylvania. There were 60 franchised Restaurants in those states that were operational during the entire 2021 calendar year.

The first Capriotti’s Restaurant in one of these states opened in June 1976. The most recent Capriotti’s Restaurant opened in one of these states in November 2021.

Number of Restaurants in Range: 60
Average Unit Volume: $975,109
Highest Sales: $1,765,805
Lowest Sales: $488,570
Number and Percentage of Restaurants Exceeding Average: 25/42%
Median Unit Volume: $899,989
Average Unit Volume of Top 25th Percentile: $1,394,914
Highest Sales: $1,765,805
Lowest Sales: $1,107,075
Number and Percentage of Restaurants in Top 25th Percentile Exceeding Average: 12/80%
Median Unit Volume of Top 25th Percentile: $1,396,445
Average Unit Volume of Bottom 25th Percentile: $639,385
Highest Sales: $728,212
Lowest Sales: $488,570
Number and Percentage of Restaurants in Bottom 25th Percentile Exceeding Average: 9/60%
Median Unit Volume of Bottom 25th Percentile: $676,607

2021 Results for All Franchised Restaurants Open More Than 2 Years as of December 31, 2021

Number of Restaurants in Range: 80
Average Unit Volume: $915,559
Highest Sales: $1,748,594
Lowest Sales: $415,662
Number and Percentage of Restaurants Exceeding Average: 34/43%
Median Unit Volume: $879,144
Average Unit Volume of Top 25th Percentile: $1,296,901
Highest Sales: $1,748,594
Lowest Sales: $1,074,398
Number and Percentage of Restaurants in Top 25th Percentile Exceeding Average: 14/70%
Median Unit Volume of Top 25th Percentile: $1,213,659
Average Unit Volume of Bottom 25th Percentile: $601,426
Highest Sales: $712,121
Lowest Sales: $415,662
Number and Percentage of Restaurants in Bottom 25th Percentile Exceeding Average: 10/50%
Median Unit Volume of Bottom 25th Percentile: $635,192

2021 Results for All Franchised Restaurants Open More Than 10 Years as of December 31, 2021

Number of Restaurants in Range: 45
Average Unit Volume: $958,386
Highest Sales: $1,679,300
Lowest Sales: $527,391
Number and Percentage of Restaurants Exceeding Average: 20/44%
Median Unit Volume: $893,219
Average Unit Volume of Top 25th Percentile: $1,335,328
Highest Sales: $1,679,300
Lowest Sales: $1,107,075
Number and Percentage of Restaurants in Top 25th Percentile Exceeding Average: 5/45%
Median Unit Volume of Top 25th Percentile: $1,252,789
Average Unit Volume of Bottom 25th Percentile: $669,625
Highest Sales: $786,732
Lowest Sales: $527,391
Number and Percentage of Restaurants in Bottom 25th Percentile Exceeding Average: 5/45%
Median Unit Volume of Bottom 25th Percentile: $683,686

Affiliate-Owned Restaurants

2021 Results for All Affiliate-Owned Restaurants Open During All of 2021

Number of Restaurants in Range: 12
Average Unit Volume: $1,076,011
Highest Sales: $1,884,884
Lowest Sales: $686,737
Number and Percentage of Restaurants Exceeding Average: 4/33%
Median Unit Volume: $927,012

2021 Results for All Affiliate-Owned Restaurants Open in Mature Markets as of December 31, 2021

Mature market in this table is the State of Nevada. There were 11 affiliate-owned Restaurants in Nevada that were operational during the entire 2021 calendar year.

The first Capriotti’s Restaurant opened in Nevada in April 1993. The most recent Capriotti’s Restaurant opened in Nevada in February 2020.

Number of Restaurants in Range: 11
Average Unit Volume: $1,107,163
Highest Sales: $1,884,884
Lowest Sales: $686,737
Number and Percentage of Restaurants Exceeding Average: 4/36%
Median Unit Volume: $927,012

2021 Results for All Affiliate-Owned Restaurants Open More Than 2 Years as of December 31, 2021

Number of Restaurants in Range: 11
Average Unit Volume: $1,107,163
Highest Sales: $1,884,884
Lowest Sales: $686,737
Number and Percentage of Restaurants Exceeding Average: 4/36%
Median Unit Volume: $927,012

2021 Results for All Affiliate-Owned Restaurants Open More Than 10 Years as of December 31, 2021

Number of Restaurants in Range: 6
Average Unit Volume: $1,130,247
Highest Sales: $1,884,884
Lowest Sales: $686,737
Number and Percentage of Restaurants Exceeding Average: 2/33%
Median Unit Volume: $902,024

Part 2 – Income Statement Information

Affiliate-Owned Restaurants

Average of 11 Affiliate-Owned Restaurants Operated for a Full Year in 2021

Total Sales: $1,136,338 (100.00%)

Total Prime Cost: $561,058 (49.37%)

Total Cost of Goods Sold: $339,530 (29.88%)
Store Level Salary: $45,609 (4.01%)
Store Level Bonus – Salary: $7,180 (0.63%)
Total Payroll and Related: $221,527 (19.49%)

Total Operating Expense: $127,131 (11.19%)

Total Non-Controllable Expense: $218,915 (19.26%)

Total Rent: $54,232 (4.77%)
Royalty Fee: $66,460 (5.85%)
National Marketing Fees: $21,556 (1.90%)
Local Marketing Cooperative Fees: $21,565 (1.90%)

EBITDA (5.85% Royalty Fee): $229,234 (20.17%)

Royalty Fee: $77,537 (6.82%)

EBITDA (6.82% Royalty Fee): $218,158 (19.20%)

The Restaurants in this category represent all of the affiliate-owned Restaurants in the State of Nevada.

Capriotti’s included 12 Restaurants in the “Affiliate-Owned Restaurants” table displaying 2021 sales results for Restaurants open during all of 2021 that its subsidiaries owned and operated during all of the year (Part 1).

However, Capriotti’s is including in the table in Part 2 only 11 of these Restaurants that operated during all of 2021. The table in Part 2 excludes 1 Restaurant in Virginia that operates a considerable distance from Capriotti’s corporate headquarters, Capriotti’s core operational footprint. Operating remotely is a difficult endeavor, and the resulting operating expenses are not indicative of the expenses likely to be incurred by an operator based in the Restaurant’s market.

The table above also excludes 2 Restaurants that operate as “ghost kitchens” (a type of non-traditional Restaurant).

Total Cost of Goods Sold. This includes the total cost of all food, beverages, and paper goods used in the Restaurants.

The average Cost of Goods Sold in markets for the affiliate-owned Restaurants from the table above for 2021 was $339,530 or 29.88% of total sales. A franchisee in a new market with less than 3 open Restaurants could expect that its Cost of Goods Sold will be higher, likely ranging between 1% and 2% of total sales. Some proprietary items might not be stocked by Capriotti’s local distributor, causing an increase in freight costs. If compared to the average above, a 2% increase would increase the average Cost of Goods Sold to $346,320 or 31.88% of total sales.

Store Level Salary. This is the General Manager’s salary. Each affiliate-owned Restaurant has one General Manager.

Store Level Bonus – Salary. Each General Manager has the opportunity to earn a bonus based on his or her management of Cost of Goods Sold and Labor.

Total Payroll and Related. This includes all salary and hourly wages, bonuses, taxes, and benefits paid at each company-owned Restaurant.

Total Prime Cost. This is the sum of Cost of Goods Sold plus Total Payroll and Related.

Total Operating Expense. This includes comps, promos, cleaning supplies, linen, uniforms, equipment (purchases and rentals), repairs and maintenance, pest control, marketing and advertising, delivery expense, music, technology, telephone, permits, license, security, office supplies, postage, bank charges, credit card fees, and professional services.

Total Rent. This includes base rent, common area maintenance, property tax, insurance, and (at some of the company-owned locations) a fee to be included on monument or pylon signs.

Royalty Fee. Two affiliate-owned Restaurants pay a Management Fee equal to a 6% Royalty Fee. In this example, Capriotti’s takes into account the payment of Royalty Fees for all 11 locations. Royalties are not paid on discounts or couponing.

Marketing Fee – National. Each affiliate-owned Restaurant contributes to the National Marketing Fund. While Capriotti’s has the right to collect 4% towards the National Marketing Fund, it currently collects 2%.

Marketing Fees – Coop. All 11 affiliate-owned Restaurants contribute to the Las Vegas Cooperative. Capriotti’s subsidiaries currently operate 11 of the 36 Restaurants in that market.

Total Non-Controllable Expense. This includes total rent, in some instances personal property tax, electricity, gas, sewer, trash removal, water, TV, Management Fee (Royalty), Marketing Fees – National Fund and Local Cooperative, and accounting fees.

EBITDA. This calculation uses the following formula (Total Sales minus Total Prime Cost minus Total Operating Expense minus Total Non-Controllable Expense = EBITDA).

Section VI – Capriotti’s Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers)

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