A manager-run Arby’s Traditional Restaurant may produce roughly $69,865 to $255,576 in annual pre-tax, pre-financing owner earnings under the scenarios below, with a base case of about $138,192. The range is an independent estimate anchored to 2025 franchised-unit sales disclosed in the 2026 Franchise Disclosure Document, not an official profit claim.
This analysis is not an Item 19 financial performance representation by Arby’s Franchisor, LLC. It combines identified FDD facts with a U.S. Internal Revenue Service sector benchmark and explicit scenario assumptions. Actual results can differ materially because of location, venue type, sales, food cost, labor, occupancy, financing, owner involvement, capital spending, and execution.
Legal franchisor: Arby’s Franchisor, LLC, an indirect wholly owned subsidiary of Inspire Brands, Inc. Disclosure document: 2026 Arby’s Franchise Disclosure Document, issued March 26, 2026. Item 19 status: official Annual Unit Volume, or AUV, data only; no restaurant profit or owner compensation disclosure. Applicable population: 2,182 franchised U.S. Traditional Restaurants operating for the full 2025 fiscal year and meeting the stated inclusion criteria. Benchmark: 2023 IRS partnership data for Accommodation and Food Services, plus 2024 Bureau of Labor Statistics manager wages. Date checked: July 14, 2026.
What does Arby’s Item 19 actually measure?
Item 19 officially measures restaurant revenue, not owner earnings. The disclosed “AUV” or “Unit Volume” is annual Gross Sales for selected franchised Traditional Restaurants during the fiscal year from December 30, 2024 through December 28, 2025. It does not deduct food, payroll, rent, royalty, advertising, repairs, financing, taxes, or other operating costs.
The all-restaurant median AUV was $1,201,669, while the average was $1,274,787. The median is the better central anchor here because the highest disclosed restaurant generated $4,008,289 and can pull the average upward. Only 939 restaurants, or 43% of the cohort, exceeded the average AUV. Source: 2026 Arby’s Franchise Disclosure Document, Item 19, pp. 63–66.
Median 2025 AUV by Item 19 sales quartile; quartiles are observed groups, not forecast probabilities.
Interpretation: sales position changes the amount of revenue available to absorb largely fixed management and occupancy costs; the first-quartile median was more than twice the fourth-quartile median.
Source: 2026 Arby’s Franchise Disclosure Document, Item 19, pp. 64–65. Values are official AUV medians, not profit.
| Official 2025 Item 19 group | Restaurants | Median AUV | Average AUV |
|---|---|---|---|
| All included Traditional Restaurants | 2,182 | $1,201,669 | $1,274,787 |
| Free-standing | 1,858 | $1,199,475 | $1,267,493 |
| Travel Plaza | 177 | $1,406,679 | $1,487,830 |
| Other Non-Free-standing | 147 | $1,045,735 | $1,110,463 |
The Item 19 cohort is mature: the included restaurants had operated for an average of 26 years. The disclosure excluded 78 franchised restaurants that closed during 2025, 21 partial-year openings, 6 restaurants with extended periods of no reported sales, 115 restaurants transferred from company ownership in December, 4 Multi-Brand Locations, 19 Non-Traditional Restaurants, and all company-operated restaurants. That makes the sales evidence useful for established Traditional Restaurants but less representative of ramp-up, closure risk, and nontraditional formats.
How is the owner-earnings range calculated?
The model multiplies observed Arby’s sales anchors by a broad, official cash-margin proxy. Conservative revenue uses the fourth-quartile median AUV, the base uses the all-restaurant median, and upside uses the first-quartile median. The corresponding 8.5%, 11.5%, and 14.5% margins are analytical sensitivities, not FDD-reported margins.
The inputs come from the IRS 2023 “All Partnerships” table for Accommodation and Food Services. Adding back interest and depreciation produces an unlevered, pre-depreciation cash-margin proxy. Guaranteed payments to partners remain in deductions. This is a broad sector proxy, not an Arby’s restaurant margin.
$821,946 fourth-quartile median AUV × 8.5% modeled margin.
$1,201,669 system median AUV × 11.5% modeled margin.
$1,762,595 first-quartile median AUV × 14.5% modeled margin.
Estimated annual pre-tax owner earnings before interest, principal, personal taxes, and capital expenditures.
Interpretation: the range widens because both revenue and margin move. It should not be read as a probability distribution or a promise that a new restaurant will reach the mature cohort’s results.
Sources and method: 2026 Arby’s FDD, Item 19, pp. 64–65; IRS 2023 Partnership Table 1; calculations shown above. Scenario margins are editorial assumptions around the 11.5% benchmark.
Normal restaurant operating expenses, manager compensation, cost of goods, wages, rent, taxes and licenses, repairs, benefits, recurring franchise fees, and other deductions are assumed to be represented in the IRS all-in sector deduction structure.
Interest, debt principal, personal income taxes, depreciation, maintenance and growth capital expenditures, and working-capital changes are outside the published earnings figures.
The model does not subtract Arby’s 4% royalty and 5.2% minimum aggregate advertising expenditure a second time because the IRS benchmark uses total deductions. This avoids mechanical double counting, but it also creates uncertainty because the IRS “other deductions” category does not isolate franchise fees.
How does active owner involvement change the result?
Active operation can add labor value, but it does not automatically increase business profit. Item 15 says owners are not required to participate personally, although Arby’s recommends it. Each of the first two restaurants must employ two trained managers, and the franchisee may serve as one of them after completing the approved training. The owner-operator scenario therefore adds one supported manager wage to the manager-run residual while retaining the second-manager requirement.
The owner-operator figure adds $63,040 of market labor value; it is not passive profit.
Interpretation: every owner-operator scenario is $63,040 higher because the owner is assumed to perform one compensated management role. The operating business itself has not become $63,040 more profitable.
Source for labor value: U.S. Bureau of Labor Statistics, Food Service Managers, May 2024 median for food services and drinking places. FDD operating requirement: 2026 Arby’s FDD, Item 15, pp. 55–56.
The estimated owner-operator benefit is approximately $132,905 to $318,616, with a base of $201,232. Part of that amount compensates the owner for management work, including staffing, scheduling, cost control, service execution, and compliance. It should not be characterized as passive income, a distribution guarantee, or after-tax take-home pay.
Which FDD fees materially affect annual earnings?
The largest disclosed recurring top-line obligations are the standard 4% royalty and the 5.2% minimum aggregate advertising expenditure for Traditional Restaurants. Together they equal 9.2% of Gross Sales before optional transaction-based technology charges. The precise advertising allocation can vary among the Advertising and Marketing Service Fee, Local Market Advertising, and Local Cooperative Area Advertising.
| Recurring FDD obligation | Current amount | Owner-earnings treatment |
|---|---|---|
| Royalty Fee, Traditional Restaurant | 4% of Gross Sales | Assumed within the broad all-in operating deductions used for the scenario margin. |
| Aggregate advertising expenditure | Minimum 5.2% | Includes the service fee and required local or cooperative advertising components. |
| Learning Management System | $62.99 + tax/year | Small fixed recurring cost per restaurant; immaterial to the rounded range. |
| Order Ahead platform | $50/month + transaction fees | Optional platform cost; depends on digital and third-party delivery sales mix. |
Qualifying new Traditional Restaurants may receive temporary royalty and advertising discounts under the Standard incentive program, but those incentives are conditional and time-limited. The published scenario uses the standard mature-unit obligations rather than assuming an incentive. Source: 2026 Arby’s Franchise Disclosure Document, Items 5–6, pp. 21–30.
Why is the evidence confidence limited?
Confidence is limited because the same-brand FDD discloses sales but no restaurant expenses, Operating Profit, EBITDA, Net Income, Cash Flow, or Owner Compensation. The earnings range therefore depends on a broad government sector proxy and a sensitivity band rather than Arby’s franchisee profit-and-loss statements.
Item 19 reports median, average, high, low, quartile, venue, sample-size, and inclusion data for 2,182 franchised Traditional Restaurants.
The IRS benchmark covers the broad Accommodation and Food Services sector and partnership tax returns. It is not restricted to limited-service sandwich restaurants, Arby’s operators, mature outlets, or a single capital structure.
Seventy-eight franchised restaurants that closed in 2025 were excluded from the AUV presentation, so the disclosed sales distribution does not show their results.
The estimate is before interest and principal. Actual loan payments reduce owner cash dollar-for-dollar, and Item 7 states that the initial-investment estimates exclude finance charges, interest, and debt service.
Adding back depreciation does not eliminate the need for equipment replacement, repairs, refreshes, and remodels. Those cash outlays can make distributions lower than the modeled operating figure.
At the base AUV of $1,201,669, the standard royalty alone is about $48,067 and the 5.2% advertising minimum is about $62,487. Those figures illustrate the scale of top-line obligations, but they are not separately subtracted from the scenario because the IRS benchmark already uses total operating deductions.
What should a buyer verify before relying on this range?
A buyer should replace the sector proxy with actual Arby’s unit economics wherever possible. The most useful diligence is a reconciled profit-and-loss review for comparable restaurants, supported by Item 19 substantiation and interviews with current and former franchisees.
Request the written substantiation for the 2025 Item 19 AUV tables and confirm how sales reports, POS data, exclusions, and venue classifications were applied.
Ask franchisees for food and paper cost, hourly labor, management payroll, occupancy, utilities, insurance, repairs, delivery commissions, technology, local advertising, and maintenance capital as percentages of Gross Sales.
Compare free-standing, travel-plaza, and other non-free-standing restaurants separately; their official median AUVs differ materially.
Verify whether the owner will personally serve as one trained manager, how the second-manager requirement will be staffed, and how many hours the owner expects to work.
Model loan interest and principal, equipment replacement, required refreshes, working capital, and personal taxes separately from operating earnings.
Use Item 20 contacts to speak with operators and former operators, while recognizing the FDD states that some have confidentiality restrictions.
What is the strongest defensible earnings answer?
The strongest defensible range is approximately $70,000 to $256,000 per year in manager-run, pre-tax, pre-financing owner earnings for a mature U.S. Traditional Restaurant scenario, with a base estimate near $138,000. It is scenario-based, not an official Arby’s earnings disclosure. The most important driver is unit sales relative to the Item 19 distribution; the largest unresolved uncertainty is the absence of same-brand franchisee expense and profit data.
An owner who personally fills one trained manager role may have an estimated owner-operator benefit of roughly $133,000 to $319,000, but the added labor value is compensation for work rather than passive business profit. Before making a decision, a buyer should verify Item 19 substantiation, comparable-unit profit-and-loss statements, manager staffing, debt service, capital spending, and franchisee experience.