The base manager-run scenario is about $103,000 a year in unit-level pre-tax owner earnings. This is not an official Baja Fresh profit figure. It is an independent estimate anchored to the 2026 Franchise Disclosure Document’s 2025 Gross Sales cohorts, the disclosed recurring franchise fees, and a current public company-operated restaurant-margin proxy.
The $38,000–$192,000 range is an independent analytical scenario, not an Item 19 financial performance representation by BF Acquisition Holdings, LLC. It combines identified FDD facts with separately identified benchmark and scenario assumptions. In this article, estimated pre-tax owner earnings means unit-level cash available after normal restaurant operating expenses and modeled recurring franchise fees, but before debt service and personal income taxes. Manager compensation is included through the operating proxy; interest, depreciation, capital expenditures, and financing principal are excluded. Actual results can differ materially by location, restaurant format, sales, food cost, labor, occupancy, financing, owner involvement, and execution. The range is not a floor, ceiling, guarantee, or after-tax take-home estimate.
The sales anchor is strong, but the earnings conversion is not same-brand profit evidence. Baja Fresh Item 19 reports broad U.S. franchised-outlet Gross Sales, while the operating-margin input comes from another restaurant system’s company-operated units and excludes some owner-level costs.
Rounded unit-level pre-tax owner earnings before debt service, personal taxes, depreciation, and capital expenditures.
Median for all 65 eligible franchised outlets in the Item 19 measurement population.
About 97% of U.S. franchised outlets open at period end met the stated Item 19 eligibility rules.
5% royalty plus the current 3% Advertising Fee. The model avoids charging advertising twice.
El Pollo Loco fiscal 2025 company-operated restaurant contribution margin; not Baja Fresh franchisee profit.
BLS 2024 industry median wage, used only when an active owner fully replaces a qualified paid manager.
What does the 2026 Baja Fresh Item 19 actually measure?
It measures Gross Sales, not owner earnings. The official disclosure covers 65 eligible U.S. franchised outlets for the period from December 1, 2024 through November 30, 2025. Item 19 defines Gross Sales as revenue from goods and services after sales tax, discounts, allowances, and returns. It does not report food cost, payroll, rent, restaurant contribution, operating profit, EBITDA, net income, owner salary, distributions, or cash flow.
The strongest central observation is the $813,419 median Gross Sales for all eligible outlets. The corresponding average was $822,568. The average and median are close, but the published top- and bottom-cohort results still show substantial unit-to-unit variation.
| Official Item 19 cohort | Average Gross Sales | Median Gross Sales | Stores measured |
|---|---|---|---|
| All eligible franchised outlets | $822,568 | $813,419 | 65 |
| Top 20% franchised outlets | $1,283,451 | $1,222,206 | 13 |
| Bottom 20% franchised outlets | $359,747 | $406,368 | 13 |
Source: 2026 Baja Fresh Franchise Disclosure Document, Item 19, pp. 77–78. The franchisor states that the table was prepared from weekly franchisee sales reports and that it did not audit those reports.
A restaurant with $813,419 in Gross Sales does not provide the owner with $813,419 of income. Food and paper, hourly labor, management labor, payroll burden, rent, common-area charges, utilities, repairs, merchant fees, delivery commissions, insurance, advertising, royalty, technology, and other operating costs must be paid first.
How broad is the disclosed population?
The population is broad for the outlets that were open, but it is not segmented enough for format-specific underwriting. Baja Fresh had 67 franchised U.S. outlets open on November 30, 2025; 65 qualified for the Item 19 table because they were existing outlets, did not first open during the fiscal year, were in the United States, and were not temporarily closed at the start or end of the period. That is approximately 97% coverage of the period-end franchised base.
Item 20 reports 67 franchised outlets and one company-owned outlet at the end of fiscal 2025. Item 19 does not publish separate Traditional Restaurant and Non-Traditional Restaurant economics. A captive-market non-traditional unit can have materially different hours, occupancy arrangements, staffing, menu mix, and traffic from a traditional street restaurant, so the combined result should not be applied to either format without verification.
The Federal Trade Commission’s Franchise Rule Compliance Guide explains the regulatory framework for financial performance representations. For this decision, the practical point is straightforward: Baja Fresh’s official representation stops at the sales figures and limitations stated in Item 19.
How can Gross Sales be converted into an owner-earnings scenario?
The conversion requires an external restaurant-margin proxy, so the output is estimated rather than official. The model uses the Item 19 medians for revenue, Item 6 for recurring fees, and El Pollo Loco’s fiscal 2025 company-operated restaurant contribution margin as the closest current public operating benchmark identified for a U.S. limited-service Mexican restaurant system.
El Pollo Loco reported a 17.8% restaurant contribution margin for fiscal 2025. Its definition subtracts food and paper, labor and related costs, and occupancy and other restaurant operating costs from company-operated restaurant revenue. Those operating costs include rent, common-area maintenance, real estate taxes, utilities, advertising, credit-card processing, delivery-provider fees, supplies, repairs, and maintenance. The measure excludes corporate general and administrative expense, depreciation and amortization, impairment, closed-store reserves, and other corporate-level costs. See the company’s fiscal 2025 Form 10-K restaurant contribution disclosure and official annual-report archive.
The base operating margin begins with the 17.8% external restaurant contribution proxy and subtracts the disclosed 5% royalty, producing 12.8% before the fixed data and POS support fees. The comparable company-operated margin already includes advertising expense, and El Pollo Loco states that its company restaurants contribute to its advertising fund on the same basis as franchise restaurants. Therefore, this model does not subtract Baja Fresh’s current 3% Advertising Fee a second time. That treatment avoids double counting; it does not assert that the two systems have identical advertising economics.
Because the margin is a cross-brand company-operated proxy, the model applies an explicit three-percentage-point sensitivity around 12.8%: 9.8% conservative, 12.8% base, and 15.8% upside. The revenue anchors are observed Item 19 cohort medians, not invented revenue growth rates.
- Conservative revenue: $406,368, the official median Gross Sales of the bottom 20% cohort; paired with a 9.8% scenario margin.
- Base revenue: $813,419, the official median Gross Sales of all 65 eligible outlets; paired with a 12.8% scenario margin.
- Upside revenue: $1,222,206, the official median Gross Sales of the top 20% cohort; paired with a 15.8% scenario margin.
| Scenario | Revenue anchor | Modeled margin | Manager-run earnings |
|---|---|---|---|
| Conservative | $406,368 | 9.8% | $38,000 |
| Base | $813,419 | 12.8% | $103,000 |
| Upside | $1,222,206 | 15.8% | $192,000 |
Calculations use full-precision inputs, subtract $1,560 for up to $75 per month in Data Fees plus $55 per month for POS Help Desk support, and then round to the nearest $1,000. Source facts: 2026 Baja Fresh FDD, Items 6 and 19, pp. 31–35 and 77–78. The three modeled margins are scenario assumptions, not FDD results.
Estimated annual unit-level pre-tax owner earnings with paid management, rounded to the nearest $1,000.
Interpretation: the sales level and operating margin compound one another. A location near the top-cohort revenue median can produce far more residual cash than a bottom-cohort location, but only if its cost structure also supports the modeled margin.
Sources: 2026 Baja Fresh FDD, Item 19, pp. 77–78; Item 6, pp. 31–35; El Pollo Loco Holdings, Inc. fiscal 2025 Form 10-K. Scenario calculations are independent estimates.
What is included and excluded from the estimate?
The result is a unit-level pre-tax operating estimate, not personal take-home pay. Normal restaurant labor, including paid management labor, is included through the comparable restaurant-cost structure. Royalty and fixed data/POS support charges are included as described above.
Food and paper, labor and related costs, occupancy, utilities, advertising, credit-card processing, delivery-provider fees, supplies, repairs, maintenance, and other restaurant operating expenses.
5% royalty and $1,560 in annual Data Fees and POS Help Desk support. Advertising is represented inside the comparable operating expense base and is not subtracted twice.
Personal income taxes, financing principal, interest expense, depreciation and amortization, capital expenditures, remodel reserves, owner-level general and administrative overhead, and contingent fees.
Up to $1,000 for annual-meeting registration if a meeting is held, a surcharge of up to $10 per week in applicable markets, and other event-driven fees. These are not included in the three headline scenarios.
How does owner involvement change the economic result?
An active owner may capture labor value in addition to residual business profit, but that is not passive earnings. Baja Fresh Item 15 says the franchisor intends to select franchisees who actively participate in direct operations and daily affairs, does not seek principals pursuing a merely passive investment, and requires at least one full-time on-premises qualified Manager. The restaurant may be managed by the owner, another principal, or a trained manager.
For an owner who is accepted as the qualified Manager and genuinely replaces a paid full-time manager, the model adds $63,040, the U.S. Bureau of Labor Statistics’ 2024 median annual wage for food service managers in food services and drinking places. The BLS Food Service Managers profile also notes that these managers generally work full time and may work more than 40 hours, including nights, weekends, and holidays.
The resulting figure is labeled estimated owner-operator benefit. It combines residual unit-level operating profit with the market wage value of labor performed by the owner. It is not pure business profit, owner salary guaranteed by Baja Fresh, or passive cash flow. It also does not include employer payroll burden, benefits, or the value of hours beyond the BLS wage benchmark.
Residual earnings with a paid manager compared with estimated owner-operator benefit after adding the $63,040 manager wage proxy.
Interpretation: active operation changes the composition of owner benefit, not the underlying restaurant’s revenue. The $63,040 increment compensates the owner for manager work that otherwise would be paid to an employee.
Sources: 2026 Baja Fresh FDD, Item 15, pp. 68–69; U.S. Bureau of Labor Statistics, Food Service Managers, 2024 median wage for food services and drinking places. Owner-operator values are independent scenarios.
An owner using a paid manager may spend less time in daily operations, but Item 15 still emphasizes active participation and on-premises supervision. A multi-unit owner also cannot simply multiply one-unit residual earnings by the number of restaurants: area management, unit managers, shared administrative staff, differing maturity, and development timing can change portfolio economics.
What could move annual owner earnings outside this range?
The largest driver is unit sales, while the largest unresolved uncertainty is Baja Fresh-specific operating margin. The official bottom-20%, all-outlet, and top-20% medians span approximately $406,000 to $1.22 million in Gross Sales. At the same time, a few percentage points of margin difference can add or remove tens of thousands of dollars from owner cash.
Item 19 does not separate Traditional Restaurants from Non-Traditional Restaurants in captive-market locations. Different lease structures, operating hours, menus, service patterns, and staffing can make one combined margin misleading.
Waste, portion control, menu mix, wage rates, scheduling, overtime, workers’ compensation, and manager depth can materially change restaurant contribution.
Base rent, percentage rent, common-area maintenance, property taxes, utilities, delivery commissions, and credit-card fees vary by site and sales channel.
El Pollo Loco’s company-operated units have different scale, menu, geography, purchasing, real estate, and corporate systems. Its restaurant contribution excludes corporate G&A and depreciation, so a franchise owner’s distributable cash may be lower.
The headline range excludes debt principal, interest, remodel spending, equipment replacement, and major repairs. Baja Fresh Item 10 generally does not offer direct financing, except limited discretionary situations such as certain company-store purchases, so no standardized debt-service case is defensible.
No after-tax estimate is provided. Entity structure, state and local jurisdiction, depreciation elections, deductions, other income, and the owner’s personal circumstances determine tax outcomes.
The Item 19 sales disclosure is useful because it covers 65 eligible franchised outlets, but it excludes newly opened outlets and does not publish profit statements, restaurant-level cost ratios, losses, debt load, owner hours, or results by format. The top and bottom 20% cohorts are descriptive groups, not probabilities that a new buyer will land in either band.
What should a buyer verify before relying on the estimate?
The buyer should replace every proxy with Baja Fresh-specific evidence from the target format, market, and operating plan. Item 19 says written substantiation spreadsheets are available upon reasonable request. Those spreadsheets, current and former franchisee interviews, and actual unit profit-and-loss statements are the most direct route from system sales data to a defensible owner-income expectation.
- Request Item 19 substantiation. Confirm the weekly sales records, cohort assignments, temporary-closure treatment, and whether each candidate comparable is Traditional or Non-Traditional.
- Ask for restaurant-level P&Ls. Obtain food and paper, hourly labor, manager compensation, payroll taxes, occupancy, utilities, repairs, merchant fees, delivery commissions, insurance, advertising, technology, and other operating expenses.
- Separate owner labor from business profit. Ask how many hours owners work, which manager duties they perform, what replacement management would cost, and whether additional shift managers remain necessary.
- Reconcile all recurring fees. Verify the current royalty, Advertising Fee, data and POS charges, local-marketing obligations, meeting fees, market-specific surcharge, and any required technology or supplier programs.
- Build a capital reserve. Identify equipment replacement, maintenance, refresh, remodel, leasehold, and working-capital needs that restaurant contribution does not capture.
- Model financing separately. Use the buyer’s actual loan amount, interest rate, amortization, fees, collateral, and repayment term rather than treating operating earnings as spendable cash.
- Interview both current and former franchisees. Compare mature and newer restaurants, similar trade areas, comparable occupancy structures, and the exact format under consideration.
What is the most defensible Baja Fresh owner-earnings takeaway?
A reasonable evidence-led planning range is approximately $38,000 to $192,000 per year for a manager-run U.S. unit, with a base scenario near $103,000. It is a scenario-based estimate, not an official Item 19 profit result. An owner who fully replaces a qualified paid manager could have estimated owner-operator benefit of roughly $101,000 to $255,000, but about $63,040 of each owner-operator figure represents labor value rather than passive business profit.
The most important earnings driver is Gross Sales; the largest unresolved uncertainty is the absence of Baja Fresh-specific restaurant expense and profit data by Traditional and Non-Traditional format. Before making a decision, a buyer should verify the Item 19 substantiation, obtain comparable franchisee P&Ls, separate owner labor from residual profit, and test debt service and capital reserves against the target restaurant’s actual economics.