A manager-run Habit Burger & Grill restaurant models at approximately -$14,000 in the Conservative scenario, $105,000 in the Base scenario, and $316,000 in the Upside scenario, before financing interest or principal, capital expenditures, and personal income taxes. Lower-sales restaurants can lose materially more than the displayed scenario floor.
This range is an independent analytical scenario, not an Item 19 financial performance representation of owner earnings by HBG Franchise, LLC. It combines identified 2026 Franchise Disclosure Document facts with separately labeled assumptions. Actual results can differ materially because of location, format, Gross Sales, labor, occupancy, financing, owner involvement, delivery mix, commodity costs, management quality, and execution.
Legal franchisor: HBG Franchise, LLC; direct parent The Habit Restaurants, LLC; ultimate parent Yum! Brands, Inc. investor information.
FDD: issued April 3, 2026; Item 19 measures Fiscal Year 2025. No matching 2026 official franchise-controlled public FDD copy was verified, so FDD citations are unlinked by year, Item, and page.
Populations: 62 full-year traditional franchisee restaurants for Gross Sales and 283 company-operated THR restaurants for Operating Profit Percentage. Non-traditional and partial-year restaurants were excluded.
Supplemental evidence: BLS Food Service Managers wage data; official franchise-format and ownership information checked July 16, 2026.
OFFICIAL — 62 Franchisee Covered Restaurants, Fiscal Year 2025.
OFFICIAL — 283 THR-operated restaurants; several material costs are excluded.
SCENARIO — pre-tax residual before debt principal and personal taxes.
OFFICIAL — 5.5% royalty, 2% Fund contribution, and 0.5% local advertising were imputed in Item 19.
OFFICIAL — franchise sales sample / company margin sample; the populations are not interchangeable.
The result relies materially on a company-operated margin proxy and an editorial omitted-cost reserve, despite using same-brand franchise sales evidence.
Estimated pre-tax owner earnings means cash remaining after modeled normal unit-level operating expenses, disclosed recurring franchise fees, annualized rent, technology fees, and an explicit reserve for other omitted costs. It excludes personal income taxes, financing principal, capital expenditures, depreciation, and distributions retained in the business.
What does the 2026 FDD actually report?
Officially, Item 19 reports Gross Sales for franchised restaurants and Operating Profit Percentage for company-operated restaurants; it does not report franchisee owner earnings. The sales data cover 62 traditional Franchisee Covered Restaurants that operated for the full 2025 fiscal year. The expense data cover 283 THR Covered Restaurants after excluding six restaurants transferred late in the year.
The distinction is decisive. Franchisee Gross Sales are revenue. The THR Operating Profit Percentage is a company-operated proxy based on Cost of Goods Sold, Labor Costs, and General Operating Expenses. The franchisor states that Labor Costs include general managers, assistant managers, kitchen managers, benefits, bonuses, workers’ compensation, and payroll taxes. The company margin also imputes the franchise royalty and required advertising charges.
| Official Item 19 measure | Median | Average | Population and limitation |
|---|---|---|---|
| Franchisee Covered Restaurant Gross Sales | $1,915,000 | $1,869,000 | 62 traditional full-year franchise restaurants; reported range $867,000 to $2,765,000. |
| THR Covered Restaurant Operating Profit Percentage | 18.5% | 17.2% | 283 company-operated restaurants; reported single-restaurant range -35.9% to 34.1%. |
| Tier 2 franchise Gross Sales | $1,695,000 | $1,664,000 | 20 franchise restaurants; used as the Conservative revenue anchor. |
| Tier 4 franchise Gross Sales | $2,368,000 | $2,439,000 | 12 franchise restaurants; used as the Upside revenue anchor, not as a probability forecast. |
FDD source: 2026 FDD, Item 19, Table A, p. 54; Table C, p. 56; definitions and exclusions, pp. 57–58.
The FDD’s 18.5% median Operating Profit Percentage is not a franchise owner margin. It excludes rent and other occupancy costs, the Technology Fee, Computer Systems Maintenance and Support Fee, interest, debt service, income taxes, depreciation and amortization, and some owner-level general and administrative work. Item 19 expressly warns that its figures do not contain every cost needed to calculate net operating income or net profit.
How broad is the Item 19 sample?
The official sales sample is meaningful but narrower than the year-end franchise system. Item 20 shows 82 franchised outlets at the end of 2025, while Item 19 includes 62 full-year traditional franchise restaurants. New openings, closures, partial-year restaurants, and nine franchise-operated non-traditional locations were excluded from the financial performance representation.
Geography also matters: 251 of the 351 total Covered Restaurants were in California. The FDD identifies drive-thru availability, location, delivery, competition, wage rates, labor productivity, commodity costs, market density, and lease terms as material performance drivers. The official U.S. franchise format page describes freestanding, end-cap, drive-thru, and non-traditional configurations, but this earnings model applies only to the traditional population used in Item 19.
What annual owner-earnings range does the evidence support?
The three manager-run scenarios produce approximately -$14,000, $105,000, and $316,000 per restaurant per year. These are independent estimates for a traditional U.S. restaurant, not official Item 19 owner-profit results and not probabilities.
What formula is used?
The model starts with FDD Gross Sales, applies the most compatible THR Operating Profit Percentage, and then subtracts expenses that Item 19 excludes.
| Scenario | Gross Sales | Operating Profit % | Estimated owner earnings |
|---|---|---|---|
|
Conservative Tier 2 franchise median sales; THR Tier 2 median margin; high annualized rent. |
$1,695,000 | 15.6% | -$13,830 |
|
Base Overall franchise median sales; overall THR median margin; midpoint annualized rent. |
$1,915,000 | 18.5% | $105,425 |
|
Upside Tier 4 franchise median sales; THR Tier 3 median margin because the sales level falls inside the THR Tier 3 range; low annualized rent. |
$2,368,000 | 22.9% | $315,832 |
Estimated annual pre-tax owner earnings per traditional restaurant; zero is marked by the vertical line.
Interpretation: sales and occupancy leverage dominate the spread. The Conservative case is slightly negative even before debt principal and capital expenditures.
Sources and method: 2026 FDD, Item 19, pp. 54–58; Item 6, pp. 10–13; Item 7, pp. 16–18. The 3.0% reserve is an explicit editorial assumption. Values are calculated at full precision and rounded for display.
A reconciled revenue-to-owner-earnings bridge, in thousands of dollars.
Interpretation: the official 18.5% Operating Profit Percentage produces $354,275 before excluded costs. Modeled rent, technology fees, and the 3.0% reserve reduce the residual to $105,425, or about 5.5% of Base Gross Sales.
Reconciliation: $1,915,000 − $1,560,725 − $180,000 − $11,400 − $57,450 = $105,425.
The 3.0% omitted-cost reserve is not an official benchmark. In the Base case, every one-percentage-point change in that reserve moves estimated annual owner earnings by $19,150. Actual common-area maintenance, real estate taxes, insurance, licenses, equipment rentals, and owner-level overhead must be verified location by location.
How does owner involvement change the result?
An active owner may increase total economic benefit by roughly the market value of one manager position, but that labor value is not passive business profit. The FDD requires a trained Managing Owner to devote full time and effort unless an approved District Manager is designated. It also requires at least five trained managers at each restaurant, with a manager on-site during operating hours.
Item 19 Labor Costs already include the general manager, assistant managers, and kitchen managers. Therefore, an owner-operator adjustment is defensible only when the owner is trained, approved, actually performs one paid manager role, and does not reduce staffing below required levels. The BLS 2024 median annual wage for Food Service Managers is $65,310, used here as a national labor-value proxy.
| Scenario | Manager-run pre-tax owner earnings | Illustrative owner-operator benefit | Interpretation |
|---|---|---|---|
| Conservative | -$13,830 | $51,480 | Includes $65,310 of owner labor value; the business itself remains near breakeven before debt and capital spending. |
| Base | $105,425 | $170,735 | Approximately $105,425 residual business profit plus the value of one replaced manager role. |
| Upside | $315,832 | $381,142 | The labor add-back remains one manager wage; it is not multiplied merely because sales are higher. |
The owner-operator benefit cannot be added to every restaurant in a multi-unit portfolio. The official franchise FAQ emphasizes multi-restaurant operating experience and area development. A Managing Owner or District Manager overseeing several restaurants is not automatically replacing a full paid manager at each unit.
Which variables can move earnings outside the modeled range?
Sales level and occupancy cost are the largest visible drivers, while the unreported franchisee expense structure is the largest unresolved uncertainty. Item 19 shows that the THR median Operating Profit Percentage rises sharply across sales tiers, but even the lowest reported single-restaurant company margin was -35.9% before the excluded costs were deducted.
- Sales and throughput: drive-thru service, delivery mix, pricing, competition, daypart demand, and market maturity can move Gross Sales without proportionately changing fixed costs.
- Labor: the FDD requires substantial management coverage. Wage rates, staffing decisions, overtime, benefits, training, and productivity can materially change the Item 19-style margin.
- Occupancy: Item 7’s rent estimate varies by 50% from low to high when annualized. Percentage rent, common-area maintenance, property taxes, licenses, and equipment rentals sit outside Item 19.
- Fees: the modeled Item 19 margin already includes a 5.5% royalty, 2% Advertising Fund contribution, and 0.5% local advertising. The FDD allows the combined Fund and local advertising burden to rise to 4.5%, so future required advertising may exceed the 2.5% imputed in the 2025 margin.
- Financing and capital spending: interest, debt principal, depreciation, equipment replacement, and periodic remodeling are outside the owner-earnings range. Item 10 does not provide standardized loan rates or terms suitable for a single debt-service calculation.
The franchisee Tier 1 median Gross Sales were $1.231 million, while the THR Tier 1 median Operating Profit Percentage was only 2.5% before rent, technology fees, and other excluded costs. At that sales level, the pre-occupancy amount is approximately $30,775; even the low annualized Item 7 rent estimate of $144,000 exceeds it. This is why the displayed $0 to $315,000 range should not be read as a loss floor.
What should be verified before relying on the range?
A buyer should reconcile the scenario against written Item 19 substantiation and actual franchisee profit-and-loss statements for comparable locations. The official numbers are useful anchors, but the franchisor does not disclose franchisee expense data or franchisee owner compensation in Item 19.
- Request Item 19 written substantiation and confirm the exact Gross Sales tier, drive-thru status, market, restaurant age, and ownership period for each comparable unit.
- Ask existing franchisees for food and paper cost, fully burdened labor, base rent, percentage rent, common-area maintenance, real estate and personal property taxes, insurance, utilities, delivery commissions, repairs, and technology charges.
- Verify whether the owner may serve in a restaurant-manager role while satisfying the Managing Owner, District Manager, five-manager, training, and on-site coverage requirements in Item 15.
- Separate manager-run business profit from owner labor compensation, owner draws, distributions, retained cash, debt payments, capital expenditures, and personal taxes.
- Compare Item 20’s full-year operating cohort with openings, closures, non-renewals, transfers, and non-traditional locations that Item 19 excludes.
- Model the actual lease and financing terms. The 2026 FDD does not provide one uniform interest rate, term, financed amount, or debt-service schedule for all buyers.
The FTC Franchise Rule Compliance Guide explains the regulatory framework for financial performance representations. The official Habit Burger & Grill U.S. franchising site confirms that the brand is offering domestic franchise opportunities, while the 2026 FDD remains the controlling source for the financial model.
What is the strongest defensible earnings takeaway?
The strongest defensible scenario range is approximately -$14,000 to $316,000 in annual manager-run pre-tax owner earnings per traditional U.S. restaurant, with a Base scenario near $105,000. This is scenario-based, not an official franchisee earnings disclosure. An active owner who genuinely replaces one paid manager could show an illustrative Base owner-operator benefit near $171,000, but about $65,000 of that amount represents labor performed by the owner rather than passive residual profit.
The most important earnings driver is the combination of Gross Sales and occupancy leverage. The largest unresolved uncertainty is the actual franchisee cost structure omitted from Item 19, especially non-rent occupancy expenses and owner-level overhead. A buyer should verify the model against Item 19 substantiation, location-specific leases, and interviews with franchisees operating comparable traditional restaurants.
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