Annual owner-earnings answer
For one mature, traditional U.S. Menchie’s Store, the strongest defensible manager-run estimate is approximately $13,000 to $62,000 in annual pre-tax owner earnings, with a base scenario near $34,000. An owner who personally replaces a paid food service manager may realize an estimated $88,000 to $137,000 owner-operator benefit, but about $74,880 of that modeled benefit compensates the owner for labor rather than representing passive business profit.
Independent estimate
This range is an independent analytical scenario, not an Item 19 financial performance representation by Menchie’s Group, Inc. It combines identified facts from the 2026 Franchise Disclosure Document with separately identified Internal Revenue Service and Bureau of Labor Statistics benchmarks and explicit modeling assumptions. Actual results can differ materially because of location, Store format, Gross Sales, discounts, labor, occupancy, financing, owner involvement, and execution.
Data basis
- Legal franchisor
- Menchie’s Group, Inc.
- FDD
- Issued April 10, 2026
- Item 19 status
- Gross Sales, Cost of Goods Sold, and Labor Cost; no owner-profit disclosure
- Applicable population
- Full-year traditional U.S. franchised Stores for calendar 2025
- External benchmarks
- IRS 2022 corporation statistics and BLS May 2025 wages
- Research checked
- July 21, 2026
Evidence confidence
Item 19 provides strong same-brand revenue and two operating-cost measures, but it omits occupancy, manager compensation, other operating expenses, interest, depreciation, and owner earnings. The final range therefore depends materially on a broad official industry margin proxy.
Item 19 evidence
What does Menchie’s Item 19 actually measure?
Officially, Item 19 measures Gross Sales for 278 full-year traditional franchised Stores and reports Cost of Goods Sold and Labor Cost for a smaller reporting cohort during January 1 through December 31, 2025. It does not report Store-Level Profit, EBITDA, Net Income, cash flow, owner salary, distributions, or owner earnings.
The official median Gross Sales figure was $595,357, while Average Gross Sales was $639,093. Gross Sales is total Store revenue, not the amount available to the owner after expenses. Menchie’s Item 19 expressly states that royalties, marketing fees, Cost of Goods Sold, operating expenses, and other costs must still be deducted. See 2026 Menchie’s FDD, Item 19, pp. 28–32.
Calendar 2025 revenue for the middle Store in the 278-Store sales cohort.
Full-year traditional franchised Stores, equal to 94.2% of the 295 U.S. franchised Stores at year-end.
Item 19 narrative says 103 Stores reported; explanatory notes describe calculations using 102 Stores.
25.20% plus 23.97% of Net Sales; Labor Cost excludes a manager.
6% royalty, 2% Marketing Fee, $10,000 local marketing, and $960 annual Technology Fee.
BLS May 2025 national annual mean wage for food service managers.
How were the 278 traditional Stores distributed by Gross Sales?
The official 2025 categories show substantial revenue dispersion; they do not disclose profits within each band.
Interpretation: 51 Stores, or 18.3% of the cohort, were at or below $400,000, while 64 Stores, or 23.0%, exceeded $800,000. A single average cannot describe this spread.
Source: 2026 Menchie’s FDD, Item 19, Table 2, pp. 30–31. Percentages are derived from the official count of 278 Stores and rounded to one decimal place.
Revenue is not earnings
A Store above the Item 19 median can still produce weak owner earnings if rent, manager payroll, utilities, card-processing charges, repairs, insurance, local marketing, or debt costs are high. Conversely, disciplined occupancy and labor control can make a lower-revenue Store more productive. Item 19 does not reveal that relationship.
Scenario model
How was the annual owner-earnings range estimated?
The estimate is scenario-based. It uses 80%, 100%, and 120% of the official $595,357 median Gross Sales as transparent revenue anchors, then applies a broad IRS net-income margin proxy with a three-percentage-point sensitivity band. These are analytical assumptions, not FDD-reported probabilities or forecasts.
Conservative
- Gross Sales
- $476,286
- Margin
- 2.7%
- Manager-run earnings
- $12,921
- Owner-operator benefit
- $87,801
Base
- Gross Sales
- $595,357
- Margin
- 5.7%
- Manager-run earnings
- $34,012
- Owner-operator benefit
- $108,892
Upside
- Gross Sales
- $714,428
- Margin
- 8.7%
- Manager-run earnings
- $62,247
- Owner-operator benefit
- $137,127
- Revenue spread: $476,286, $595,357, and $714,428 equal 80%, 100%, and 120% of Item 19 median Gross Sales. Menchie’s does not report quartile sales values.
- Base margin: IRS Publication 16, Table 5.1 reports $35.281 billion of Net Income (less deficit) on $617.565 billion of Total Receipts for 2022 corporations in Food Services and Drinking Places, producing a derived 5.7129% aggregate margin.
- Margin sensitivity: 2.7129%, 5.7129%, and 8.7129% use the official benchmark minus three percentage points, unchanged, and plus three percentage points.
- Fee treatment: The IRS measure is used as an all-in industry proxy. Menchie’s royalty, Marketing Fee, local marketing, and Technology Fee are therefore not subtracted a second time.
- Financing and tax treatment: The IRS net-income measure reflects industry tax-return deductions, including interest and depreciation. Financing principal and personal income taxes are not calculated.
How much does the owner’s operating role change the modeled result?
Manager-run residual is shown beside owner-operator benefit for each scenario, in annual dollars.
Interpretation: The $74,880 gap is the modeled annual value of food service manager labor. It is compensation for work performed by the owner, not passive profit or an additional Item 19 earnings claim.
Sources: scenario calculations above; BLS May 2025 national occupational wage table. Values in the chart are rounded to the nearest $1,000.
Owner role
Can a Menchie’s Store be treated as passive income?
No. The 2026 FDD permits owner-operator management, but day-to-day operations must be managed by the owner or a qualifying Operating Partner with primary focus and direct involvement in management and supervision. A semi-absentee structure therefore still needs an active Operating Partner and normally requires management labor.
This distinction is unusually important because Item 19 defines Labor Cost to exclude the cost of a manager. The official 23.97% median Labor Cost is not a complete labor burden for a manager-run Store. In the scenario model, the manager-run residual uses an all-in industry margin, while the owner-operator benefit adds the BLS annual mean food service manager wage of $74,880 as a labor-value proxy.
Owner-operator effect
An active owner may retain more cash by replacing a paid manager, but the incremental amount is economically similar to earning a wage for managing the Store. The estimate does not assume that every manager position can be removed entirely, and the BLS wage excludes employer payroll taxes and benefits.
Cost structure
Which disclosed costs matter most to owner earnings?
The most important disclosed cost relationship is that median Cost of Goods Sold and median Labor Cost together equal 49.17% of Net Sales, before manager cost. That figure is derived from compatible Item 19 percentages, but it cannot be subtracted directly from Gross Sales without knowing discounts, coupons, promotional allowances, returns, and refunds.
- Cost of Goods Sold
- Official median: 25.20% of Net Sales. It covers direct product costs, including food, inventory, paper products, and chemicals.
- Labor Cost
- Official median: 23.97% of Net Sales. It includes wages, salaries, payroll taxes, and employee-related expenses, but excludes manager cost.
- Royalty and Marketing Fee
- Official recurring charges: the greater of $125 per week or 6% of Gross Sales for royalty, plus 2% of Gross Sales for the Marketing Fee.
- Local marketing and technology
- Official recurring obligations: at least $10,000 per year for approved local marketing plus $80 per month for the Technology Fee, subject to permitted annual adjustment.
- Unreported operating costs
- Item 19 does not quantify occupancy, manager compensation, utilities, insurance, repairs, payment processing, professional fees, depreciation, interest, or capital expenditures.
At the official median Gross Sales, the 6% royalty, 2% Marketing Fee, $10,000 local-marketing requirement, and $960 annual Technology Fee total approximately $58,589. This is a useful obligation check, not a separate deduction from the scenario result, because the IRS benchmark is treated as an all-in margin proxy.
Uncertainty and verification
What should a buyer verify before relying on the range?
The largest unresolved uncertainty is the Store-level margin after occupancy, full management payroll, and all other operating expenses. The 2026 FDD supplies useful revenue and partial cost evidence, but it does not connect those measures to a complete profit-and-loss statement.
- Request the written substantiation for Item 19 and reconcile why the cost narrative says 103 reporting Stores while the explanatory notes refer to 102.
- Ask for the actual Gross Sales-to-Net Sales discount rate for comparable traditional Stores, because Cost of Goods Sold and Labor Cost use Net Sales as their denominator.
- Obtain anonymized or franchisee-provided Store profit-and-loss statements showing rent, common-area charges, utilities, manager payroll, insurance, repairs, payment processing, local marketing, depreciation, and interest.
- Interview current and former franchisees near the proposed market and within the relevant Gross Sales band; compare owner-operated and manager-run schedules separately.
- Review Item 20 turnover evidence, including 15 transfers and seven terminations during 2025, and ask what operating or financial conditions preceded those outcomes.
- Model financing principal, equipment replacement, remodels, and personal taxes outside this operating-earnings range using the buyer’s actual capital structure.
Buyer verification
The FTC’s consumer guide to buying a franchise emphasizes that Gross Sales do not reveal actual profit and recommends requesting written substantiation and testing whether an Item 19 population is representative of the planned operation.
Decision synthesis
What is the strongest defensible Menchie’s owner-earnings range?
For one mature traditional U.S. Store, the strongest defensible range is approximately $13,000 to $62,000 per year in manager-run pre-tax owner earnings. This is an independent Mode C scenario, not an official Menchie’s profit disclosure. The base scenario is about $34,000.
An active owner who fully replaces a paid food service manager may capture approximately $88,000 to $137,000 in owner-operator benefit, with a base scenario around $109,000. That larger figure combines business residual with the market value of the owner’s management labor; it should not be described as passive profit.
The most important driver is the interaction between Gross Sales and the actual all-in Store margin. The largest missing fact is a complete same-brand profit-and-loss distribution for traditional franchised Stores. Before making a decision, a buyer should verify Item 19 substantiation, obtain comparable Store expense statements, and test the scenario assumptions through current and former franchisee interviews.
Definition used: Estimated pre-tax owner earnings means the modeled residual after normal unit-level operating expenses and recurring franchise obligations, before personal income taxes and before financing principal payments. The IRS margin proxy includes industry-level interest and depreciation effects. Owner-operator benefit adds a manager-labor value and is not pure business profit. Figures are rounded only for presentation; calculations use full-precision inputs.