Segment Reporting |
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| Segment Reporting | Note 12 – Segment Reporting - The Company accounts for segment reporting in accordance with ASC Topic 280, Segment Reporting. Operating segments are components of an enterprise for which separate financial information is available and regularly reviewed by the chief operating decision maker ("CODM") in deciding how to allocate resources and assess performance. For details of revenue and expenses by segment see charts on pages 15 and 16 in this Form 10-Q.
The Company generates revenue from the following primary sources:
Restaurant Revenue Restaurant revenue consists primarily of food and beverage sales from Company-owned Craft Pizza & Pub locations and Company-operated non-traditional locations. Revenue is recognized at the point in time when food and beverage products are provided to customers. Payment is generally received at the time of sale through cash, credit card, or other electronic payment methods.
Franchise Royalties The Company enters into franchise agreements that generally provide for ongoing royalty fees based on a percentage of franchisee sales. Royalty revenue is recognized as the underlying franchise sales occur because the nature of the Company's performance obligation is to provide ongoing access to the Company's intellectual property and franchise system. Royalty revenue is generally billed and collected weekly through automated clearing house (ACH) withdrawals.
Initial Franchise Fees Initial franchise fees are received upon execution of franchise agreements. Because the initial franchise fee does not represent a separate performance obligation, the fee is deferred and recognized over the term of the related franchise agreement, which is generally ten years, as the Company satisfies its ongoing performance obligations to the franchisee.
Equipment Commissions The Company assists franchisees in arranging equipment purchases from third-party vendors and earns commissions on certain equipment sales. Revenue is recognized when the underlying equipment transaction is completed and the Company's performance obligation has been satisfied.
Manufacturer and Distributor Allowances The Company receives consideration from approved manufacturers and distributors related to the use of the Company's proprietary recipes, formulas, specifications, and approved product programs. Revenue from these arrangements is recognized as the underlying product sales occur based on sales reports received from distributors and manufacturers.
Administrative Fees and Other Revenue Administrative fees and other revenue primarily consist of various franchise-related charges and other miscellaneous revenue streams and are recognized when the related services are performed or when the Company's performance obligations have been satisfied. Disaggregation of Revenue
The following table disaggregates revenue by major revenue source for the quarter ended March 31:
The Company's CODM is its Chief Executive Officer.
The Company has identified two reportable operating segments:
The CODM evaluates segment performance primarily based on segment revenue, segment operating expenses, and segment contribution margin. General corporate expenses, depreciation and amortization, interest expense, income taxes, and certain other corporate-level items are not allocated to operating segments for purposes of evaluating segment performance.
For income and expense performance please refer to the margin statements on pages 15 and 16. |
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