v3.26.1
Segment Reporting
 6 Months Ended
Jun. 30, 2026
Segment Reporting  
Segment Reporting

Note 12 – Segment Reporting - The Company accounts for segment reporting in accordance with Accounting Standards Codification (“ASC”) Topic No. 280/ASU 2023-07, 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. 

 

Six-Month Period Ended June 30, 2026

 

 

 

Franchising

 

 

Company-Owned Restaurants

 

 

Total

 

Revenue

 

$3,130,590

 

 

$4,858,066

 

 

$7,988,656

 

Administrative fees and other revenue

 

 

—

 

 

 

—

 

 

 

39,891

 

Total revenue

 

 

3,130,590

 

 

 

4,858,066

 

 

 

8,028,547

 

Segment operating expenses

 

 

(841,641)

 

 

(4,485,520)

 

 

(5,327,161)

Segment contribution margin

 

$2,288,949

 

 

$372,546

 

 

$2,661,495

 

 

Six-Month Period Ended June 30, 2025

 

 

 

Franchising

 

 

Company-Owned Restaurants

 

 

Total

 

Revenue

 

$2,900,159

 

 

$4,933,475

 

 

$7,833,634

 

Administrative fees and other revenue

 

 

—

 

 

 

—

 

 

 

6,954

 

Total revenue

 

 

2,900,159

 

 

 

4,933,475

 

 

 

7,840,588

 

Segment operating expenses

 

 

(941,192)

 

 

(4,467,463)

 

 

(5,408,655)

Segment contribution margin

 

$1,958,967

 

 

$466,012

 

 

$2,431,933

 

 

The following table reconciles total segment contribution margin to consolidated income before income taxes:

 

Six Month Ended June 30,

 

 

 

2026

 

 

2025

 

Total segment contribution margin

 

$2,661,493

 

 

$2,431,933

 

General and administrative expenses

 

 

(1,229,923)

 

 

(993,511)

Depreciation and amortization

 

 

(208,288)

 

 

(197,049)

Operating income

 

 

1,263,175

 

 

 

1,241,373

 

Interest expense

 

 

(853,451)

 

 

(751,336)

Income (loss) before income taxes

 

$409,724

 

 

$490,037

 

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 and transfer fees are received upon execution of franchise agreements or transfer agreement. Because the initial franchise fee does not represent a separate performance obligation, the fee had formerly been 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. Since the Company lowered its upfront fee for non-traditional to significantly less than the money spent on each location prior to signing the franchise agreement, the Company is no longer deferring the upfront fee.

 

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 six-month periods ended June 30:

 

Revenue Source

 

2026

 

 

2025

 

Company-owned Craft Pizza & Pub restaurant revenue

 

$4,307,800

 

 

$4,343,877

 

Company-owned non-traditional restaurant revenue

 

 

550,266

 

 

 

589,598

 

Franchising revenue (including royalties, franchise fee amortization, manufacturer allowances, equipment commissions and other franchise-related revenue)

 

 

3,130,590

 

 

 

2,900,159

 

Administrative fees and other revenue

 

 

39,891

 

 

 

6,954

 

Total Revenue

 

$8,028,547

 

 

$7,840,588

 

 

The Company's CODM is its Chief Executive Officer.

 

The Company has identified two reportable operating segments:

 

·

Franchising – Consists primarily of franchise royalties, franchise fee revenue, manufacturer and distributor allowances, equipment commissions, and related support activities.

·

Company-Owned Restaurants – Consists of the operations of Company-owned Craft Pizza & Pub locations and Company-operated non-traditional restaurant locations.

 

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 page 17 of this report.