Taco Bell FDD Item 19 is the section of the Franchise Disclosure Document that contains financial performance representations, and it is the single most referenced section by prospective franchisees trying to evaluate whether a Taco Bell franchise is a sound investment. Item 19 provides data on gross sales performance across the Taco Bell franchise system, with average unit volumes (AUVs) for traditional Taco Bell locations reported in the range of approximately $1.8 million to $2 million or more in recent FDD filings. However, what Item 19 shows and what it does not show are equally important. At Lopes Law LLC, we spend significant time with every Taco Bell franchise client breaking down Item 19 because the data, while valuable, does not tell you what you will actually earn as a franchise owner. It tells you what locations generate in gross sales. The distance between gross sales and net profit is where the real analysis begins.

This guide explains what Taco Bell discloses in Item 19, how to read the data correctly, what the numbers do not tell you, and how to build a realistic profitability model using Item 19 data alongside the fee structure in Item 6.

What Does Taco Bell Disclose in FDD Item 19?

Item 19 of the FDD is the only section where a franchisor is legally permitted to make financial performance representations to prospective franchisees. Under the FTC Franchise Rule (16 C.F.R. Part 436), franchisors are not required to include an Item 19, but if they do, the representations must have a reasonable basis and the franchisor must have written substantiation for the claims.

Taco Bell provides an Item 19, which is an advantage for prospective franchisees compared to franchise systems that do not disclose financial performance data. The Item 19 typically includes average gross sales for franchise locations (the AUV), median gross sales (which provides a different perspective than the average because it is not skewed by extreme performers), the number of locations included in the data set, the percentage of locations that met or exceeded the stated average, and potentially a breakdown by quartile or performance tier.

Taco Bell’s AUV for traditional franchise locations has shown strong growth in recent years, reflecting the brand’s successful menu innovation strategy, value positioning, and digital ordering expansion. AUVs in the range of $1.8 million to $2 million or higher for traditional restaurants are competitive within the QSR segment and represent one of Taco Bell’s key selling points for prospective franchisees.

However, the AUV is an average. By definition, some locations perform above the average and some perform below it. Understanding the distribution of results, not just the average, is essential for realistic financial planning.

Why Does Item 19 Show Gross Sales but Not Profitability?

This is the most important question prospective franchisees need to ask, and the answer is both legal and practical.

From a legal perspective, franchisors are cautious about disclosing profitability data because profitability varies dramatically by location, by operator, and by local market conditions. A franchisor that discloses average net profit numbers risks having those numbers used against them if individual franchisees do not achieve the stated results. By limiting the disclosure to gross sales data, the franchisor provides useful information while reducing the risk of misrepresentation claims.

From a practical perspective, profitability depends on factors that the franchisor does not control: the franchisee’s rent (to the landlord, which varies by market), local labor costs, the franchisee’s management efficiency, local tax rates, and individual operating decisions. Two Taco Bell locations generating identical gross sales in different markets can have dramatically different profitability based on these local factors.

The practical implication for prospective franchisees is clear: you cannot use Item 19 gross sales data alone to determine your expected income. You must build a complete financial model that starts with the gross sales figures and subtracts every cost category to arrive at projected net income.

How Should You Read Taco Bell’s Item 19 Data?

Reading Item 19 correctly requires looking beyond the headline average. Here is a framework for analyzing the data:

Step 1: Understand the Data Set

Determine how many locations are included in the Item 19 data. Does it include all franchise locations or only a subset? Does it include company-owned locations (which may perform differently than franchise locations)? Does it include non-traditional formats (Cantina, Express, convenience store locations) alongside traditional drive-through restaurants? The composition of the data set affects the relevance of the averages.

Step 2: Look at the Median, Not Just the Average

If Taco Bell’s Item 19 includes a median figure, pay close attention to it. The median is the midpoint: half of all locations perform above the median and half perform below. If the average is significantly higher than the median, it means that a few very high-performing locations are pulling the average up, and the typical location performs below the average. The median gives you a more realistic picture of what a “typical” location generates.

Step 3: Examine the Distribution

If Item 19 provides a breakdown by quartile or performance tier, examine where the majority of locations fall. What percentage of locations achieve or exceed the stated average? If the average AUV is $1.9 million but only 35% of locations achieve that level, then the majority of locations fall below the average. Your financial model should be built on a realistic estimate, not on the best-case scenario.

Step 4: Compare Drive-Through vs. Dine-In Performance

Taco Bell locations with drive-through windows typically outperform locations without drive-through access, particularly in suburban and highway-adjacent markets. If Item 19 provides separate data for drive-through and non-drive-through locations, use the data that corresponds to your proposed location format. Drive-through locations generally generate higher sales volumes due to speed, convenience, and the ability to serve customers who do not want to leave their vehicles.

Step 5: Account for Year-Over-Year Growth Trends

Compare the current year’s Item 19 data to prior years if available. Taco Bell has experienced strong AUV growth in recent years, driven by successful marketing campaigns, menu innovation, and digital ordering adoption. However, past growth does not guarantee future performance. Model your projections using current figures, not projected growth rates.

How Do Taco Bell’s Fees Affect Profitability Relative to Item 19 Sales Data?

This is where Item 19 and Item 6 come together to tell the complete financial story. Let us model the impact of Taco Bell’s fee structure on a location generating $1.9 million in annual gross sales (slightly above the approximate AUV).

Line Item	% of Sales	Annual Amount
Gross Sales	100%	$1,900,000
Royalty	5.5%	($104,500)
National Advertising	4.25%	($80,750)
Local Advertising (est.)	3%	($57,000)
Food Costs	28%	($532,000)
Labor	27%	($513,000)
Occupancy (rent, utilities, property)	10%	($190,000)
Technology, Insurance, Other	3%	($57,000)
Estimated Net Before Debt Service		$365,750
Less: Debt Service (est. on $1.5M investment)		($180,000 – $220,000)
Estimated Owner Cash Flow		$145,750 – $185,750

This model illustrates several important points. First, the owner cash flow of $145,750 to $185,750 on a $1.5 million investment represents a return that may or may not meet a specific investor’s return requirements. Second, the estimate assumes a well-managed location operating at or slightly above average performance. Locations performing below average will generate lower cash flow. Third, the model does not include reserves for mandatory remodels, which as discussed in our Item 6 analysis, can cost $500,000 to $1 million or more.

The key takeaway: the $1.9 million in gross sales from Item 19 translates to estimated owner cash flow of roughly $150,000 to $185,000 under favorable assumptions. Prospective franchisees who look at the $1.9 million gross sales figure and assume it represents their income will be severely disappointed.

A Client Scenario: When Item 19 Data Did Not Match the Financial Reality

A client approached our firm excited about a Taco Bell franchise opportunity in a fast-growing suburban market. The client had reviewed the FDD’s Item 19 and was focused on the AUV data showing strong system-wide sales performance. The client’s initial financial model projected an owner income of approximately $250,000 per year based on a location generating $2.1 million in annual gross sales.

When we reviewed the model during our FDD validation engagement, we identified several areas where the projections were overly optimistic. First, the client had used a food cost percentage of 25%, which is below the typical Taco Bell range of 27% to 30%. Second, the client had modeled labor at 22% of sales, which was unrealistic given the labor market in the target geography where minimum wages and benefits costs were above the national average. Third, the client had not included any local advertising obligation beyond the 4.25% national contribution.

After we rebuilt the financial model using realistic cost assumptions derived from conversations with current operators in the same market, the projected owner income dropped from $250,000 to approximately $130,000 before debt service. After accounting for SBA loan payments on the initial investment, the projected cash flow dropped to approximately $70,000 per year.

The client ultimately decided to proceed with the investment but at a different location with a lower purchase price and in a market with more favorable labor and occupancy costs. The revised investment produced a more attractive return profile because the client used realistic cost assumptions informed by a complete analysis of both Item 19 and Item 6. At Lopes Law LLC, helping clients build accurate financial models is one of the most valuable services we provide during the FDD review process.

What Is Taco Bell’s Food Cost Advantage and How Does It Affect Item 19 Analysis?

One of Taco Bell’s competitive advantages within the QSR industry is its relatively low food cost percentage. Taco Bell’s menu is built around protein-efficient ingredients: seasoned beef, beans, rice, cheese, sour cream, lettuce, and tortillas. These ingredients are generally less expensive on a per-serving basis than the proteins used by burger, chicken, or sandwich concepts.

A typical Taco Bell food cost runs between 27% and 30% of gross sales, compared to 28% to 34% for many other QSR brands. This food cost advantage means that, all else being equal, a Taco Bell location can convert a higher percentage of its gross sales into operating margin compared to a burger or chicken concept operating at the same revenue level.

However, the food cost advantage should be evaluated in context. Taco Bell’s combined royalty and national advertising contribution (9.75%) is higher than some competitors, and when local advertising is added, the total fee and advertising burden can offset some of the food cost savings. The correct analysis compares the net margin after all variable costs and fees, not just one cost category in isolation.

How Does Drive-Through Performance Differ from Dine-In for Taco Bell?

Drive-through is a critical revenue channel for Taco Bell, and locations with drive-through access generally outperform dine-in-only locations on both total sales and speed of service. The COVID-19 pandemic accelerated the shift toward drive-through and digital ordering, and that trend has persisted in subsequent years.

When evaluating Item 19 data, consider whether the sales figures differentiate between drive-through and non-drive-through locations. If the AUV data includes both formats, the average may be pulled up by high-performing drive-through locations while non-drive-through locations perform below the stated average.

For prospective franchisees, the format of your proposed location matters significantly. A drive-through location in a high-traffic suburban area will likely perform differently than a Taco Bell Cantina in an urban entertainment district or a non-traditional location inside a convenience store. Match your financial projections to the format that corresponds to your proposed location, not to the system-wide average. For a broader perspective on evaluating financial performance data, see our general guide on understanding Item 19 across all franchise systems.

What Should Prospective Taco Bell Franchisees Do with Item 19 Data?

Here is a practical framework for using Taco Bell’s Item 19 data in your investment decision:

• Start conservative: Use the median rather than the average as your baseline. If the median is not provided, assume your location will perform at or below the average unless you have strong evidence to suggest otherwise.
• Build a complete P&L: Create a profit and loss statement that includes every cost category: food (27% to 30%), labor (25% to 30%), royalty (5.5%), national advertising (4.25%), local advertising (2% to 5%), occupancy (8% to 12%), technology and other fees (2% to 3%), insurance, and maintenance. Only then calculate your projected net income.
• Model debt service: If you are financing the investment through an SBA loan or other debt, include the debt service payments in your cash flow model. A $1.5 million investment financed over 10 years at current interest rates will require significant monthly payments.
• Reserve for remodels: Set aside funds or model the impact of a $500,000 to $1 million remodel that may be required during the 20-year franchise term.
• Talk to current operators: Ask existing Taco Bell franchisees about their actual financial performance relative to the Item 19 data. Validation calls are one of the most valuable sources of real-world financial information.
• Engage a franchise attorney: Have a qualified franchise attorney review the complete FDD, including both Item 19 and Item 6, and help you build an accurate financial model.

At Lopes Law LLC, our flat-fee FDD validation review is $3,000 and covers all 23 items of the Taco Bell FDD with detailed attention to the financial performance data in Item 19 and the fee structure in Item 6. For more on what that review process involves, see our guide on what to expect from an FDD review.

Frequently Asked Questions About Taco Bell FDD Item 19

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Last updated: March 10, 2026