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Fast-Food Cost Segregation Studies

Fast-food restaurants have much in common with traditional dining. Much short-life depreciation can be found in the kitchen, with specialty gas appliances, cooking appliances, industrial refrigerators, and countless other appliances for making a quick meal. Then there is the counter area, where more savings can be found to help lower your income taxes.

A cost segregation study from O’Connor will not only focus on the interior of your fast-food establishment but also look at the exterior. The parking lot, signage, landscaping, and drive-thru lanes are just some components that can be used. Whether they are short-life or long-term depreciable assets, O’Connor will find and utilize all of them.

There is some upfront cost for a cost segregation study, but this can often be mitigated quickly by income tax savings using accelerated depreciation. The typical study is paid back by a ratio of 2-1, though this can be as high as 15-1 depending on circumstances. And that is just the first year! The table below shows other fast-food establishments that O’Connor has helped in the past.

Real Clients That Used Cost Segregation

Depreciable BasisPurchase pricePurchase DateYear of Study1st Year Tax SavingsYear 1 PaybackInitial 5 Years Tax Savings5 Year Payback
$2,150,00010/1/20152015$18,840$7,4611.2:1$136,05523.7:1
$714,7061/1/20122012$78,127$33,59512.4:1$148,91156.0:1
$5,476,71612/1/20152015$100,339$39,7349.1:1$653,681151.0:1
$1,623,5002/1/20112011$62,613$26,92410.5:1$135,18753.7:1
$1,318,77611/1/20152015$16,434$6,5082.4:1$109,94141.6:1

Results

* Results from studies using mid-quarter depreciation convention due to timing of purchase and other factors.

NOTE: The above listed tax savings are based on a 39.6% tax rate for the owner.