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The impact global and domestic economic conditions have on consumer discretionary spending and our costs of operations could materially adversely affect our financial performance.
−Removed: Geopolitical and macroeconomic events have impacted consumer spending and our costs of operations and may continue to do so for some time in the future.
Dining out is a discretionary expenditure that is influenced by domestic and global economic conditions, including, but not limited to:
−Removed: geopolitical instability, including armed conflicts, supply shortages, interest rates (including recent interest rates above historical norms), unemployment, significant cost inflation, health emergencies including the COVID-19 pandemic, consumer confidence, consumer purchasing and saving habits, credit conditions, stock market performance, home values, population growth, household incomes and tax policy.
+Added: geopolitical instability, including armed conflicts, supply shortages, interest rates, unemployment, significant cost inflation, public health emergencies, consumer confidence, consumer purchasing and saving habits, credit conditions, stock market performance, home values, population growth, household incomes and tax policy.
Material changes to governmental policy related to domestic and international fiscal concerns, and/or changes in central bank policies with respect to monetary policy, also could affect consumer discretionary spending.
Any factor affecting consumer discretionary spending may influence customer traffic in our restaurants and average check amount, thus potentially having a material impact on our financial performance.
−Removed: Global and domestic economic conditions also impact our costs of operations.
−Removed: During fiscal 2021, we began to experience certain supply shortages and transportation delays largely attributable to impacts of the COVID-19 pandemic.
−Removed: These shortages continued in fiscal 2022 and were exacerbated by geopolitical unrest and other macroeconomic factors, which contributed to significant cost inflation.
−Removed: While we have seen improvements in many of these areas, the absolute level of commodity costs has remained elevated.
−Removed: The ongoing impact of geopolitical and macroeconomic events could lead to further shifts in consumer behavior, wage inflation, staffing challenges, product and services cost inflation, disruptions in the supply chain and delay in new restaurant openings.
+Added: In recent years, our operating results were impacted by geopolitical and other macroeconomic events, causing supply chain challenges and significantly increased commodity and wage inflation.
+Added: Our commodity and wage inflationary environment began returning to more historical levels in fiscal 2024.
+Added: The impact of ongoing geopolitical and macroeconomic events could lead to further wage inflation, product and services cost inflation, disruptions in the supply chain, staffing challenges, shifts in consumer behavior, and delays in new restaurant openings.
Any of these factors may have an adverse impact on our business and materially adversely affect our financial performance.
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Changes in customer traffic and average check amount may be impacted by a variety of factors, including, without limitation:
−Removed: macroeconomic conditions that impact consumer discretionary spending (See the risk factor titled “The impact global and domestic economic conditions have on consumer discretionary spending could materially adversely affect our financial performance.”);
+Added: macroeconomic conditions that impact consumer discretionary spending;
perception of our concepts’ offerings in terms of quality, price, value and service;
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adverse weather conditions;
+Added: natural disasters;
and demographic, economic and other adverse changes in the trade areas in which our restaurants are located and changes in the regulatory environment.
−Removed: We compete directly and indirectly for customer traffic with national and regional casual dining restaurant chains, as well as independently-owned restaurants.
+Added: (See the risk factor titled “The impact global and domestic economic conditions have on consumer discretionary spending and our costs of operations could materially adversely affect our financial performance.”)
+Added: We compete directly and indirectly for customer traffic with national and regional full-service dining restaurant chains as well as independently-owned restaurants.
In addition, we face competition from fast casual and quick-service restaurants, grocery stores and meal kits that have increased the quality and variety of their food products in response to consumer demand.
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We utilize menu price increases in an effort to help offset inflation of key operating costs.
−Removed: However, our menu price increases may be insufficient to meaningfully offset increased costs and may, if not accepted by customers, result in reduced customer traffic and unfavorable menu mix shifts (i.e.
−Removed: customers reducing their spend by purchasing fewer menu items or lower cost menu items).
−Removed: These risks became more pronounced during fiscal 2022 and 2023, as persistent supply shortages and a heightened inflationary environment significantly increased our costs causing us to implement pricing actions above our historical levels to help protect margins.
+Added: However, our menu price increases may be insufficient to meaningfully offset increased costs and may, if not accepted by customers, result in reduced customer traffic and unfavorable menu mix shifts (i.e., customers reducing their spend by purchasing fewer menu items or lower cost menu items).
+Added: These risks became more pronounced beginning in 2022, when we began to implement menu price increases above our historical levels to help offset significant inflationary cost pressures.
(See the risk factor titled “Our inability to anticipate and react effectively to changes in the costs of key operating resources may increase our cost of doing business, which could materially adversely affect our financial performance.”)
−Removed: In recent years, generally beginning with the COVID-19 pandemic, we have generated a higher mix of sales from off-premise channels as consumers have demonstrated a preference for convenience and at-home dining.
+Added: In recent years, we have generated a higher mix of sales from off-premise channels as consumers have demonstrated a preference for convenience and at-home dining.
Growing competition in off-premise channels, our inability to differentiate our concepts in these channels or a change in customers’ willingness to pay fees associated with third-party delivery could negatively impact our comparable restaurant sales performance.
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(See the risk factor titled “Any inability to effectively use and manage social media could harm our marketing efforts as well as our reputation, which could materially adversely affect our financial performance.”) Negative publicity about us could harm our reputation and damage the value of our brands, which could materially adversely affect our financial performance.
−Removed: Over the past several years we have experienced and continue to experience significant labor cost inflation, which has and may continue to significantly increase our cost of doing business.
−Removed: Low unemployment coupled with increases in minimum wages (including increased minimum wages in industries with which we compete for talent) and minimum tip credit wages, extensions of personal and other leave policies, other governmental regulations affecting labor costs, reduced levels of legal immigration and a diminishing pool of potential staff members, which has been exacerbated by potential staff members choosing to exit the workforce, in general and in the hospitality industry, in particular, especially in certain localities, have and may continue to significantly increase our labor costs and make it more difficult to fully staff our restaurants, any of which could materially adversely affect our financial performance.
+Added: In past years we have experienced and may again experience significant labor cost inflation, which has and may in the future significantly increase our cost of doing business.
+Added: Increases in minimum wages (including increased minimum wages in industries with which we compete for talent) and minimum tip credit wages, extensions of personal and other leave policies, other governmental regulations affecting labor costs including pay transparency and secure scheduling requirements and reduced levels of legal immigration have and may continue to significantly increase our labor costs and make it more difficult to fully staff our restaurants, any of which could materially adversely affect our financial performance.
Certain state and localities have significantly increased their minimum wage and/or tip credit wage (or have eliminated the tip credit wage), and require significantly more mandated benefits, and we believe it is becoming increasing likely that the United States federal government or certain other states and localities will also elect to do so.
−Removed: Should this occur, in addition to increasing the overall wages paid to our minimum wage and tip credit wage earners, these increases create pressure to increase wages and other benefits paid to other staff members who, in recognition of their tenure, performance, job responsibilities and other similar considerations, historically received a rate of pay exceeding the applicable minimum wage or minimum tip credit wage.
+Added: Should this occur, in addition to increasing the overall wages paid to our minimum wage and tip credit wage earners, these increases create pressure to increase wages paid to and other benefits provided to other staff members who, in recognition of their tenure, performance, job responsibilities and other similar considerations, historically received a rate of pay exceeding the applicable minimum wage or minimum tip credit wage.
Because we employ a large workforce, any wage increases and/or expansion of benefits mandates will have a particularly significant impact on our labor costs.
−Removed: Our vendors, contractors and business partners are similarly impacted by wage and benefit cost inflation, and many have or will increase their prices for goods, construction and services in order to offset their increasing labor costs.
+Added: Increased restaurant labor costs could impact us more than others in our industry because we have a complex menu made fresh from scratch at our restaurants, requiring more labor at each restaurant location than some of our competitors who use processed foods or commissaries to prepare their foods.
+Added: Our vendors, contractors and business partners are similarly impacted by wage and benefit cost inflation, and many have or will increase their prices for goods, construction and services in order to offset their increasing labor costs, resulting in higher operating costs for us.
Our labor expenses include significant costs related to our self-insured health, pharmacy and dental benefit plans.
−Removed: Healthcare costs continue to rise and are especially difficult to project given that material increases in costs associated with medical claims, or an increase in the severity or frequency of such claims, may cause healthcare costs to vary substantially from quarter-to-quarter and year-over-year.
+Added: Healthcare costs continue to rise and are especially difficult to project given that material increases in costs associated with medical claims, or an increase in the severity or frequency of such claims, may cause healthcare costs to vary substantially from quarter-to-quarter and year-
Any significant changes to the healthcare insurance system could also impact our healthcare costs.
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If we are unable to effectively anticipate and respond to increased labor costs, our financial performance could be materially adversely affected.
−Removed: The impacts of and our failure to effectively respond to pandemics, epidemics, endemics and other public health emergencies, or food safety and food-borne illness, could reduce customer traffic to our restaurants, disrupt our food supply chain or cause us to be the target of litigation, which could materially adversely affect our financial performance .
−Removed: The COVID-19 pandemic significantly disrupted our business and may do so in the future as variants of the underlying virus evolve.
−Removed: During fiscal 2021 and 2022, the COVID-19 pandemic continued to affect our business during periods of accelerated case counts in which we experienced increased restaurant staff absenteeism and temporary shifts in consumer behavior, such as changes in customer traffic or the mix between on-premise and off-premise channels.
−Removed: Along with the COVID-19 pandemic, our operating results were impacted by geopolitical and macroeconomic events, causing supply chain challenges and significantly increased commodity and wage inflation.
−Removed: Some of these factors continued to impact our operating results in fiscal 2023, contributing to significantly increased commodity and other costs.
−Removed: We also encountered delays in opening new restaurants primarily due to delays in permitting and landlord readiness, as well as supply chain challenges.
−Removed: The ongoing impact of geopolitical and macroeconomic events could lead to further shifts in consumer behavior, wage inflation, staffing challenges, product and services cost inflation, disruptions in the supply chain and delay in new restaurant openings.
−Removed: Any of these factors may have an adverse impact on our business and materially adversely affect our financial performance.
−Removed: The impacts of and our failure to effectively respond to future pandemics, epidemics, endemics and other public health emergencies may also significantly disrupt our business.
−Removed: We also face food safety risk, including the risk of food-borne illness and food contamination (including allergen cross contamination), which are common both in the restaurant industry and the food supply chain.
+Added: Health risks associated with our restaurants or products, such as food safety concerns and food-borne illness, pandemics, epidemics, endemics and other public health emergencies could negatively impact customer traffic to our restaurants, disrupt our food supply chain or cause us to be the target of litigation, which could materially adversely affect our financial performance .
+Added: We face food safety risk, including the risk of food-borne illness and food contamination (including allergen cross contamination), which are common both in the restaurant industry and the food supply chain.
While we dedicate substantial resources and provide training to help ensure the safety and quality of the food we serve, these risks cannot be completely eliminated.
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Publicized food safety concerns, regardless of accuracy, whether specifically concerning food served at any of our restaurant brands, desserts produced at our bakeries, any products bearing our branding or regarding our third-party suppliers or service providers, or the food supply more generally, could negatively affect consumer demand for our restaurants and products, which in turn could materially adversely affect our financial performance.
+Added: The impacts of and our failure to effectively respond to pandemics, epidemics, endemics and other public health emergencies may also significantly disrupt our business, including, by adversely affecting, among other things, our ability to operate our business, consumer behavior, our supply chain, commodity prices, wage costs and our ability to timely open new restaurants.
+Added: For example, we experienced these and other impacts to our business as a result of the COVID-19 pandemic.
The demand for and availability and price of certain food items may be adversely impacted if a pathogen, such as coronavirus, Ebola, mad cow disease, SARS, swine flu, avian influenza, norovirus or other virus or bacteria, such as salmonella or E.coli, or if parasites or other toxins infect or are believed to have infected the food supply, including the food supply chain for our restaurants or bakery facilities.
+Added: For example, in 2024 we experienced challenges sourcing eggs as a result of an outbreak of avian influenza in poultry flocks.
Additionally, customers may avoid our restaurants and it may become difficult to adequately staff our restaurants if our customers or staff members become infected with a pathogen which was actually or alleged to be contracted at our restaurants.
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We are also subject to various environmental regulations governing areas such as water usage, sanitation disposal and transportation mitigation.
−Removed: The United States, on the federal, state and local levels, and other countries are expanding the type, nature and scope of laws and regulations governing other environmental matters, such as climate change, reducing greenhouse gas emissions, use of natural gas and water consumption, including in some cases imposing disclosure requirements with respect to such matters.
−Removed: (See the risk factor titled “Failure to adequately address environmental, social and governance (“ESG”) matters, could adversely affect our brand, business, results of operations and financial condition.”) We may incur significant additional costs and require operational changes to comply with these laws and regulations and may face fines, penalties or other sanctions, adverse publicity and incur legal liability in the event of our failure to do so.
+Added: The United States, on the federal, state and local levels, and other countries are expanding the type, nature and scope of laws and regulations governing other environmental matters, such as reducing greenhouse gas emissions, use of natural gas and water consumption, including in some cases imposing disclosure requirements with respect to such matters.
+Added: (See the risk factor titled “Failure to appropriately address environmental and social matters, could adversely affect our brand, business, results of operations and financial condition.”).
+Added: We may incur significant additional costs and require operational changes to comply with these laws and regulations and may face fines, penalties or other sanctions, adverse publicity and incur legal liability in the event of our failure to do so.
Our international business exposes us to additional laws and regulations, including antitrust and tax requirements, anti-boycott legislation, import/export and customs regulations and other international trade regulations, privacy laws, the USA Patriot Act and the Foreign Corrupt Practices Act.
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In addition, immigration-related employment regulations may make it more difficult for us to identify and hire qualified staff members.
−Removed: Our inability to maintain an experienced and qualified work force comprised of individuals who meet all legal citizenship or residency requirements could result in a disruption in our work force, sanctions against us and adverse publicity, any of which could materially adversely affect our financial performance.
+Added: Our inability to maintain an experienced and qualified work force comprised of individuals who meet all
+Added: legal citizenship or residency requirements could result in a disruption in our work force, sanctions against us and adverse publicity, any of which could materially adversely affect our financial performance.
Our facilities must comply with applicable requirements of the Americans with Disabilities Act of 1990 (“ADA”) and related federal, state and foreign laws and regulations which prohibit discrimination on the basis of disability with respect to public accommodations and employment.
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Additionally, some jurisdictions have introduced (or may be planning to introduce) legislation seeking to mandate an employment relationship between companies that facilitate third-party delivery services and their service personnel.
−Removed: Department of Labor recently issued a final rule concerning independent contractor standards for employees nationwide, which has not yet taken effect.
+Added: Department of Labor recently issued a final rule concerning independent contractor standards for employees nationwide, which took effect in March 2024.
The extent to which this rule may impact our third-party delivery services and their service personnel is not yet known.
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Additionally, some state, local and foreign governments also have enacted legislation regulating or prohibiting the sale of or mandating disclosures relating to certain types and/or levels of ingredients in food served in restaurants, such as trans fats, sodium, genetically modified organisms (GMOs) and gluten, and are taxing or considering taxing and/or otherwise regulating high fat, high sugar and high sodium foods.
−Removed: While it remains unclear to what extent consumers may reconsider dining preferences in response to such requirements, it is clear that consumer dining preferences continue to evolve, and these preferences may evolve more rapidly in response to any of these new requirements.
+Added: While it remains unclear to what extent consumers may reconsider dining preferences in response to such requirements, consumer dining preferences continue to evolve, and these preferences may evolve more rapidly in response to any of these new requirements.
+Added: New and current medical treatments such as GLP-1 agonists may shift consumer preferences.
Our failure to quickly and effectively adapt to any significant shift in consumer dining preference could cause our or our licensees’ restaurants to lose market share, which could materially adversely affect our financial performance.
−Removed: Our failure to effectively develop, grow and operate North Italia and our other branded concepts could materially adversely affect our financial performance.
+Added: Our failure to effectively develop, grow and operate North Italia, Flower Child and our other branded concepts could materially adversely affect our financial performance.
All of our restaurant concepts are subject to the risks and uncertainties described in this filing.
However, there is an enhanced level of risk and uncertainty related to the operation and expansion of our less-established restaurant concepts.
−Removed: We acquired North Italia and the remainder of Fox Restaurant Concepts’ business for the purpose of accelerating unit growth and to develop innovating concepts for future growth.
+Added: We acquired North Italia, Flower Child and the remainder of Fox Restaurant Concepts’ business for the purpose of accelerating unit growth and to develop innovating concepts for future growth.
While we actively seek to grow these concepts, we can provide no assurance that new restaurants will be accepted in the markets targeted for expansion or that we will be able to achieve our targeted returns when opening new locations.
−Removed: Adverse weather conditions, natural disasters, climate change and public health emergencies could unfavorably impact our restaurant sales, which could materially adversely affect our financial performance.
+Added: Adverse weather conditions, natural disasters and public health emergencies could unfavorably impact our restaurant sales, which could materially adversely affect our financial performance.
Adverse weather conditions, natural disasters and public health emergencies can impact customer traffic, make it more difficult to fully staff our restaurants and more severe events, such as hurricanes, earthquakes, tornadoes, blizzards, wildfires and other natural disasters and public health emergencies, such as the COVID-19 pandemic, have resulted in and may in the future result in restaurant closures, underutilization of outdoor patio dining and curtailed operations, impediments to availability of staff and supplies and increased commodity costs, sometimes for prolonged periods of time.
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Our inability to anticipate and react effectively to changes in the costs of key operating resources may increase our cost of doing business, which could materially adversely affect our financial performance.
−Removed: The cost of products and services used in our operations are subject to volatility due to the relative availability of labor and distribution, weather, natural disasters, inventory levels and other supply and/or demand impacting events such as the COVID-19 pandemic, geopolitical events, economic conditions or other unforeseen circumstances.
−Removed: Climate change may further exacerbate a number of these factors.
+Added: The cost of products and services used in our operations are subject to volatility due to the relative availability of labor and distribution, weather, natural disasters, inventory levels and other supply and/or demand impacting events such as geopolitical events, economic conditions, public health emergencies or other unforeseen circumstances.
We attempt to negotiate short-term and long-term agreements for some of our principal commodity, supply and equipment requirements, such as certain dairy products and poultry, depending on market conditions and expected demand.
−Removed: While we are in the process of contracting for certain key food and non-food supplies for fiscal 2024, these efforts may not be successful or yield our intended benefits.
−Removed: Due to the inflationary cost pressures we experienced in fiscal 2022 and 2023, we implemented price increases above our historical levels to help support our longer-term restaurant-level margin objectives.
−Removed: Recent pricing actions were and current and future near-term pricing actions may also be at levels above historical norms to keep pace with any significant cost increases.
+Added: We are in the process of contracting for certain key food and non-food supplies for fiscal 2025, and these efforts may not be successful or yield our intended benefits.
+Added: Due to the inflationary cost pressures we experienced, beginning in 2022, we implemented price increases above our historical levels to help offset inflationary cost pressures.
+Added: Our commodity inflationary environment began returning to more historical levels in 2024.
+Added: We will continue to take the cost and inflationary environment into consideration when implementing future pricing decisions.
In addition, on a regular basis, we carefully consider opportunities to adjust our menu offerings or ingredients to help manage product availability and cost.
However, we can provide no assurance that these efforts will be successful.
−Removed: We continue to evaluate the possibility of entering into similar arrangements for other commodities and periodically evaluate hedging vehicles, such as direct financial instruments, to assist us in managing risk and variability associated with such commodities.
+Added: We continue to evaluate the possibility of entering into similar short-term and long-term arrangements for other commodities and periodically evaluate hedging vehicles, such as direct financial instruments, to assist us in managing risk and variability associated with such commodities.
As of the end of fiscal 2024, we had no hedging contracts in place.
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Additionally, the cost of commodities subject to governmental regulation, such as dairy and corn, can be especially susceptible to price fluctuation.
−Removed: Goods we purchase on
−Removed: the international market may be subject to even greater fluctuations in cost and availability, which could result from a variety of factors, including the value of the U.S.
+Added: Goods we purchase on the international market may be subject to even greater fluctuations in cost and availability, which could result from a variety of factors, including the value of the U.S.
dollar relative to other currencies, international trade disputes, tariffs, geopolitical unrest and varying global demand.
+Added: New or increased tariffs and other changes in U.S.
+Added: trade policy could trigger retaliatory actions, including increased tariffs, by affected countries.
While we strive to engage in a competitive bidding process for our principal commodity, supply, service and equipment requirements, because certain of these products and services may only be available from a few vendors or service providers, we may not always be able to do so.
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Certain products and ingredients commonly used in food preparation are under scrutiny for possibly posing social and environmental risks, including from an animal welfare and environmental sustainability perspective.
−Removed: We use many of these products and ingredients and have adopted a comprehensive Sustainable Sourcing Policy under which, among other things, we commit to a buying preference by 2025, or sooner where required, for products and ingredients that are sustainably grown and harvested and which do not have negative social impact, and for products from animals that are humanely raised and processed (“sustainable products”).
−Removed: While we are committed to implementing these changes in as timely and commercially feasible manner as possible, there is a risk that some of our products or ingredients may become the subject of adverse publicity before we are able to do so, regardless of factual basis.
−Removed: Additionally, while we make significant efforts to help ensure we will have a sufficient ongoing supply of sustainable products at a reasonable cost, because there is currently a smaller market for certain of these products, any condition affecting the demand for or supply of these products may cause significant cost and supply volatility.
−Removed: For example, during fiscal 2023, we experienced supply shortages with respect to certain sustainable products, which largely resulted from challenges related to a growing framework of laws mandating the use of sustainable products.
−Removed: For these and other reasons, we cannot be certain that our supply and cost mitigation efforts or commitment to purchase sustainable products will be successful.
+Added: We use many of these products and ingredients and have adopted a comprehensive Sustainable Sourcing Policy under which, among other things, we have a buying preference for products and ingredients that meet our social, environmental and animal welfare qualifications (“sustainable products”).
+Added: While we strive to source sustainable products, there is a risk that some of our products or ingredients may become the subject of adverse publicity or shareholder activism, regardless of factual basis.
+Added: There is currently a smaller market for certain sustainable products, and any condition affecting the demand for or supply of these products may cause significant cost and supply volatility and prevent us from obtaining these products at a reasonable cost.
+Added: For example, during fiscal 2023 and 2024, we experienced supply shortages with respect to certain sustainable products, which largely resulted from challenges related to a growing framework of laws mandating the use of sustainable products.
+Added: This may become more prevalent as the European Union’s regulation of sustainably sourced commodities may cause limited inventories of sustainably sourced commodities to be diverted there.
+Added: For these and other reasons, we cannot be certain that our supply and cost mitigation efforts or our efforts to purchase sustainable products will be successful.
Our international licensees are also subject to commodity price fluctuations.
−Removed: While they generally employ strategies to mitigate the impact these fluctuations have on their businesses, neither we nor they can be assured such strategies will be successful.
+Added: Any strategies employed by our international licensees to mitigate the impact these fluctuations have on their businesses may not be successful.
Commodity price fluctuations have and may continue to impede our international licensees’ profitability, which may hamper their ability to grow and negatively impact our ability to expand our brand internationally.
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If we are unable to staff and retain qualified restaurant management and operating personnel in an increasingly competitive market, we may be unable to effectively operate and grow our business and revenues, which could materially adversely affect our financial performance.
−Removed: If we are unable to attract and retain qualified personnel, our restaurants and bakery operations could be short staffed, we may be forced to incur overtime expenses, and our ability to operate and expand our concepts effectively and to meet our customers’ demand could be limited, any of which could materially adversely affect our financial performance.
+Added: If we are unable to attract and retain qualified personnel, including due to increasingly competitive labor markets, our restaurants and bakery operations could be short staffed, we may be forced to incur overtime expenses, and our ability to operate and expand our concepts effectively, grow our business and revenues and meet our customers’ demand could be limited, any of which could materially adversely affect our financial performance.
If any of our third-party vendors experiences a failure that affects a significant aspect of our business, we may experience data loss, increased costs, operational disruption or other harm, any of which could materially adversely affect our financial performance.
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In some instances, these processes rely on technology and may be outsourced to the vendor in their entirety and in other instances we utilize these vendors’ externally-hosted business applications.
−Removed: Our vendors’ systems have experienced cybersecurity incidents, including credential stuffing attacks in which compromised user credentials were used to breach the systems, and are vulnerable to a
−Removed: variety of risks, including, without limitation, theft, casualties such as fire, power loss, telecommunications failure or other catastrophic events, as well as from internal and external cybersecurity threats, including from diverse threat actors, such as state-sponsored organizations, opportunistic hackers and hacktivists, as well as through diverse attack vectors, such as malfeasance by insiders, human or technological error, malicious code embedded in open-source software, or misconfigurations, “bugs” or other vulnerabilities in commercial software that is integrated into our (or our suppliers’ or service providers’) network infrastructure, products or services, security breaches, denial of service attacks, viruses, worms, malware, ransomware, social engineering/phishing, breaches of the algorithms used to encrypt and protect data and other malicious, or disruptive or unauthorized events that jeopardize the confidentiality, integrity or availability of information systems or information residing therein, including confidential information and personal information (each, a “Cybersecurity Incident” and collectively, “Cybersecurity Incidents”).We also rely on third party services to effectively operate our restaurants including, for example, gift card distribution and transaction processing services, point-of-sale system services, online ordering services and food delivery services, and our Cheesecake Rewards TM program.
+Added: Our vendors’ systems are vulnerable to a variety of risks, including,
+Added: without limitation, theft, casualties such as fire, power loss, telecommunications failure or other catastrophic events, as well as from internal and external cybersecurity threats, including from diverse threat actors, such as state-sponsored organizations, opportunistic hackers and hacktivists, as well as through diverse attack vectors, such as malfeasance by insiders, human or technological error, malicious code embedded in open-source software, or misconfigurations, “bugs” or other vulnerabilities in or issues with commercial software that is integrated into our (or our suppliers’ or service providers’) network infrastructure, products or services, security breaches, denial of service attacks, viruses, worms, malware, ransomware, social engineering/phishing, breaches of the algorithms used to encrypt and protect data and other malicious, or disruptive or unauthorized events that jeopardize the confidentiality, integrity or availability of information systems or information residing therein, including confidential information and personal information (each, a “Cybersecurity Incident” and collectively, “Cybersecurity Incidents”), and have also experienced Cybersecurity Incidents, including credential stuffing attacks in which compromised user credentials were used to breach the system.
+Added: The failure of third-party vendors to provide adequate services, including, as result of any Security Incident, or to generally fail to employ up-to-date and appropriate data security and internal control practices, could significantly harm our operations and reputation, which could materially adversely affect our financial performance.
+Added: For example, in July 2024 we experienced disruptions to our information technology systems as part of the CrowdStrike software update that resulted in global information technology outages, including disruptions to our ability to process customer payments at certain of our restaurants.
+Added: While we experienced this disruption for a limited period of time, the incident did not have a significant impact on our business.
+Added: We also rely on third party services to effectively operate our restaurants including, for example, gift card distribution and transaction processing services, point-of-sale system services, online ordering services and food delivery services, and our Cheesecake Rewards ® program.
We derive substantial revenue from these aspects of our business, which could suffer in the event of any factor that adversely impacts our vendors’ ability to provide such services.
−Removed: Such factors include, without limitation, loss of, or significant change in contractual terms of, key vendor contracts, vendor or processor failures, technology failures, changes in applicable laws or regulations, Security Incidents, damage to the reputation of any key vendor and mandated employment relationships between companies that facilitate third-party delivery services and their service personnel.
+Added: Such factors include, without limitation, loss of, or significant change in contractual terms of, key vendor contracts, vendor or processor failures, technology failures, changes in applicable laws or regulations, Cybersecurity Incidents, damage to the reputation of any key vendor and mandated employment relationships between companies that facilitate third-party delivery services and their service personnel.
(See the risk factor titled “Changes in, or any failure to comply with, applicable laws or regulations could materially adversely affect our ability to operate our restaurants and/or increase our cost to do so, which could materially adversely affect our financial performance.”)
−Removed: We continue to review options to expand the use of third-party providers in other areas.
−Removed: Our general practice is to seek to work with service providers that are leading performers in their industries and with technology vendors that we understand employ up-to-date and appropriate data security practices and internal control practices.
−Removed: However, we cannot guarantee that failures will not occur.
−Removed: The failure of third-party vendors to provide adequate services, including, as result of any Security Incident, or to generally fail to employ up-to-date and appropriate data security and internal control practices, could significantly harm our operations and reputation, which could materially adversely affect our financial performance.
We may incur additional costs if we are unable to renew our restaurant leases on similar terms and conditions, or at all, or to relocate our restaurants in certain trade areas, which could materially adversely affect our financial performance.
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Delay in delivery of leased premises from our landlords may also result in increased costs.
−Removed: During 2023, the timing of the delivery of the leased premises to us from our landlords in order to perform build-out construction activities contributed to delays in opening new restaurants.
−Removed: In addition, we may elect to terminate certain leases prior to their expiration dates, and we may be unable to negotiate favorable terms for such early terminations.
+Added: In addition, changing consumer preferences and demographics in a given area have in the past and may in the future cause us relocate or terminate a restaurant lease.
+Added: We may elect to terminate certain leases prior to their expiration dates, and we may be unable to negotiate favorable terms for such early terminations.
Additional costs related to expiring restaurant lease terms, our inability to terminate certain restaurant leases under favorable terms or the unavailability of suitable replacement locations could materially adversely affect our financial performance.
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This aspect of social media is especially challenging because it allows any individual to reach a broad audience with an ability to respond or react, in near real time, with comments that are often not filtered or checked for accuracy.
−Removed: If we are unable to quickly and effectively respond, any negative publicity could “go viral” causing nearly immediate and potentially significant harm to our brand and reputation, whether or not factually accurate.
+Added: Any negative publicity could “go viral” causing nearly immediate and potentially significant harm to our brand and reputation, whether or not factually accurate.
Our marketing strategy includes an emphasis on social media.
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Our failure to adequately protect our intellectual property could materially adversely affect our financial performance.
−Removed: We own and have applied to register trade names, logos, service marks, trademarks, copyrights and other intellectual property (collectively, “Intellectual Property”), including The Cheesecake Factory ® , North Italia ® , a collection within the Fox Restaurant Concepts subsidiary and other trademarks related to our restaurant and bakery businesses in the United States and in other countries throughout the world.
+Added: We own and have applied to register trade names, logos, service marks, trademarks, copyrights and other intellectual property (collectively, “Intellectual Property”), including The Cheesecake Factory ® , North Italia ® , Flower Child ® , a collection within the Fox Restaurant Concepts subsidiary and other trademarks related to our restaurant and bakery businesses in the United States and in other countries throughout the world.
Our Intellectual Property is valuable to our business and requires continuous monitoring to protect.
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Furthermore, we have not registered all our Intellectual Property throughout the world, and doing so may not be feasible because of associated costs, various foreign trademark law prohibitions or registrations by others.
−Removed: Our failure or inability to protect our Intellectual Property worldwide could limit our ability to globally expand our brand.
Our inability to effectively protect our Intellectual Property domestically or internationally could cause our customers to believe lesser quality products or services are ours, may reduce the capacity of our Intellectual Property to uniquely identify our products and services and/or may limit our ability to globally expand our brand, any of which could materially adversely affect our financial performance.
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● exchange rate fluctuations;
−Removed: ● currency fluctuations, trade restrictions, taxes or tariffs adversely affecting our or our licensees’ ability to import goods from the United States and other parts of the world that are required for operating our branded restaurants, including our cakes which are wholly manufactured in the United States.
+Added: ● trade restrictions, taxes or tariffs adversely affecting our or our licensees’ ability to import goods from the United States and other parts of the world that are required for operating our branded restaurants, including our cakes which are wholly manufactured in the United States.
Our international licensees are authorized to operate The Cheesecake Factory restaurant concept in licensed trade areas using certain of our Intellectual Property, including our proprietary systems.
−Removed: We provide extensive and detailed training to our licensees to enable their staff members to effectively execute our operating processes and procedures, and we periodically audit their performance
−Removed: and adherence to our requirements.
−Removed: However, because we do not operate these restaurants directly, we can provide no assurance that our licensees will adhere to our operating standards to the same extent as we would.
+Added: Because we do not operate these restaurants directly, we can provide no assurance that our licensees will adhere to our operating standards to the same extent as we would.
If we or our licensees fail to effectively operate our international restaurants, or if we or they fail to receive an adequate return on investment, and these difficulties are attributed to us or our brand, our reputation and brand value could be harmed, our revenues from these restaurants could be diminished and our international growth may be slowed, any of which could materially adversely affect our financial performance.
In order to support our international expansion, our bakeries supply certain of our bakery products to our branded international restaurants.
−Removed: In order to supply bakery products to restaurants in other countries, we may be required to adapt certain recipes to eliminate locally prohibited ingredients, comply with labeling requirements that differ from those in the United States and maintain certifications required to export to such countries.
+Added: In order to supply bakery products to restaurants in other countries, we are and in the future may be further required to adapt certain recipes to eliminate locally prohibited ingredients, comply with labeling requirements that differ from those in the United States and maintain certifications required to export to such countries.
In addition, unexpected events outside of our control, such as, without limitation, trade restrictions, import and export embargos, governmental shutdowns and disruptions in shipping, may affect our ability to transport adequate levels of our bakery products to our or our licensees’ international restaurants, for which we are the sole source of supply.
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● the financial viability of our landlords;
−Removed: ● timing of the delivery of the leased premises to us from our landlords in order to perform build-out construction activities, which contributed to delays in opening new restaurants in 2023;
−Removed: ● obtaining, on a timely basis, all governmental licenses and permits necessary to construct and operate our restaurants, which has become more challenging as we are experiencing longer than usual governmental delays in the licensing and permitting process;
−Removed: ● obtaining, on a timely basis, all utility connections;
−Removed: ● obtaining, on a timely basis, all third-party consents necessary to construct and operate our restaurants;
+Added: ● timing of the delivery of the leased premises to us from our landlords in order to perform build-out construction activities;
+Added: ● obtaining, on a timely basis, governmental licenses and permits necessary to construct and operate our restaurants;
+Added: ● obtaining, on a timely basis, utility connections;
+Added: ● obtaining, on a timely basis, third-party consents necessary to construct and operate our restaurants;
● successfully managing the complex design, construction and preopening processes for our highly customized restaurants;
3 unchanged sentences
● adverse weather or other delays during the construction period.
−Removed: We have encountered and expect to continue to experience delays in opening new restaurants due to delays in permitting and landlord readiness, as well as supply chain challenges.
We may engage in expansion opportunities or other initiatives which may create risks to our business that could materially adversely affect our financial performance.
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Our international license agreements require us to provide training and support to our licensees for their development and operation of The Cheesecake Factory restaurants.
−Removed: We have dedicated certain corporate personnel to international development and continue to utilize the talents of existing management to support our international licensing and operations infrastructure.
−Removed: In addition, one of the most important aspects of our restaurant operations is our ability to deliver dependable, quality service by experienced staff members who can execute our concepts according to our high standards.
This may require training our licensees’ management personnel in the United States and our licensees’ staff members in the licensed territories, as well as providing support in the selection and development of restaurant sites, product sourcing logistics, technological systems, menu modification and other areas.
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At any given time, we may be monitoring a number of locations, and future impairment charges and/or closures may occur if individual restaurant performance does not improve, which could materially adversely affect our financial performance.
−Removed: During fiscal 2023, we recorded impairment of assets and lease terminations expense of $29.5 million primarily related to the impairment of long-lived assets for three The Cheesecake Factory (one previously impaired), one North Italia (previously impaired), one Other FRC and two Other restaurant lease terminations.
+Added: During fiscal 2024, we recorded impairment of assets and lease terminations expense of $13.6 million primarily related to the impairment of long-lived assets.
(See Note 1 of Notes to Consolidated Financial Statements in Part IV, Item 15 for further discussion of impairment of long-lived assets.)
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We are subject to lawsuits, administrative proceedings and claims that arise in the ordinary course of business.
−Removed: These matters typically involve claims by customers, staff members and others regarding issues such as food-borne illness, food safety, premises liability, dram shop liability, compliance with wage and hour requirements, work-related injuries, discrimination, harassment, disability and other operational issues common to the foodservice industry.
+Added: These matters typically involve claims by customers, staff members and others regarding issues such as food-borne illness, food safety, premises
+Added: liability, dram shop liability, compliance with wage and hour requirements, compliance with pay transparency and secure scheduling requirements, work-related injuries, discrimination, harassment, disability and other operational issues common to the foodservice industry.
We could be materially adversely affected by negative publicity and litigation costs resulting from these claims, regardless of their validity.
1 unchanged sentence
Also, some employment-related claims in the area of wage and hour disputes are not insurable risks and many employment-related disputes involve uncertainty in judicial interpretation from state to state and from federal to state court with respect to the effectiveness of arbitration agreements with our staff members, particularly those which provide for class waivers.
−Removed: In recent years, we have experienced an increase in wage and hour litigation.
We are involved in legal proceedings, including litigation, arbitration and other claims, investigations, inspections, audits, inquiries and similar actions with litigants and other government governmental authorities.
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Our financial performance may be materially adversely affected if our actual claims costs significantly exceed our estimates.
−Removed: Our inability or failure to execute on comprehensive business continuity and disaster recovery plans following a major disaster could interfere with our business operations, which could materially adversely affect our financial performance.
−Removed: All our core and critical applications are housed in an external tier 3 data center, which is a location with redundant and dual-powered servers, storage, network links and other IT components.
+Added: Our inability or failure to execute on comprehensive business continuity and disaster recovery plans following a major disaster or disruption could interfere with our business operations, which could materially adversely affect our financial performance.
+Added: All our core and critical applications are housed in an external tier 3 data center, which is a location with redundant and dual-powered servers, storage, network links and other information technology components.
To mitigate business interruptions, we employ a disk-based data backup and replication infrastructure between our onsite and external data centers.
−Removed: We provide support for our restaurant operations, with the exception of design and construction, from our corporate headquarters in Calabasas, California, an area that is prone to natural disasters such as earthquakes and wildfires.
+Added: We provide support for our restaurant operations, with the exception of design and construction, from our corporate headquarters in Calabasas, California, an area that is prone to and has been impacted by natural disasters such as earthquakes and wildfires.
Corporate support for our bakery operations is also performed from this centralized location.
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Any of these events could materially adversely affect our financial performance.
−Removed: Failure to adequately address environmental, social and governance (“ESG”) matters, could adversely affect our brand, business, results of operations and financial condition.
−Removed: There has been an increasing focus from certain governmental and nongovernmental organizations, investors, customers, consumers, employees and other stakeholders concerning ESG matters.
−Removed: In addition, various regulatory authorities have imposed, and may continue to impose, mandatory substantive and/or disclosure requirements with respect to ESG matters, including climate change.
−Removed: For example, we may be subject to various disclosure requirements (such as information on greenhouse gas emissions, climate risks, use of offsets, and emissions reduction claims) from the State of California, the International Sustainability Standards Board (ISSB) global sustainability standards, to the extent adopted by jurisdictions in which we operate, as well as the SEC’s climate disclosure proposal, if finalized, among other regulations or requirements.
−Removed: These requirements may not always be uniform across jurisdictions, which may result in increased complexity, and cost, for compliance.
−Removed: Any of the foregoing may require us to make additional investments in facilities and equipment, require us to incur additional costs for the collection of data and/or preparation of disclosures and associated internal controls, may impact the availability and cost of key products ingredients, and, in turn, may adversely impact our business, operating results, and financial condition.
−Removed: ESG matters have also been the subject of increased scrutiny by regulators in different jurisdictions which may expose us to potential regulatory scrutiny or enforcement actions related to our ESG activities.
−Removed: Further, a variety of organizations measure the performance of companies on ESG topics, and the results of these assessments are widely publicized.
−Removed: In addition, investment in funds that specialize in companies that perform well in such assessments are increasingly popular, and major institutional investors have publicly emphasized the importance of ESG measures to their investment decisions.
−Removed: Topics taken into account in such assessments include, among others, climate change, biodiversity, labor rights, responsible sourcing, animal welfare, water consumption, waste management, human capital and diversity, equity and inclusion matters, and the role of our board of directors in supervising various ESG issues.
−Removed: Unfavorable ESG ratings could lead to negative investor sentiment towards us or our industry, which could negatively impact our share price as well as our access to and cost of capital.
−Removed: To the extent ESG matters negatively impact our reputation, it may also adversely impact our ability to attract and retain customers, employees or business partners.
−Removed: Simultaneously, there are efforts by some stakeholders to reduce companies’ efforts on certain ESG-related matters.
−Removed: Both advocates and opponents to certain ESG matters are increasingly resorting to a range of activism forms, including media campaigns and litigation, to advance their perspectives.
+Added: Failure to appropriately address environmental and social matters could adversely affect our brand, business, results of operations and financial condition.
+Added: There has been an increasing focus from certain governmental and nongovernmental organizations, investors, customers, consumers, employees and others concerning environmental and social matters.
+Added: Various regulatory authorities have imposed, and may continue to impose, mandatory substantive and/or disclosure requirements with respect to environmental and social matters.
+Added: For example, we may be subject to various disclosure requirements (such as information on greenhouse gas emissions, climate risks, use of offsets, and emissions reduction claims) from the State of California, the International Sustainability Standards Board (ISSB) global sustainability standards, to the extent adopted by jurisdictions in which we operate, as well as the SEC’s climate disclosure rules, if they take effect, among other regulations or requirements.
+Added: These requirements may not always be uniform across jurisdictions and may have uncertain interpretation, which may result in increased complexity, and cost, for compliance.
+Added: Any of the foregoing may require us to make additional investments in facilities and equipment, require us to incur additional costs for the collection of data and/or preparation of disclosures and associated internal controls, may impact the availability and cost of key products ingredients,
+Added: and, in turn, may adversely impact our business, operating results, and financial condition.
+Added: Environmental and social matters have also been the subject of increased scrutiny by regulators in different jurisdictions which may expose us to potential regulatory scrutiny or enforcement actions related to these activities.
+Added: Further, a variety of organizations measure the performance of companies on environmental and social topics, and the results of these assessments are widely publicized.
+Added: In addition, many institutional investors have publicly emphasized the importance of environmental and social measures to their investment decisions.
+Added: Unfavorable ratings could lead to negative investor sentiment towards us or our industry, which could negatively impact our share price as well as our access to and cost of capital.
+Added: Simultaneously, public and investor sentiments as to the scale to which publicly traded companies should prioritize and focus attention and resources towards environmental and social matters vary widely, with a growing trend opposing such matters.
+Added: Recently, companies have been publicly criticized and, in extreme circumstances, have been boycotted for their environmental and social policies.
+Added: Further, there is growing regulatory risk from recent legislation and executive actions prohibiting certain initiatives in this space.
+Added: Our actions and/or inactions with respect to environmental and social matters could negatively impact our reputation, which could adversely impact our ability to attract and retain customers, employees or business partners.
+Added: Both advocates and opponents to certain environmental and social matters are increasingly resorting to a range of activism forms, including media campaigns and litigation, to advance their perspectives.
To the extent we are subject to such activism, it may require us to incur costs or otherwise adversely impact our business.
−Removed: Moreover, we have engaged, and expect to continue to engage, in certain voluntary ESG or corporate social responsibility initiatives (such as voluntary disclosures, commitments, and goals) to improve our ESG profile.
+Added: We have engaged, and expect to continue to engage, in certain voluntary corporate social responsibility initiatives and related reporting.
However, such initiatives may be costly and may not have the desired effect.
−Removed: For example, execution of these strategies and achievement of our goals is subject to risks and uncertainties, many of which are outside of our control.
−Removed: As a result, there is no assurance that we will be able to successfully execute our strategies and achieve our sustainability and ESG-related goals, which could damage our reputation and consumer and other stakeholder relationships.
−Removed: Additionally, there can be no assurance that our stakeholders will agree with our strategies, and any perception, whether or not valid, that we have failed to achieve, or to act responsibly with respect to, such matters or to effectively respond to new or additional legal or regulatory requirements regarding climate change, sustainability or ESG matters could result in adverse publicity or potential regulatory or investor engagement or litigation and adversely affect our business and reputation.
+Added: For example, execution of these strategies and achievement of our sustainability goals is subject to risks and uncertainties, many of which are outside of our control.
+Added: As a result, there is no assurance that we will be able to successfully execute our strategies and achieve our sustainability-related goals, which could damage our reputation and consumer and other stakeholder relationships.
+Added: Additionally, any perception, whether or not valid, that we have failed to achieve, or to act responsibly with respect to, such matters or to effectively respond to new or additional legal or regulatory requirements regarding greenhouse gas emissions, sustainability or social matters could result in adverse publicity or potential regulatory or investor engagement or litigation and adversely affect our business and reputation.
Additionally, many of our business partners and suppliers may be subject to similar expectations, which may augment or create additional risks, including risks that may not be known to us.
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We rely heavily on our in-restaurant and enterprise-wide computer systems and network infrastructure across our operations (“Cyber Environment”), which are vulnerable to various risks.
−Removed: This reliance has grown recently as we have had to rely to a greater extent on systems such as online ordering, contactless payments, our Cheesecake Rewards TM program, systems supporting a remote and hybrid workforce and the like.
−Removed: Remote and hybrid working arrangements at our company (and at many third-party providers) also increase cybersecurity risks due to the challenges associated with managing remote computing assets and security vulnerabilities that
−Removed: are present in many non-corporate and home networks.
+Added: This reliance has grown recently as we have had to rely to a greater extent on systems such as online ordering, contactless payments, our Cheesecake Rewards ® program, systems supporting a remote and hybrid workforce and the like.
+Added: Remote and hybrid working arrangements at our company (and at many third-party providers) also increase cybersecurity risks due to the challenges associated with managing remote computing assets and security vulnerabilities that are present in many non-corporate and home networks.
(See the risk factor titled “If any of our third-party vendors experiences a failure that affects a significant aspect of our business, we may experience data loss, increased costs, operational disruption or other harm, any of which could materially adversely affect our financial performance”).
+Added: Additionally, we may incorporate traditional and generative artificial intelligence solutions into our business, which may increase our cybersecurity and privacy risk and increase expenses.
Our Cyber Environment, and the information processed therein, including confidential information and personal information, face numerous and evolving cybersecurity risks that threaten their confidentiality, integrity and availability, including from Cybersecurity Incidents.
The efficient management of our operations depends upon our ability to protect our Cyber Environment against damage from theft, casualties such as fire, power loss, telecommunications failure or other catastrophic events, as well as from Cybersecurity Incidents.
−Removed: We employ both internal resources and external consultants to conduct auditing and testing for weaknesses in our Cyber Environment, intended to help us reduce the likelihood of any Security Incident, and have developed a multi-discipline Security Incident response plan designed to help ensure that our executives are fully and accurately informed and manage, with the help of content experts, the discovery, investigation and auditing of, and recovery from any Security Incidents that we become aware of.
+Added: We employ both internal resources and external consultants to conduct auditing and testing for weaknesses in our Cyber Environment, intended to help us reduce the likelihood of any Cybersecurity Incident, and have developed a multi-discipline Cybersecurity Incident response plan designed to help ensure that our executives are accurately informed and manage, with the help of content experts, the discovery, investigation and auditing of, and recovery from any Cybersecurity Incidents that we become aware of.
Despite these efforts, we can provide no assurance that these measures will successfully prevent all Cybersecurity Incidents or mitigate losses resulting from a Cybersecurity Incident.
−Removed: Cyberattacks are expected to accelerate on a global basis in frequency and magnitude as threat actors are becoming increasingly sophisticated in using techniques and tools—including artificial intelligence—that circumvent security controls, evade detection and remove forensic evidence.
−Removed: As a result, we may be unable to detect, investigate, remediate or recover from future attacks or incidents, or to avoid a material adverse impact to our Cyber Environment, confidential or information, or business.
+Added: Cyberattacks are accelerating on a global basis in frequency and magnitude as threat actors are becoming increasingly sophisticated in using techniques and tools—including artificial intelligence—
+Added: that circumvent security controls, evade detection and remove forensic evidence.
+Added: As a result, we may be unable to detect, investigate, remediate or recover from future attacks or incidents, or to avoid a material adverse impact to our Cyber Environment, confidential information or business.
We and our third-party vendors have experienced Cybersecurity Incidents and we expect such attacks and incidents to continue in varying degrees.
−Removed: For example, in 2021 we learned of a potential compromise of employee credentials that could be used to access our corporate network.
−Removed: While we were able to address this incident through remediation efforts including rotating the credentials at issue and did not experience any significant impacts as a result, we cannot provide assurances that future cyber incidents will not occur or that they will not materially adversely affect our business and financial performance.
−Removed: Our international licensees have access to certain elements of our intellectual property within their Cyber Environment and may not have developed adequate processes to secure their Cyber Environments against a Security Incident and may not maintain robust discovery, investigation, auditing or recovery protocols, or have the ability to promptly and effectively respond to a Security Incident.
−Removed: Available cyber-risk insurance coverage and policy limits may not adequately cover or compensate us in the event of a Security Incident.
−Removed: Any Security Incident or adverse impact to the availability, integrity or confidentiality of our Cyber Environment (or information residing therein, including confidential information or personal information) could result in legal claims or proceedings (such as class actions), regulatory investigations and enforcement actions, fines and penalties, negative reputational impacts that cause us to lose existing or future customers, and/or significant incident response, system restoration or remediation and future compliance costs.
+Added: We cannot provide assurances that future cyber incidents will not occur or that they will not materially adversely affect our business and financial performance.
+Added: Our international licensees have access to certain elements of our intellectual property within their Cyber Environment and may not have developed adequate processes to secure their Cyber Environments against a Cybersecurity Incident and may not maintain robust discovery, investigation, auditing or recovery protocols, or have the ability to promptly and effectively respond to a Cybersecurity Incident.
+Added: Any Cybersecurity Incident or adverse impact to the availability, integrity or confidentiality of our Cyber Environment (or information residing therein, including confidential information and personal information) could result in legal claims or proceedings (such as class actions and securities litigation), regulatory investigations and enforcement actions, fines and penalties, negative reputational impacts that cause us to lose existing or future customers (which may become more likely due to new data breach notification laws including the new cybersecurity incident disclosure rules promulgated by the SEC), and/or significant incident response, system restoration or remediation and future compliance costs.
Any or all of the foregoing could materially adversely affect our business, operating results, and financial condition.
Finally, we cannot guarantee that any costs and liabilities incurred in relation to a Cybersecurity Incident will be covered by our existing insurance policies or that applicable insurance will be available to us in the future on economically reasonable terms or at all.
−Removed: Actual or perceived failures to comply with applicable data protection, privacy and security laws, regulations, standards and other requirements and our inability to maintain a secure environment for customers’ and staff members’ personal data could result in legal liability, financial penalties, reputational harm and loss of customers, which could materially adversely affect our financial performance.
+Added: Actual or perceived failures to comply with applicable data protection, privacy and security laws, regulations, standards and other requirements or our inability to maintain a secure environment for customers’ and staff members’ personal data could result in legal liability, financial penalties, reputational harm and loss of customers, which could materially adversely affect our financial performance.
We and certain of our third-party vendors receive and maintain certain personal information about our customers, staff members, business partners and others.
−Removed: For example, we transmit confidential credit card information in connection with credit card transactions, we are required to collect and maintain certain personal information in connection with our employment practices, including the administration of our benefit plans, and we collect information in relation to our Cheesecake Rewards TM program.
−Removed: Our collection, storage, handling, use, disclosure and security of personal information is regulated by complex and continually evolving (and at times conflicting) U.S.
+Added: For example, we transmit confidential credit card information in connection with credit card transactions, we are required to collect and maintain certain personal information in connection with our employment practices, including the administration of our benefit plans, and we collect information in relation to our Cheesecake Rewards ® program.
+Added: Our collection, storage, handling, use, disclosure, processing and security of personal information is regulated by complex and continually evolving (and at times conflicting) U.S.
(federal, state and local) and foreign laws, regulations, and industry standards.
−Removed: Many of these laws, regulations and standards are subject to change and uncertain interpretation and could result in claims, changes to our business practices, penalties, increased cost of operations, or otherwise harm our business.
−Removed: For instance, the California Consumer Privacy Act (“CCPA”) became effective on January 1, 2020, which created individual privacy rights for California residents and increased the privacy related obligations of covered businesses handling personal information about California residents.
−Removed: The CCPA provides for civil penalties for violations, as well as a private right of action for certain data breaches that has increased the likelihood of, and risks associated with data breach litigation.
−Removed: The CCPA was significantly
−Removed: amended from January 1, 2023, imposing additional obligations on covered businesses, including additional privacy rights, limitations on data uses, and opt outs for certain uses of sensitive information and sharing of personal information.
−Removed: It also created a new data protection agency authorized to enforce the CCPA and issue substantive regulations.
−Removed: Similar laws have been passed in other states, and are continuing to be proposed at the state and federal level, reflecting a trend toward more stringent privacy legislation in the United States and creating the potential for a patchwork of overlapping but different state laws.
−Removed: Compliance with laws relating to privacy, security or the processing of personal information involve significant costs, and could increase our potential liability (including in the event we allow an unauthorized disclosure of or access to personal information), subject to us increased regulatory scrutiny and result in us making changes to our data processing practices.
−Removed: Furthermore, the Federal Trade Commission (“FTC”) and many state Attorneys General continue to enforce federal and state consumer protection laws against companies for online collection, use, dissemination and security practices that appear to be unfair or deceptive.
−Removed: If we are found to have breached privacy, security or consumer protection laws, regulations or standards, we may be subject to enforcement actions that require us to change our business practices in a manner which may negatively impact our revenue, as well as expose ourselves to litigation, fines, civil and/or criminal penalties and adverse publicity that could cause our customers to lose trust in us, negatively impacting our reputation, brand and business in a manner that harms our financial position.
+Added: Many of these laws, regulations and standards are subject to change and uncertain interpretation and could result in claims, investigations or enforcement actions, changes to our business practices, penalties, increased cost of operations, or otherwise harm our business.
+Added: For instance, the California Consumer Privacy Act (“CCPA”) created individual privacy rights for California residents and increased the privacy related obligations of covered businesses handling personal information about California residents.
+Added: Similar laws have been passed and taken effect in other states, and are continuing to be proposed at the state and federal level, reflecting a trend toward more stringent privacy legislation in the United States and creating a patchwork of overlapping but different state laws.
+Added: Compliance with laws relating to privacy, security or the processing of personal information involve significant costs, increase our potential liability (including in the event we experience an unauthorized disclosure of or access to personal information), subject us to increased regulatory scrutiny and could result in us making changes to our data processing practices.
+Added: Furthermore, the Federal Trade Commission (“FTC”) and many state Attorneys General continue to enforce federal and state consumer protection and privacy laws against companies for online collection, use, dissemination and security practices that appear to be unfair or deceptive.
+Added: If we are found to have breached privacy, security or consumer protection laws, regulations or standards, we may be subject to enforcement actions that require us to change our business practices in a manner which could negatively impact our revenue, as well as expose ourselves to litigation (including class action litigation), fines, civil and/or criminal penalties and adverse publicity that could cause our customers to lose trust in us, negatively impacting our reputation, brand and business in a manner that harms our financial position.
Further, we are subject to laws, regulations and standards covering marketing, advertising and other activities conducted by telephone, email, mobile devices and the Internet, such as the Controlling the Assault of Non-Solicited Pornography and Marketing Act (“the CAN-SPAM Act”), the Telephone Consumer Protection Act (the “TCPA”) and similar state consumer protection and communication privacy laws, such as California’s Invasion of Privacy Act (“CIPA”).
−Removed: Numerous class-action suits under federal and state laws have been filed in recent years against companies who conduct telemarketing and/or SMS texting programs, with many resulting in multi-million-dollar settlements to the plaintiffs.
+Added: Numerous class-action suits under federal and state laws have been filed in recent years against companies who conduct telemarketing and/or SMS texting programs, with many
+Added: resulting in multi-million-dollar settlements to the plaintiffs.
There has also been a noticeable uptick in class actions wherein plaintiffs have utilized a variety of laws, including state wiretapping laws such as CIPA, in relation to companies’ use of tracking technologies, such as cookies and pixels.
Actual or perceived failures to comply with requirements relating to marketing, advertising, electronic communications and the Internet, could subject us to legal proceedings, which could expose us to adverse publicity, substantial monetary damages and legal defense costs, injunctive relief and fines or penalties.
−Removed: If a Cybersecurity Incident were to occur involving loss of or inappropriate access to or dissemination of personal information, we may become liable under applicable law for damages (including statutory damages) and incur penalties and other costs to remedy such an incident.
+Added: If a Cybersecurity Incident were to occur involving loss of or unauthorized access to or dissemination of personal information, we may become liable under applicable law for damages (including statutory damages) and incur penalties and other costs to remedy such an incident.
Depending on the facts and circumstances of such an incident, these damages, penalties and costs could be significant and may not be covered by insurance or could exceed our applicable insurance coverage limits.
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The indenture governing our outstanding Notes will not restrict us from incurring additional indebtedness, and the Notes and the incurrence of any additional indebtedness could limit the cash flow available for our operations, expose us to risks that could adversely affect our business, financial condition and results of operations and impair our ability to satisfy our obligations under the Notes.
−Removed: In June 2021, we completed the offering of $345.0 million aggregate principle amount of convertible senior notes due 2026 (“Notes”) and issued $175.0 million of shares of our common stock (the “Issuance”).
−Removed: The Notes and Issuance are collectively referred to as the “Offerings.” We used the net proceeds from the Offerings to fund approximately $457.3 million payable in connection with the cash-settled conversion of 150,000 shares of our previously outstanding Series A convertible preferred stock and the share-settled conversion of the remaining 50,000 shares of Series A convertible preferred stock into approximately 2.4 million shares of our common stock.
−Removed: (See Notes 10 and 14 of Notes to Consolidated Financial Statements in Part 1, Item 1 of this report for further discussion of these events.)
−Removed: As of January 2, 2024, we had approximately $475 million in principal amount of consolidated indebtedness.
+Added: As of December 31, 2024, we had approximately $455.0 million in principal amount of consolidated indebtedness, including $345.0 million aggregate principal amount of convertible senior notes due 2026 (“Notes”).
The indenture governing the Notes does not contain any meaningful restrictive covenants and does not prohibit us or our subsidiaries from incurring additional indebtedness in the future.
15 unchanged sentences
We may also conduct future offerings of our common stock, preferred stock or other securities that are convertible into or exercisable for our common stock to finance our operations or fund acquisitions, or for other purposes.
−Removed: In addition, we have reserved approximately 3.1 million shares of common stock for grant under our The Cheesecake Factory Incorporated Stock Incentive Plan as of January 2, 2024.
+Added: In addition, we have reserved approximately 1.4 million shares of common stock for grant under our The Cheesecake Factory Incorporated Stock Incentive Plan as of December 31, 2024.
If we issue additional shares of our common stock or rights to acquire shares of our common stock, if any of our existing stockholders sells a substantial amount of our common stock, or if the market perceives that such issuances or sales may occur, then the trading price of our common stock may significantly decline.
2 unchanged sentences
We expect that many investors in the Notes, including potential purchasers of the Notes, will seek to employ a convertible note arbitrage strategy.
−Removed: Under this strategy, investors typically short sell a certain number of shares of our common stock and adjust their short position over time while they continue to hold the Notes.
+Added: Under this strategy, investors typically short sell a certain number of shares of our common stock and adjust
+Added: their short position over time while they continue to hold the Notes.
Investors may also implement this type of strategy by entering into swaps on our common stock in lieu of, or in addition to, short selling shares of our common stock.
8 unchanged sentences
In addition, all conversions of the Notes will be settled partially or entirely in cash.
−Removed: We may not have enough available cash or be able to obtain financing at the time we are
−Removed: required to repurchase the Notes or pay the cash amounts due upon conversion.
+Added: We may not have enough available cash or be able to obtain financing at the time we are required to repurchase the Notes or pay the cash amounts due upon conversion.
In addition, applicable law, regulatory authorities and the Loan Agreement or any future indebtedness may restrict our ability to repurchase the Notes or pay the cash amounts due upon conversion.
19 unchanged sentences
We cannot guarantee that our share repurchase program will be utilized to the full value approved or that it will enhance long-term stockholder value.
−Removed: Our Board of Directors has authorized a share repurchase program of up to 61.0 million shares, of which approximately 4.5 million shares remained available for repurchase as of January 2, 2024.
−Removed: The share repurchase program does not have an expiration date, does not require the Company to purchase a specific number of shares and may be modified, suspended or terminated at any
−Removed: time, which may result in a decrease in the trading price of our common stock.
+Added: Our Board of Directors has authorized a share repurchase program of up to 61.0 million shares, of which approximately 3.9 million shares remained available for repurchase as of December 31, 2024.
+Added: The share repurchase program does not have an expiration date, does not require the Company to purchase a specific number of shares and may be modified, suspended or terminated at any time, which may result in a decrease in the trading price of our common stock.
The timing and total amount of share repurchases will depend upon market conditions and other factors and may be made from time to time in open market purchases, privately negotiated transactions, accelerated share repurchase programs, issuer self-tender offers or otherwise.
22 unchanged sentences
We are subject to the ongoing internal control provisions of Section 404 of the Sarbanes-Oxley Act of 2002.
−Removed: These provisions provide for the identification of material weaknesses in internal control over financial reporting - a process to provide reasonable
−Removed: assurance regarding the reliability of financial reporting for external purposes in accordance with accounting principles generally accepted in the United States.
+Added: These provisions provide for the identification of material weaknesses in internal control over financial reporting - a process to provide reasonable assurance regarding the reliability of financial reporting for external purposes in accordance with accounting principles generally accepted in the United States.
There can be no assurance that we will be able to timely remediate material weakness in internal controls (if any) or maintain all of the controls necessary to remain in compliance.
6 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.