What changed in this filing

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Item 1A. Risk Factors

2023-09-26 compared with 2022-09-27 · 363 added, 316 removed, 283 unchanged (71% of the section changed)

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this Annual Report on Form 10-K and other filings that we make from time to time with the SEC, including our consolidated financial statements and accompanying notes.

If any of the following risks actually occurs, our business, financial

condition, results of operations or cash flows could be materially adversely affected.

If any of the following risks actually occurs, our business, financial condition,

results of operations or cash flows could be materially adversely affected.

In any such case, the trading price of our securities could decline and you could lose all or part of your investment.

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We have experienced and continue to experience inflationary conditions with respect to the cost for food, ingredients, retail

merchandise, transportation, distribution, labor and utilities, and we may not be able to increase prices or implement operational improvements sufficient to fully offset inflationary pressures on such costs,

which may adversely impact our revenues and results of operations.

may have a material adverse effect on our results of operations.

The strength of our revenues and results of operations are dependent upon, among other things, the price and availability of food, ingredients, retail merchandise, transportation, distribution, labor and utilities .

In fiscal 2021 and fiscal 2022, the costs of commodities, labor, energy, fuel, transportation and other

inputs necessary to operate our stores have significantly increased.

Fluctuations in economic conditions, weather, freight efficiency, demand and other factors also affect the availability, quality and cost of the ingredients and products

Furthermore, many of the products that we use and their costs are interrelated.

Changes in global demand for corn, wheat and dairy products could cause volatility in the feed costs for poultry and livestock.

The effect of,

introduction of, or changes to tariffs or exchange rates on imported retail products or food products could increase our costs and possibly affect the supply of those products.

Changes in demand for over-the-road transportation and distribution

services could cause volatility, increase our costs and adversely affect our operating margins.

In addition, food safety concerns, widespread outbreaks of livestock and poultry diseases, and product recalls, all of which are out of our control,

and, in many instances, unpredictable, could also increase our costs and possibly affect the supply of livestock and poultry products.

Our operating margins are also affected, whether as a result of general inflation or otherwise, by fluctuations

in the price of utilities such as natural gas and electricity, on which our locations depend for much of their energy supply.

Our inability to anticipate and respond effectively to one or more adverse changes in any of these factors could have a

significant adverse effect on our results of operations.

We expect the inflationary pressures and other fluctuations impacting the cost of these items to continue to impact our business in 2023.

Our attempts to

offset cost pressures, such as through menu price increases and operational improvements, may not be successful.

We seek to provide a moderately priced product, and, as a result, we may not seek to or be able to pass along price increases

to our customers sufficient to completely offset cost increases.

In fiscal 2023, we faced significant inflationary pressures.

Fluctuations in economic conditions,

weather, supply chain disruptions, freight efficiency, demand and other factors also affect the availability, quality and cost of the ingredients and retail merchandise that we buy.

Changes in global demand for corn, wheat and dairy products have

caused and could continue to cause volatility in the feed costs for poultry and livestock.

Operating margins for our restaurants are subject to changes in the price and availability of food commodities, including beef, pork, chicken, dairy and

The effect of, introduction of, or changes to tariffs or exchange rates on imported retail products or food products could increase our costs and possibly affect the supply of those products.

Changes in demand for over-the-road

transportation and distribution services could cause volatility, increase our costs and adversely affect our operating margins.

In addition, the prices of our retail merchandise are similarly impacted by economic

and inflationary pressures, which have caused and may continue to cause higher costs and lower margins.

Our attempts to offset cost pressures, such as through menu price increases and operational improvements, may not be successful.

We seek to provide

a moderately priced product, and, as a result, we may not seek to or be able to pass along price increases to our customers sufficient to completely offset cost increases without adversely affecting our customers’ demand.

Consumers may be less willing to pay our menu prices and may increasingly visit lower-priced competitors, or may forgo some purchases altogether.

the extent that price increases are not sufficient to offset higher costs adequately or in a timely manner, and/or if they result in significant decreases in revenue volume, our revenues and results of operations may be adversely affected.

The extent to which price increases are not sufficient to offset higher costs adequately or in

a timely manner, and/or result in significant decreases in revenue volume, may have a material adverse effect on our revenues and results of operations.

Labor is a primary component in our operating costs, and increases in labor costs due to increased minimum wages, competition, unemployment rates, or health care and other benefit costs may have a

material adverse effect on our results of operations.

We operate in many states and localities where the minimum wage is significantly higher than the federal minimum wage.

Our distributors and suppliers could also be affected by higher minimum

wage, benefit standards and compliance costs, which could result in higher costs for goods and services supplied to us.

The market for labor in the United States is competitive, which has resulted in upward pressure on wages and may continue to do

so in the future.

Our operating margins are also affected, whether as a result of general inflation or otherwise, by fluctuations in the price of utilities such as natural gas and electricity, on which our locations

depend for much of their energy supply.

Our failure to anticipate and respond effectively to one or more adverse changes in any of these factors could have a material adverse effect on our results of operations.

Inflationary pressures and other

fluctuations impacting the cost of these items could have a negative impact on our business in 2024.

The COVID-19 pandemic has had and may in the future have a material adverse effect on our business, financial condition, results of operations, and our

ability to make distributions to our shareholders for an extended period of time.

In March 2020, the World Health Organization declared COVID-19 to be a pandemic.

In connection with the efforts to contain and mitigate the spread of COVID-19, we have experienced significant

disruptions for the past two and one half years to our business resulting from the limitations on or full prohibitions of dine-in services (in the earlier stages of the pandemic) mandated or suggested by U.S.

federal, state and local governmental

Continuing uncertainty remains as to the potential impact of the COVID-19 pandemic on the U.S.

economy as a whole, as well as on the restaurant industry and our business, in particular.

In response to the COVID-19 pandemic, both our off-premise and dine-in operations have been conducted under enhanced health and safety procedures and practices that are intended to ensure the safety and comfort of our employees and guests, and these

enhanced measures have had and will continue to have adverse effects on our operating costs.

During 2022, consumer demand decreased in part as a result of outbreaks of new variants of COVID-19.

We cannot predict how quickly or whether consumer demand for our business

will return to pre-pandemic levels, which may be a function of continued concerns over safety and/or depressed consumer sentiment as a result of adverse economic conditions and uncertainty, including job losses and lower discretionary income.

addition, we also cannot predict whether future variants of COVID-19 or outbreaks of other infectious disease will have similar effects on consumer demand.

As a result of these factors, the COVID-19 pandemic, the resulting public health response

and diminished economic activity have had and may continue to have a material adverse effect on our guest traffic, sales and operating costs, and we cannot predict the duration of the pandemic or what other government responses or economic

effects may occur.

Our restaurant operations could be further disrupted if large numbers of our employees are diagnosed with COVID-19.

If a significant percentage of our workforce is unable to

work, whether because of illness, quarantine, fear of contracting COVID-19, limitations on travel or other government restrictions in connection with COVID-19, our operations may be negatively impacted, potentially having a material adverse

effect on our liquidity, financial condition or results of operations.

Our suppliers have been and could continue to be adversely impacted by the COVID-19 pandemic.

If our suppliers’ employees are unable to work, whether because of illness,

quarantine, fear of contracting COVID-19, limitations on travel or other government restrictions in connection with COVID-19 or if our suppliers face shortages that are otherwise caused or exacerbated by the COVID-19 pandemic, we could face

shortages of food items or other supplies at our restaurants, and our operations and sales could be adversely impacted by such supply interruptions.

Although we have not experienced material adverse impacts to date, additional or prolonged

closures of meat processing facilities that have occurred because of COVID-19 could adversely impact our supply chain and the products that we offer.

Similarly, many of the products sold in our retail operations are sourced from international

suppliers, including from the People’s Republic of China, and have experienced, and will likely continue to experience, disruptions, temporary closures and worker shortages that may result in an inability to fulfill our orders timely or, in some

cases, at all, which could have an adverse impact on our retail sales and margins.

The COVID-19 pandemic may also have the effect of heightening other risk factors, or amplifying the adverse effects on our liquidity, financial condition or results of

operations should other risks that we discuss in this Annual Report on Form 10-K actually occur.

Risks Related to Our Business

Health concerns, government regulation relating to the consumption of food products and widespread infectious diseases could affect consumer preferences and could negatively

affect our results of operations.

In addition to the COVID-19 pandemic, the United States and other countries have experienced, or may experience in the future, outbreaks of other viruses, such as norovirus, the bird/avian flu or

The Department of Health and Human Services declared the end of the COVID-19 public health emergency on May 11 2023.

However, during 2023, we continued to experience negative economic pressures

related to the COVID-19 pandemic.

We cannot predict how quickly or whether consumer demand for our business will return to pre-pandemic levels in 2024.

Additionally, we cannot anticipate whether our suppliers

will face economic challenges caused or exacerbated by the COVID-19 pandemic, and as a result, we may face shortages of food items or other supplies at our restaurants, and our operations and sales may be adversely impacted by such supply

interruptions.

Similarly, many of the products sold in our retail operations are sourced from international suppliers, including from the People’s Republic of China, and have experienced, and will likely continue to experience, disruptions,

temporary closures and worker shortages that may result in an inability to fulfill our orders timely or, in some cases, at all, which could have an adverse impact on our retail sales and margins.

In addition, we also cannot predict whether

future variants of COVID-19 or outbreaks of other infectious disease will have similar effects on consumer demand.

As a result of these factors, diminished economic activity has had and may continue to have a material adverse effect on our guest

traffic, sales and operating costs, and we cannot predict the duration of the ongoing economic uncertainty.

Risks Related to Our

Health concerns, government regulation relating to the consumption of food products and widespread infectious diseases could affect consumer preferences and could have a material

adverse effect on our results of operations.

In addition to the COVID-19 pandemic, the United States and other countries have experienced, and may experience in the future, outbreaks of other viruses, such as norovirus, the bird/avian flu or

other diseases.

As we have experienced with the COVID-19 pandemic, if a regional or global health pandemic occurs, depending upon its location, duration and severity, our business could be severely affected.

In the event a health pandemic occurs,

customers might avoid public places, and local, regional or national governments might limit or ban public gatherings to halt or delay the spread of disease.

Jurisdictions in which we have restaurants may impose mandatory closures or impose

restrictions on operations.

If a virus is transmitted by human contact or respiratory transmission, our employees or guests could become infected, or could choose, or be advised, to avoid gathering in public places, any of which would adversely

affect our restaurant guest traffic or perform functions at the corporate level.

A regional or global health pandemic might also adversely affect our business by disrupting or delaying production and delivery of materials and products in our

supply chain and by causing staffing shortages in our stores.

In recent years there has been publicity concerning E.

coli bacteria, hepatitis A, “mad cow” disease, “foot-and-mouth” disease, salmonella, African swine fever, peanut and other food allergens, and other public health concerns

affecting the food supply, including beef, chicken, pork, dairy and eggs.

Food safety concerns, widespread outbreaks of livestock and poultry diseases, and product recalls, all of which are out of our control, and, in many instances, unpredictable,

could also increase our costs and possibly affect the supply of livestock and poultry products.

Additionally, we rely on our suppliers to comply with applicable laws and industry standards, and if our suppliers are unable to comply with such laws or

do not otherwise meet our quality standards, we may face a disruption in our supply chain that could have a material adverse effect on our business.

If we are unable to respond effectively, food safety concerns could have a negative impact on our

business and our reputation.

The sale of food and prepared food products for human consumption involves the risk of injury to our customers.

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contain beef and chicken.

The preferences of our customers toward beef and chicken could be affected by changes in consumer health or dietary trends and preferences regarding meat consumption or health concerns and publicity concerning food

quality, illness and injury generally.

In recent years there has been publicity concerning E.

coli bacteria, hepatitis A, “mad cow” disease, “foot-and-mouth” disease, salmonella, African swine fever, peanut and other food allergens, and other

public health concerns affecting the food supply, including beef, chicken, pork, dairy and eggs.

illness and injury generally.

Changes in consumer dietary preferences may impact our menu offerings.

Further, consumers may change their dining-in preferences, such as during the COVID-19 pandemic, when consumers often chose to order food to go or

for delivery.

In addition, government regulations or the likelihood of government regulation could increase the costs of obtaining or preparing food products.

decrease in guest traffic to our stores, a change in our mix of products sold or an increase in costs as a result of these health concerns either in general or specific to our operations, could result in a decrease in sales or higher costs to our

stores that would materially harm our business.

Our plans depend significantly on our strategic priorities and business initiatives designed to enhance our menu and retail offerings, support our brand, improve operating

margins and improve the efficiencies and effectiveness of our operations.

Failure to respond and adapt to changing consumer preferences could have a material

adverse effect on our results of operation and financial condition.

A decrease in guest traffic to our stores, a change in our mix of products sold or an increase in costs as a result of these health concerns either in general or specific to our

operations, could result in a decrease in sales or higher costs to our stores that would materially harm our business.

Our plans depend significantly on our strategic priorities and business initiatives designed to enhance our menu and retail offerings, support our brand, improve operating margins

and improve the efficiencies and effectiveness of our operations.

Failure to achieve or sustain these plans could adversely affect our results of operations.

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financial condition.

These priorities and initiatives include, but are not limited to, tiered menu and retail pricing, evolving our marketing messaging to support the brand, improving the quality and breadth of retail assortments, evolving our

menu, re-engineering store processes to reduce costs and improve store margins, applying technology to improve the employee and guest experience, expanding our store footprint, focusing on new and existing fast casual concepts, focusing on our off

premise business and transactions such as strategic relationships, joint ventures and acquisitions.

It is possible that our focus on these priorities and initiatives and constantly changing consumer preferences could cause unintended changes to our

current results of operations.

re-engineering store processes to reduce costs and improve store margins, applying technology to improve the employee and guest experience, expanding our store footprint, focusing on new and existing fast casual concepts, focusing on our off premise

business and transactions such as strategic relationships, joint ventures and acquisitions.

It is possible that our focus on these priorities and initiatives and constantly changing consumer preferences could cause unintended changes to our current

results of operations.

Additionally, many of these initiatives are inherently risky and uncertain in their application to our business in general, even when tested successfully on a more limited scale.

It is possible that successful

testing can result partially from resources and attention that cannot be duplicated in broader implementation.

It is possible that successful testing can

result partially from resources and attention that cannot be duplicated in broader implementation.

Testing and general implementation also can be affected by other risk factors described herein that reduce the results expected.

Successful system-wide implementation across hundreds of stores and involving tens of thousands of employees relies on consistency of training, stability of workforce, ease of execution and the absence of offsetting factors that can adversely

influence results.

system-wide implementation across hundreds of stores and involving tens of thousands of employees relies on consistency of training, stability of workforce, ease of execution and the absence of offsetting factors that can adversely influence

Failure to achieve successful implementation of our initiatives could adversely affect our results of operations.

We face intense competition, and if we are unable to continue to compete effectively, our business, financial condition and results of operations would be adversely affected.

We face intense competition, and if we are unable to continue to compete effectively, our business, financial condition and results of operations may be adversely affected.

The restaurant and retail industries are intensely competitive, and we face many well-established competitors.

We compete within each market with national and regional restaurant and retail chains

and locally owned restaurants and retailers.

Competition from other regional or national restaurant and retail chains typically represents the more important competitive influence, principally because of their significant marketing and financial

We also face competition as a result of the convergence of grocery, deli, retail and restaurant services, particularly in the supermarket industry.

We also face competition from various off-premise meal replacement offerings including,

but not limited to, home meal kits delivery, third-party meal delivery and catering and the rapid growth of these channels by our competitors.

Moreover, our competitors can harm our business even if they are not successful in their own operations

by taking away customers or employees through aggressive and costly advertising, promotions or hiring practices.

We compete with national and regional restaurant and retail chains and locally owned

restaurants and retailers within each market.

Competition from other regional or national restaurant and retail chains typically represent the more important competitive influence, principally because of their significant marketing and financial

We face competition as a result of the convergence of grocery, deli, retail and restaurant services, particularly in the supermarket industry.

We also face competition from various off-premise meal replacement offerings including, but

not limited to, home meal kits delivery, third-party meal delivery and catering and the rapid growth of these channels by our competitors.

Moreover, our competitors can harm our business even if they are not successful in their own operations by

taking away customers or employees through aggressive and costly advertising, promotions or hiring practices.

We compete primarily on the quality, variety and perceived value of menu and retail items.

The number and location of stores, the

growth of e-commerce, type of concept, quality and efficiency of service, attractiveness of facilities and effectiveness of advertising and marketing programs also are important factors.

We anticipate that intense competition will continue with

respect to all of these factors.

We also compete with other restaurant chains and other retail businesses for quality site locations, management and hourly employees, and other competitive pressures that could affect both the availability and cost

of these important resources.

The number and location of stores, the growth

of e-commerce, type of concept, quality and efficiency of service, attractiveness of facilities and effectiveness of advertising and marketing programs also are important factors.

We anticipate that intense competition will continue with respect to

all of these factors.

important resources.

If we are unable to continue to compete effectively, our business, financial condition and results of operations would be adversely affected.

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In addition, our failure to recognize, respond to and effectively manage the impact of social media could materially impact our

Multi-unit businesses such as ours can be adversely affected by publicity resulting from complaints or litigation alleging poor food quality, poor service, food-borne illness, viruses, product

defects, personal injury, adverse health effects (including obesity) or other concerns stemming from one or a limited number of our stores.

Even when the allegations or complaints are not valid, unfavorable publicity relating to one or more of our

stores, or only to a single store, could adversely affect public perception of the entire brand.

Additionally, social media can be utilized to target specific companies or brands as a result of a variety of actual or perceived actions or inactions

that are disfavored by our customers, local culture, employees, or interest groups, which can materially impact consumer behavior.

Adverse publicity and its effect on overall consumer perceptions of food safety or customer service could have a

material adverse effect on our business, financial condition and results of operations.

Multi-unit businesses such as ours can be adversely affected by publicity resulting from complaints or litigation alleging poor food quality, poor service, guest discrimination, food-borne illness,

viruses, product defects, personal injury, adverse health effects (including obesity), employee relations or other concerns stemming from one or a limited number of our stores.

Even when the allegations or complaints are not accurate or valid,

unfavorable publicity relating to one or more of our stores, or only to a single store, could adversely affect public perception of the entire brand.

Additionally, social media can be utilized to target specific companies or brands as a result of a

variety of actual or perceived actions or inactions that are disfavored by our customers, local culture, employees, or interest groups, which can materially and immediately impact consumer behavior.

Social media allows users to organize collective

actions and engage in other brand-damaging behaviors that, if targeted at us, could impact our business.

Adverse publicity and its effect on overall consumer perceptions of food safety or customer service could have a material adverse effect on our

business, financial condition and results of operations.

Additionally, social media uses and platforms are constantly evolving, and as a result, we need to innovate and develop our social media strategies to maintain brand relevance.

We rely on social

media and other forms of digital marketing to increase brand recognition and reach a broader audience.

If our social media initiatives or strategies are not successful, our brand awareness may decline or we may otherwise suffer reputational harm.

In addition, a variety of risks are associated with the use of social media, including the public dissemination of proprietary or confidential information, negative comments about us, personally identifiable information, or out-of-date or false

The inappropriate use of social media by our guests or employees could increase our costs, lead to litigation or result in negative publicity that could damage our reputation.

Failure to maximize or to successfully assert our intellectual property rights could adversely affect our business and results of operations.

We rely on trademark, unfair competition, trade secret and copyright laws to protect our intellectual property rights.

We have registered certain trademarks and service marks

with appropriate governmental authorities.

We cannot guarantee that these intellectual property rights will be maximized or that they can be successfully asserted.

There is a risk that we will not be able to obtain and perfect our own, or, where

appropriate, license intellectual property rights necessary to support new product introductions or other brand extensions.

We cannot be sure that these rights, if obtained, will not be invalidated, circumvented or challenged in the future.

Additionally, we cannot guarantee that third parties will not claim our trademarks or menu offerings will infringe on their intellectual property rights, regardless of merit.

Our failure to protect or successfully assert our intellectual property

rights could make us less competitive and could have an adverse effect on our business and results of operations.

Risks Related to our Capital Structure

The performance of our business as affected by the level of our indebtedness could prevent us from meeting the obligations under our revolving credit

facility or the indenture governing the $300 million aggregate principal amount of 0.625% Convertible Senior Notes due 2026 (the “Notes”), maintaining sufficient liquidity to operate our business or service our debt obligations, and we cannot

provide any guarantee of future cash dividend payments or that we will be able to actively repurchase our common stock pursuant to a share repurchase program.

any guarantee of future cash dividend payments or that we will be able to actively repurchase our common stock pursuant to a share repurchase program.

Our consolidated indebtedness and restrictions in our revolving credit facility may have the effect, among other things, of reducing our flexibility to respond to changing business and economic

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prevailing economic conditions and to financial, business and other factors beyond our control.

Our inability to refinance our indebtedness when necessary or to do so upon attractive terms would materially and adversely affect our liquidity and

Our inability to refinance our indebtedness when necessary or to do so upon attractive terms may have a material adverse effect on our liquidity and

results of operations.

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Further, no assurance can be made that sources of additional liquidity will be available on terms that are favorable to us.

Any determination to pay cash dividends on our common stock in the future will be based primarily upon our financial condition, and prospects, results of operations, business requirements and our

Any determination to pay cash dividends on our common stock in the future will be based primarily upon our financial condition, prospects, results of operations and business requirements and our

Board of Directors’ conclusion that the declaration of cash dividends is in the best interest of our shareholders and is in compliance with all laws and agreements applicable to the payment of dividends.

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indebtedness may limit our ability to repurchase the Notes or pay cash upon their conversion.

Noteholders may require us to repurchase their Notes following a fundamental change at a cash repurchase price generally equal to the principal amount of the Notes to be repurchased, plus accrued

and unpaid interest, if any.

Noteholders may require us to repurchase their Notes following a fundamental change at a cash repurchase price generally equal to the principal amount of the Notes to be repurchased, plus accrued and

unpaid interest, if any.

In addition, all conversions of Notes will be settled partially or entirely in cash.

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.

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 agreements governing our other indebtedness may restrict our ability to repurchase the Notes or pay the cash amounts due upon conversion.

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Certain provisions in the Notes and the indenture governing the Notes could make a third party attempt to acquire us more difficult or expensive.

For example, if a takeover constitutes a

fundamental change, then noteholders will have the right to require us to repurchase their Notes for cash.

In addition, if a takeover constitutes a make-whole fundamental change, then we may be required to temporarily increase the conversion rate

for the Notes.

In either case, and in other cases, our obligations under the Notes and the indenture governing the Notes could increase the cost of acquiring us or otherwise discourage a third party from acquiring us or removing incumbent

management, including in a transaction that noteholders or holders of our common stock may view as favorable.

For example, if a takeover constitutes a fundamental

change, then noteholders will have the right to require us to repurchase their Notes for cash.

In addition, if a takeover constitutes a make-whole fundamental change, then we may be required to temporarily increase the conversion rate for the

including in a transaction that noteholders or holders of our common stock may view as favorable.

The convertible note hedge and warrant transactions may affect the value of the notes and our common stock.

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required to make in excess of the principal amount of converted Notes, as the case may be.

However, the warrant transactions could separately have a dilutive effect to the extent that the market value per share of our common stock exceeds the

strike price of the warrants.

In connection with establishing and maintaining their initial hedges of the convertible note hedge and warrant transactions, we understand that the hedge counterparties or their respective affiliates may modify their

hedge positions with respect to the convertible note hedge transactions and the warrant transactions from time to time by purchasing or selling shares of our common stock or the Notes in privately negotiated transactions or open-market transactions

or by entering into or unwinding various over-the-counter derivative transactions with respect to our common stock.

However, the warrant transactions could separately have a dilutive effect to the extent that the market value per share of our common stock exceeds the strike

price of the warrants.

positions with respect to the convertible note hedge transactions and the warrant transactions from time to time by purchasing or selling shares of our common stock or the Notes in privately negotiated transactions or open-market transactions or by

entering into or unwinding various over-the-counter derivative transactions with respect to our common stock.

The effect, if any, of these activities on the trading price of our common stock will depend on a variety of factors, including market conditions, and is uncertain at this time.

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hedge counterparties.

Conversion of the Notes or exercise of the warrants evidenced by the warrant transactions may dilute the ownership interest of existing stockholders, including noteholders who

Conversion of the Notes or exercise of the warrants evidenced by the warrant transactions may dilute the ownership interest of existing shareholders, including noteholders who

have previously converted their Notes.

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settled on a net-share basis.

As a result, the conversion of some or all of the Notes or the exercise of some or all of such warrants may dilute the ownership interests of existing stockholders.

As a result, the conversion of some or all of the Notes or the exercise of some or all of such warrants may dilute the ownership interests of existing shareholders.

Any sales in the public market of the shares of our

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because the conversion of the Notes could depress the price of our common stock.

Risks Related to Labor and Supply Chains

Risks Related to Supply Chains

Our reliance on certain significant vendors, particularly for foreign-sourced retail products, subjects us to numerous risks, including possible interruptions in supply, which

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to rebuild profitability, all of which tends to make the supply environment more expensive.

If any of these vendors is unable to fulfill its obligations, or if we are unable to find replacement suppliers in the event of a supply disruption, we

could encounter supply shortages and/or incur higher costs to secure adequate supplies, either of which could materially harm our business.

If any of these vendors is unable to fulfill its obligations, or if we are unable to find replacement suppliers in the event of a supply disruption, we could

encounter supply shortages and/or incur higher costs to secure adequate supplies, either of which could materially harm our business.

Additionally, we use a number of products that are or may be manufactured in a number of foreign countries.

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product assortment, that store may experience a significant reduction in revenue during the time affected by the shortage or thereafter as a result of our customers changing their dining and shopping habits.

We are dependent upon attracting and retaining qualified employees while also controlling labor costs.

Our performance is dependent on attracting and retaining a large and growing number of qualified store employees.

Availability of staff varies widely from location to location.

Many staff members

are in entry-level or part-time positions, typically with high rates of turnover.

High turnover of store management and staff would cause us to incur higher direct costs associated with recruiting, training and retaining replacement personnel.

Management turnover as well as general shortages in the labor pool can cause our stores to operate with reduced staff, which negatively affects our ability to provide appropriate service levels to our customers.

The market for the most qualified

talent continues to be competitive and we must provide competitive wages, benefits and workplace conditions to maintain our most qualified employees.

Additionally, personal or public health concerns related to COVID-19 or other widespread

outbreaks of infectious disease might make some existing team members or potential candidates reluctant to work in enclosed restaurant environments.

Competition for qualified employees exerts upward pressure on wages paid to attract such

personnel, resulting in higher labor costs, together with greater recruiting and training expenses

Our ability to meet our labor needs while controlling our costs is subject to external factors such as unemployment levels, minimum wage legislation, health care legislation, payroll taxes and

changing demographics.

Many of our employees are hourly workers whose wages are affected by increases in the federal or state minimum wage or changes to tip credits.

Tip credits are the amounts an employer is permitted to assume an employee

receives in tips when the employer calculates the employee’s hourly wage for minimum wage compliance purposes.

Increases in minimum wage levels and changes to the tip credit have been made and continue to be proposed at both federal and state

As minimum wage rates increase, we may need to increase not only the wages of our minimum wage employees but also the wages paid to employees at wage rates that are above minimum wage.

If competitive pressures or other factors prevent us

from offsetting increased labor costs by increases in prices, our profitability may decline.

Our ability to manage our retail inventory levels and changes in merchandise mix may adversely affect our business.

The long lead times required for a substantial portion of our retail merchandise and the risk of product damages or non-compliance with required specifications could affect the amount of inventory

we have available for sale.

The long lead times required for a substantial portion of our retail merchandise and the risk of product damages or non-compliance with required specifications could affect the amount of inventory we

have available for sale.

Additionally, our success depends on our ability to anticipate and respond in a timely manner to changing consumer demand and preferences for merchandise.

If we misjudge the market, we may overstock unpopular products

and be forced to take significant markdowns, which could reduce our gross margin.

If we misjudge the market, we may overstock unpopular products and

be forced to take significant markdowns, which could reduce our gross margin.

Conversely, if we underestimate demand for our merchandise we may experience inventory shortages resulting in lost revenues.

Any of these factors could have an

adverse effect on our results of operations, cash flows from operations and our financial condition.

Our risks are heightened because of our single retail distribution facility and our potential inability or failure to execute on a comprehensive business

continuity plan following a major disaster at or near our corporate facility could adversely affect our business .

Inventory shrinkage may also result in lost

Any of these factors could have an adverse effect on our results of operations, cash flows from operations and our financial condition.

Our risks are heightened because of our single retail distribution facility and our potential inability or failure to execute on a comprehensive business continuity

plan following a major disaster at or near our corporate facility could adversely affect our business .

The majority of our retail inventory is shipped into, stored at and shipped out of a single warehouse located in Lebanon, Tennessee.

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continuity plans in place to address most events, back up and offsite locations for recovery of electronic and other forms of data and information.

However, if we are unable to implement our disaster recovery and business continuity plans, we

may experience delays in recovery of data, failure to support field operations, tardiness in required reporting and compliance and the inability to perform vital corporate functions which could adversely affect our business.

However, if we are unable to implement our disaster recovery and business continuity plans, we may

experience delays in recovery of data, failure to support field operations, tardiness in required reporting and compliance and the inability to perform vital corporate functions which could adversely affect our business.

Risks Related to IT Systems, Cybersecurity and Data Privacy

A material disruption in our information technology, network infrastructure and telecommunication systems could adversely affect our business and results of operations.

A material disruption in our information technology, network infrastructure and telecommunication systems could have a material adverse effect on our business and results of

We rely extensively on our information technology across our operations, including, but not limited to, point of sales processing, supply chain management, retail merchandise allocation and

distribution, labor productivity and expense management Our business depends significantly on the reliability, security and capacity of our information technology systems to process these transactions, summarize results, manage and report on

our business and our supply chain.

business and our supply chain.

Our information technology systems are subject to damage or interruption from power outages, computer, network, cable system, internet and telecommunications failures, computer viruses, security breaches,

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may have to make a significant investment to repair or replace them, and we could suffer loss of critical data and interruptions or delays in our operations in the interim.

Any material interruption in our information technology and

telecommunication systems could adversely affect our business or results of operations.

In addition, from time to time, our systems may become obsolete or require

attention and could result in interruptions in our services and non-compliance with certain laws or regulations.

Any material interruption in our information technology and telecommunication systems could have a material adverse effect on our

business or results of operations.

In addition, some of these essential technology-based business systems are outsourced to third parties.

While we make efforts to ensure that our outsourced

providers are observing proper standards and controls, we cannot guarantee that breaches, disruptions or failures caused by these providers will not occur.

While we make efforts to ensure that our outsourced providers are observing proper standards and controls,

we cannot guarantee that breaches, disruptions or failures caused by these providers will not occur.

A privacy breach could adversely affect our business.

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The regulatory environment surrounding information security and privacy is increasingly demanding, with the frequent imposition of new and constantly

changing requirements, including the recently enacted California Consumer Privacy Act (“CCPA”).

Compliance with these requirements may result in cost increases due to necessary system changes and the development of new administrative processes.

changing requirements, including the California Consumer Privacy Act, which became effective on January 1, 2020.

Compliance with these requirements may result in cost increases due to necessary system changes and the development of new

administrative processes.

In addition, customers and employees have a high expectation that we will adequately protect their personal information.

For example, in connection with credit and debit card sales, we transmit confidential card information.

Third parties may

have the technology or know-how to breach the security of this customer information, and our security measures and those of our technology vendors may not effectively prevent others from obtaining improper access to this information.

to comply with the laws and regulations regarding privacy and security or experience a security breach, we could be exposed to risks of data loss, regulatory investigations and/or penalties, a loss of the ability to process credit and debit card

payments, substantial inconvenience or harm to our guests, litigation and serious disruption of our operations.

Additionally, any resulting negative publicity could significantly harm our reputation and damage our relations with our guests.

privacy and information security laws, regulations and practices change and cyber risks continue to evolve, we may incur additional costs to ensure we remain in compliance and protect guest, employee and Company information.

Failure to maximize or to successfully assert our intellectual property rights could adversely affect our business and results of operations.

We rely on trademark, unfair competition, trade secret and copyright laws to protect our intellectual property rights.

We have registered certain

trademarks and service marks with appropriate governmental authorities.

We cannot guarantee that these intellectual property rights will be maximized or that they can be successfully asserted.

There is a risk that we will not be able to obtain

and perfect our own, or, where appropriate, license intellectual property rights necessary to support new product introductions or other brand extensions.

We cannot be sure that these rights, if obtained, will not be invalidated, circumvented or

challenged in the future.

Our failure to protect or successfully assert our intellectual property rights could make us less competitive and could have an adverse effect on our business and results of operations.

For example, in connection with credit and debit card sales, we transmit confidential card

Third parties may have the technology or know-how to breach the security of this customer information, and our security measures and those of our technology vendors may not effectively prevent others from obtaining improper access to

this information.

If we fail to comply with the laws and regulations regarding privacy and security or experience a security breach, we could be exposed to risks of data loss, regulatory investigations and/or penalties, a loss of the ability to

process credit and debit card payments, substantial inconvenience or harm to our guests, litigation and serious disruption of our operations.

Additionally, any resulting negative publicity could significantly harm our reputation and damage our

relations with our guests.

As privacy and information security laws, regulations and practices change and cyber risks continue to evolve, we may incur additional costs to ensure we remain in compliance and protect guest, employee and Company

We outsource certain business processes to third-party vendors that subject us to risks, including disruptions in business and increased costs ;

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Some of our business processes are currently outsourced to third parties.

Such processes include distribution of food and retail products to our store locations and customers, credit and debit

card authorization and processing, gift card tracking and authorization, employee payroll card services, health care and workers’ compensation insurance claims processing, wage and related tax credit documentation and approval, guest satisfaction

survey programs, employee engagement surveys and externally hosted business software applications.

We cannot ensure that all providers of outsourced services are observing proper internal control practices, such as redundant processing facilities,

and there are no guarantees that failures will not occur.

Such processes include distribution of food and retail products to our store locations and customers, credit and debit card

authorization and processing, gift card tracking and authorization, employee payroll card services, health care and workers’ compensation insurance claims processing, wage and related tax credit documentation and approval, guest satisfaction survey

programs, employee engagement surveys and externally hosted business software applications.

We cannot ensure that all providers of outsourced services are observing proper internal control practices, such as redundant processing facilities, and

there are no guarantees that failures will not occur.

Failure of third parties to provide adequate services could have an adverse effect on our financial condition and results of operations.

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Our sales through these services may also depend on the availability of delivery drivers, who are generally independent contractors.

We use third parties to authorize and process credit and debit card payments, which requires the collection and retention of customer data, including sensitive financial data and other personally

identifiable information.

Such personal information is maintained by third parties who provide payment processing services.

A weakness in such third party’s systems or software products (or in the systems or software products in the service

providers of those third parties) may lead to a data breach or pose cybersecurity risks.

If we, or one of our third party service providers experience a cyber attack or security data breach, our results of operations and brand may suffer.

Additionally, we may have to make a significant investment to remedy or replace such systems.

We rely on certain technology licensed from third parties and may be required to license additional technology in the future for use in managing our internet sites and providing services to our

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The restaurant industry is subject to extensive federal, state and local laws and regulations, including those relating to food safety, minimum wage and other labor issues (such as unionization),

health care, menu labeling and building and zoning requirements and those relating to the preparation and sale of food and alcoholic beverages as well as certain retail products.

The development and operation of our stores depend to a significant

extent on the selection and acquisition of suitable sites, which are subject to zoning, land use, environmental, traffic and other regulations and requirements.

We are also subject to licensing and regulation by state and local authorities

relating to health, sanitation, safety and fire standards and the sale of alcoholic beverages, federal and state laws governing our relationships with employees (including the Fair Labor Standards Act of 1938, the Immigration Reform and Control Act

of 1986, the Patient Protection and Affordable Care Act, the Health Care and Education Reconciliation Act of 2010 and applicable requirements concerning minimum wage, overtime, healthcare coverage, family leave, medical privacy, tip credits,

working conditions, safety standards and immigration status), and federal and state laws which prohibit discrimination and other laws regulating the design and operation of facilities, such as the Americans With Disabilities Act of 1990.

health care, animal health and welfare, menu labeling and building and zoning requirements and those relating to the preparation and sale of food and alcoholic beverages as well as certain retail products.

The development and operation of our stores

depend to a significant extent on the selection and acquisition of suitable sites, which are subject to zoning, land use, environmental, traffic and other regulations and requirements.

We are also subject to licensing and regulation by state and

local authorities relating to health, sanitation, safety and fire standards and the sale of alcoholic beverages, federal and state laws governing our relationships with employees (including the Fair Labor Standards Act of 1938, the Immigration Reform

and Control Act of 1986, the Patient Protection and Affordable Care Act, the Health Care and Education Reconciliation Act of 2010 and applicable requirements concerning minimum wage, overtime, healthcare coverage, family leave, medical privacy, tip

credits, working conditions, safety standards and immigration status), and federal and state laws which prohibit discrimination and other laws regulating the design and operation of facilities, such as the Americans With Disabilities Act of 1990.

addition, we are subject to a variety of federal, state and local laws and regulations relating to the use, storage, discharge, emission and disposal of hazardous materials.

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Our ability to respond to minimum wage increases by increasing menu prices will depend on the responses of our competitors and customers.

Our distributors and suppliers also may be affected by higher minimum wage

and benefit standards and tracking costs, which could result in higher costs for goods and services supplied to us.

The Patient Protection and Affordable Care Act and the Health Care and Education Affordability Reconciliation Act of 2010 required restaurant companies such as ours to disclose calorie and

nutritional information on their menus effective as of May 2018.

We cannot fully predict the long-term changes, if any, in guest behavior that could result from implementation of this provision, which may have an adverse effect on our sales or

results of operations.

Our distributors and suppliers also may be affected by higher minimum wage and

benefit standards and tracking costs, which could result in higher costs for goods and services supplied to us.

There also has been increasing focus by U.S.

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litigation or governmental investigations or proceedings.

Also, the failure to obtain and maintain required licenses, permits and approvals could adversely affect our operating results.

Typically, licenses must be renewed annually and may be

revoked, suspended or denied renewal for cause at any time if governmental authorities determine that our conduct violates applicable regulations, which could adversely affect our business and results of operations.

Also, the failure to obtain and maintain required licenses, permits and approvals could have a material adverse effect on our results of operations.

Typically, licenses must be renewed

annually and may be revoked, suspended or denied renewal for cause at any time if governmental authorities determine that our conduct violates applicable regulations, which could have a material adverse effect on our business and results of

Our advertising is heavily dependent on billboards, which are highly regulated, and our evolving marketing strategy involves increased advertising and marketing costs that could

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or other concerns.

The outcome of litigation, particularly class action lawsuits and

regulatory actions, is difficult to assess or quantify.

Plaintiffs in these types of lawsuits may seek recovery of very large or indeterminate amounts and the magnitude of the potential loss relating to such lawsuits may remain unknown for

substantial periods of time.

The outcome of litigation, particularly class action lawsuits and regulatory

actions, is difficult to assess or quantify.

Plaintiffs in these types of lawsuits may seek recovery of very large or indeterminate amounts and the magnitude of the potential loss relating to such lawsuits may remain unknown for substantial periods

The cost to defend future litigation may be significant.

There may also be adverse publicity associated with litigation that could decrease guest or consumer acceptance of our brand, regardless of whether the

allegations are valid or we ultimately are found liable.

Litigation could adversely impact our operations and our ability to expand our brand in other ways as well.

As a result, litigation may adversely affect our business, financial condition

and results of operations.

There may also be adverse publicity associated with litigation that could decrease guest or consumer acceptance of our brand, regardless of whether the allegations are valid or we

ultimately are found liable.

Litigation could adversely impact our operations and our ability to expand our brand in other ways, such as by diverting management’s attention away from operations.

As a result, litigation may adversely affect our

business, financial condition and results of operations.

Our business could be negatively affected as a result of actions of activist shareholders.

The Lion Fund II, L.P., Biglari Capital Corp., First Guard Insurance Company, Southern Pioneer Property and Casualty Insurance Company, Biglari Holdings Inc.

Holding Co., Inc., are affiliates of Sardar Biglari (“Biglari”), and are the beneficial owners of approximately 9.0% of our outstanding common stock as of August 18, 2022.

We recently received notice from Biglari nominating two candidates for

election to our board of directors at our 2022 annual meeting of shareholders.

If a proxy contest ensues, or if we become engaged in a proxy contest with another activist shareholder in the future, our business could be adversely affected because:

responding to public proposals, special meeting requests and other actions by activist shareholders can disrupt our operations, be costly and time-consuming, and divert the attention of our management and

In the past, activist shareholders have nominated candidates for election to our Board of Directors at our annual meetings of shareholders, resulting in proxy contests, and called

publicly for special meetings of shareholders to consider other proposals relating to corporate policies of the Company, including on matters such as our dividend policy, capital structure and strategic alternatives.

If we become engaged in a proxy

contest or other public engagement with an activist shareholder in the future, our business could be adversely affected because:

responding to public proposals and director nominations, special meeting requests and other actions by activist shareholders can disrupt our operations, be costly and time-consuming, and divert the attention of

our management and employees;

perceived uncertainties as to our future direction may result in the loss of potential business opportunities, and may make it more difficult to attract and retain qualified personnel and business partners;

claims made by activist shareholders in connection with a proxy contest or otherwise may harm our reputation, damage our relations with customers, employees and business relations such as suppliers, or

otherwise impair our business;

impair our business;

pursuit of an activist shareholder’s agenda may adversely affect our ability to effectively implement our business strategy and create additional value for our shareholders.

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to certain provisions of Tennessee law that limit, in some cases, our ability to engage in certain business combinations with significant shareholders.

In addition, we have adopted a shareholder rights plan, which provides, among other things,

that when specified events occur, our shareholders will be entitled to purchase from us shares of junior preferred stock.

In addition, we have adopted a shareholder rights plan, which provides, among other things, that

when specified events occur, our shareholders will be entitled to purchase from us shares of junior preferred stock.

The shareholder rights plan will expire on April 9, 2024.

The preferred stock purchase rights are triggered ten days after

the date of a public announcement that a person or group acting in concert has acquired, or obtained the right to acquire, beneficial ownership of 20% or more of our outstanding common stock.

The preferred stock purchase rights would cause

dilution to a person or group that attempts to acquire the Company on terms that do not satisfy the requirements of a qualifying offer under the shareholder rights plan or are otherwise not approved by our Board of Directors.

The preferred stock purchase rights are triggered ten days after the date

of a public announcement that a person or group acting in concert has acquired, or obtained the right to acquire, beneficial ownership of 20% or more of our outstanding common stock.

The preferred stock purchase rights would cause dilution to a

person or group that attempts to acquire the Company on terms that do not satisfy the requirements of a qualifying offer under the shareholder rights plan or are otherwise not approved by our Board of Directors.

These provisions, either alone or in combination with each other, give our current directors and executive officers a substantial ability to influence the outcome of a proposed acquisition of the

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Risks Related to Our Business Strategy

If we fail to execute our business strategy, which includes our ability to find new store locations and open new stores that are profitable, our business could suffer.

One of the means of achieving our growth objectives is opening and operating new and profitable stores.

This strategy involves numerous risks, and we may not be able to open all of our planned new

stores and the new stores that we open may not be profitable or as profitable as our existing stores.

A significant risk in executing our business strategy is locating, securing and profitably operating an adequate supply of suitable new store sites.

Competition for suitable store sites and

operating personnel in our target markets is intense, and there can be no assurance that we will be able to find sufficient suitable locations, or negotiate suitable purchase or lease terms, for our planned expansion in any future period.

Recently, our target markets have been expanded to include markets that are outside of our existing core markets and in states where we currently do not have existing operations, which increases the risk of executing our business strategy.

Economic conditions may also reduce commercial development activity and limit the availability of attractive sites for new stores.

New stores typically experience an adjustment period before sales levels and operating margins normalize, and even

sales at successful newly opened stores generally do not make a significant contribution to profitability in their initial months of operation.

Our ability to open and operate new stores successfully also depends on numerous other factors, some of

which are beyond our control, including, among other items discussed in other risk factors, the following:

our ability to control construction and development costs of new stores;

our ability to manage the local, state or other regulatory

approvals and permits, zoning and licensing processes in a timely manner;

our ability to appropriately train employees and staff the stores;

consumer acceptance of our stores in new markets;

and our ability to manage construction delays related to

the opening of a new store.

Delays or failures in opening new stores, or achieving lower than expected sales in new stores, or drawing a greater than expected proportion of sales in new stores from existing stores, could materially adversely

affect our business strategy and could have an adverse effect on our business and results of operations.

Our expansion into new geographic markets may present increased risks due to our relative unfamiliarity with these markets.

Some of our new store locations may be located in areas where we have lower market presence and, as a result, less or no meaningful business experience than in our traditional, existing markets.

Those new markets may have different competitive conditions, consumer tastes and discretionary spending patterns than our traditional, existing markets, which may cause our new store locations to be less successful than restaurants in our existing

An additional risk of expanding into new markets is the potential for lower or lacking market awareness of our brand in those areas.

Stores opened in new markets may open at lower average weekly sales volumes than stores opened in

existing markets and may have higher store-level operating expense ratios than in existing markets.

Sales at stores opened in new markets may take longer to reach average unit volume and margins, if at all, thereby affecting our overall

profitability.

Failure to adequately address environmental, social and governance (“ESG”) matters, could adversely affect our brand, business, results of operations and financial condition.

There has been increasing public focus by investors, environmental activists, the media and governmental and regulatory agencies on ESG matters, including packaging and waste, animal health and

welfare, human rights, climate change, greenhouse gases and land, energy and water use.

In response to shareholders’ heightened level of expectation for expanded ESG disclosure, we publish an ESG Report annually describing our ESG efforts and

Execution of the strategies and achievement of the goals outlined in the ESG Report are subject to risks and uncertainties, including our ability to meet our goals within the currently projected costs and the expected timeframes;

design, operational and technological difficulties;

the outcome of research efforts and future technology developments;

and the actions of competitors and competitive pressures.

There is no assurance that we will be able to successfully execute our

strategies and achieve our goals.

Failure, or perceived failure, to achieve these goals could damage our reputation and relationships with customers, government agencies and investors.

Such conditions could have an adverse effect on our business,

results of operations and financial condition.

The SEC is expected to adopt rules governing climate change disclosures that could significantly increase compliance burdens and associated regulatory costs of publicly traded companies.

federal, state and local legislative and regulatory efforts to combat other ESG concerns could also result in new or more stringent forms of oversight and mandatory reporting, diligence and disclosure requirements, which could increase our reporting

Any failure or perceived failure by us to manage ESG issues or comply with regulations could have a material adverse effect on our reputation and on our business, results of operations, financial condition or stock price, including the

sustainability of our business over time.

We are dependent upon attracting and retaining qualified employees while also controlling labor costs.

Our performance is dependent on attracting and retaining a large and growing number of qualified store employees.

Availability of staff varies widely from location to location.

Many staff members

are in entry-level or part-time positions, typically with high rates of turnover.

High turnover of store management and staff would cause us to incur higher direct costs associated with recruiting, training and retaining replacement personnel.

The market for the most qualified

talent continues to be competitive and we must provide competitive wages, benefits and workplace conditions to maintain our most qualified employees.

Competition for qualified employees exerts upward pressure on wages paid to attract such personnel,

resulting in higher labor costs, including greater recruiting and training expenses.

Our ability to meet our labor needs while controlling our costs is subject to external factors such as unemployment levels, minimum wage legislation, health care legislation, payroll taxes and

changing demographics.

Many of our employees are hourly workers whose wages are affected by increases in the federal or state minimum wage or changes to tip credits.

Tip credits are the amounts an employer is permitted to assume an employee

receives in tips when the employer calculates the employee’s hourly wage for minimum wage compliance purposes.

Increases in minimum wage levels and changes to the tip credit have been made and continue to be proposed at both federal and state

As minimum wage rates increase, we may need to increase not only the wages of our minimum wage employees but also the wages paid to employees at wage rates that are above minimum wage.

If competitive pressures or other factors prevent us

from offsetting increased labor costs by increases in prices, our profitability may decline.

The loss of key executives or difficulties in recruiting and retaining qualified personnel could jeopardize our future growth and success .

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challenges in recruiting and retaining team members in various locations.

Strategic investments or initiatives that the Company may pursue now or in the future, may not yield their expected benefits, resulting in a loss of some or all of the Company’s investment.

The Company may, from time to time, evaluate and pursue other opportunities for growth, including through strategic investments, joint ventures, other acquisitions, and other Company initiatives,

such as our recent rollout of a limited selection of beer and wine in certain locations.

These initiatives involve various inherent risks, including, without limitation, general business risk, integration and synergy risk, market acceptance risk

and risks associated with the potential distraction of management.

Such transactions and initiatives may not ultimately create value for us or our stockholders and may harm our reputation and materially adversely affect our business, financial

condition and results of operations.

Additionally, Julie Felss Masino began serving as Chief Executive Officer-Elect on August 7, 2023 and will begin serving as Chief Executive Officer on November 1, 2023,

replacing Sandra B.

Cochran, who will thenceforth serve as Executive Chair of the Board of Directors through her retirement as of September 30, 2024 (or such earlier date that the Board of Directors of the Company may determine upon 30 days’ prior

written notice to Ms.

Such transition in our executive management team may divert the attention of management or otherwise be disruptive to our business.

We may pursue strategic investments or initiatives now or in the future, which may not yield their expected benefits, resulting in a loss of some or all of our investment.

We may, from time to time, evaluate and pursue other opportunities for growth, including through strategic investments, joint ventures, other acquisitions, and other initiatives, such as our recent

rollout of a limited selection of beer and wine in certain locations and our new customer loyalty program.

These initiatives involve various inherent risks, including, without limitation, general business risk, integration and synergy risk, market

acceptance risk and risks associated with the potential distraction of management.

It may be difficult to predict the success of any endeavor, and such transactions and initiatives may not ultimately create value for us or our shareholders and may

harm our reputation and materially adversely affect our business, financial condition and results of operations.

Additionally, failure to maximize or successfully execute our customer loyalty program could adversely impact growth.

Individual store locations are affected by local conditions that could change and adversely affect the carrying value of those locations.

The success of our business depends on the success of individual locations, which in turn depends on stability of or improvements in operating conditions at and around those locations.

revenues and expenses can be affected significantly by the number and timing of the opening of new stores and the closing, relocating and remodeling of existing stores.

We incur substantial pre-opening expenses each time we open a new store and

other expenses when we close, relocate or remodel existing stores.

and expenses can be affected significantly by the number and timing of the opening of new stores and the closing, relocating and remodeling of existing stores.

We incur substantial pre-opening expenses each time we open a new store and other

expenses when we close, relocate or remodel existing stores.

The expenses of opening, closing, relocating or remodeling any of our stores may be higher than anticipated.

An increase in such expenses could have an adverse effect on our

results of operations.

Also, as demographic and economic patterns (e.g., highway or roadway traffic patterns, concentrations of general retail or hotel activity, local population densities or increased

competition) change, current locations may not continue to be attractive or profitable.

Possible declines in neighborhoods where our stores are located or adverse economic conditions in areas surrounding those neighborhoods could result in reduced

revenues in those locations.

An increase in such expenses could have an adverse effect on our results of

Also, as demographic and economic patterns (e.g., highway or roadway traffic patterns, concentrations of general retail or hotel activity, local population densities or increased competition)

change, current locations may not continue to be attractive or profitable.

Possible declines in neighborhoods where our stores are located or adverse economic conditions in areas surrounding those neighborhoods could result in reduced revenues in

those locations.

The occurrence of one or more of these events could have a material adverse effect on our revenues and results of operations as well as the carrying value of our individual locations.

If we fail to execute our business strategy, which includes our ability to find new store locations and open new stores that are profitable, our business could suffer.

One of the means of achieving our growth objectives is opening and operating new and profitable stores.

This strategy involves numerous risks, and we may not be able to open all of our planned new

stores and the new stores that we open may not be profitable or as profitable as our existing stores.

A significant risk in executing our business strategy is locating, securing and profitably operating an adequate supply of suitable new store sites.

Competition for suitable store sites and

our target markets have been expanded to include markets that are outside of our existing core markets and in states where we currently do not have existing operations, which increases the risk of executing our business strategy.

Economic conditions

may also reduce commercial development activity and limit the availability of attractive sites for new stores.

New stores typically experience an adjustment period before sales levels and operating margins normalize, and even sales at successful

newly opened stores generally do not make a significant contribution to profitability in their initial months of operation.

Our ability to open and operate new stores successfully also depends on numerous other factors, some of which are beyond our

control, including, among other items discussed in other risk factors, the following:

our ability to control construction and development costs of new stores;

our ability to manage the local, state or other regulatory approvals and permits, zoning

and licensing processes in a timely manner;

our ability to recruit and appropriately train employees and staff the stores;

consumer acceptance of our stores in new markets;

and our ability to manage construction delays related to the opening of a new

and could have an adverse effect on our business and results of operations.

Our expansion into new geographic markets may present increased risks due to our relative unfamiliarity with these markets.

Some of our new store locations may be located in areas where we have lower market presence and, as a result, less or no meaningful business experience than in our traditional, existing markets.

An additional risk of expanding into new markets is the potential for lower or lacking market awareness of our brand in those areas.

Stores opened in new markets may open at lower average weekly sales volumes than stores opened in existing

markets and may have higher store-level operating expense ratios than in existing markets.

Sales at stores opened in new markets may take longer to reach average unit volume and margins, if at all, thereby affecting our overall profitability.

General Risk Factors

General economic, business and societal conditions as well as those specific to the restaurant or retail industries that are largely out of our control may adversely affect our

business, financial condition and results of operations.

General economic, business and societal conditions as well as those specific to the restaurant or retail industries that are largely out of our control may have a material adverse

effect on our business, financial condition and results of operations.

Our business results depend on a number of industry-specific and general economic factors, many of which are beyond our control.

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General economic conditions, including

economic downturns related to the COVID-19 pandemic, geopolitical conditions and uncertainty about the strength or pace of economic recovery have also adversely affected our results of operations and may continue to do so.

The current economic

slowdown, a protracted economic downturn, a worsening economy, increased energy prices, and rising interest rates may reduce consumer confidence and affect consumers’ ability or desire to spend disposable income.

A deterioration in the economy or

other economic conditions affecting disposable consumer income, such as unemployment levels, reduced home values, investment losses, inflation, business conditions, fuel and other energy costs, consumer debt levels, lack of available credit,

consumer confidence, interest rates, tax rates and changes in tax laws, may adversely affect our business by reducing overall consumer spending or by causing customers to reduce the frequency with which they shop and dine out or to shift their

spending to our competitors or to products sold by us that are less profitable than other product choices, all of which could result in lower revenues, decreases in inventory turnover, greater markdowns on inventory, and a reduction in

profitability due to lower margins.

In addition, many of the factors discussed above, along with the current economic environment and the related impact on available credit, may affect us and our suppliers and other business

partners, landlords, and customers in an adverse manner, including, but not limited to, reducing access to liquid funds or credit (including through the loss of one or more financial institutions that are a part of our revolving credit facility),

increasing the cost of credit, limiting our ability to manage interest rate risk, increasing the risk of bankruptcy of our suppliers, landlords or counterparties to or other financial institutions involved in our revolving credit facility and our

derivative and other contracts, increasing the cost of goods to us, and other adverse consequences which we are unable to fully anticipate.

an inflationary environment, geopolitical or other macroeconomic conditions and uncertainty about the strength of the economy may adversely affect our results of operations.

A protracted economic downturn, a worsening economy, increased energy

prices, and rising interest rates may reduce consumer confidence and affect consumers’ ability or desire to spend disposable income.

Current inflationary pressures and other economic conditions affecting disposable consumer income, such as

unemployment levels, reduced home values, investment losses, business conditions, fuel and other energy costs, consumer debt levels, lack of available credit, consumer confidence, interest rates, tax rates and changes in tax laws, may adversely

affect our business by reducing overall consumer spending or by causing customers to reduce the frequency with which they shop and dine out or to shift their spending to our competitors or to products sold by us that are less profitable than other

product choices, all of which could result in lower revenues, decreases in inventory turnover, greater markdowns on inventory, and a reduction in profitability due to lower margins.

In addition, many of the factors discussed above, along with the current economic environment and the related impact on available credit, may affect us and our suppliers and other business partners,

landlords, and customers in an adverse manner, including, but not limited to, reducing access to liquid funds or credit (including through the loss of one or more financial institutions that are a part of our revolving credit facility), increasing

the cost of credit, limiting our ability to manage interest rate risk, increasing the risk of bankruptcy of our suppliers, landlords or counterparties to or other financial institutions involved in our revolving credit facility and our derivative and

other contracts, increasing the cost of goods to us, and other adverse consequences which we are unable to fully anticipate.

We also cannot predict the effects of actual or threatened armed conflicts or terrorist attacks, efforts to combat terrorism, military action against any foreign state or group located in a foreign

state or heightened security requirements on the economy or consumer confidence in the United States.

Any of these events could also affect consumer sentiment and confidence that in turn affect consumer spending patterns or result in increased

costs for us due to security measures.

Any of these events could also affect consumer sentiment and confidence that in turn affect consumer spending patterns or result in increased costs

for us due to security measures.

Unfavorable changes in the factors described above or in other business and economic conditions affecting our customers could increase our costs, reduce traffic in some or all of our locations or

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Therefore, the results of operations for any quarter or period of less than one year cannot be considered indicative of the operating results for an entire year.

Furthermore, we are not able to predict the impact that the COVID-19 pandemic may have on the seasonality of our business.

Additionally, extreme or unseasonable weather conditions in the areas where our stores are located can adversely affect our business.

For example, frequent or unusually heavy snowfall, ice storms,

rain storms, floods, droughts or other extreme weather conditions over a prolonged period could make it difficult for our customers to travel to our stores and can disrupt deliveries of food and supplies to our stores and thereby reduce our sales

and profitability.

profitability.

Similarly, extended periods of unseasonably warm temperatures during the winter season or cool weather during the summer season could render a portion of our retail inventory incompatible with those unseasonable conditions, and

reduced sales from such extreme or prolonged unseasonable weather conditions could adversely affect our business.

These risks may be exacerbated in the future as some climatologists predict that the long-term effects of climate change may result

in more severe, volatile weather.

Severe weather may disrupt our ability to receive food items, which may adversely affect the availability, quality and cost of the

items we buy.

In the event we increase menu prices or adjust menu offerings to offset such increases, we may experience a negative consumer response.

These risks may be exacerbated in the future as some climatologists predict that the long-term

effects of climate change may result in more severe, volatile weather.

In addition, natural disasters such as hurricanes, tornadoes and earthquakes, or a combination of these or other factors, could severely damage or destroy one or more of our stores, warehouses or

suppliers located in the affected areas, thereby disrupting our business operations for a more extended period of time.

Lastly, unforeseen events, such as hostile acts (including terrorist activities and public or workplace violence), social unrest or other catastrophic events, and our ability to appropriately

respond and adapt to such events could negatively impact our business, results of operations and financial condition.

Other unforeseen events, such as hostile acts (including terrorist activities and public or workplace violence), social unrest or other catastrophic events, and our ability to appropriately respond

and adapt to such events could negatively impact our business, results of operations and financial condition.

If our disaster recovery procedures fail, we may experience delays in recovery of data, inability to perform vital corporate functions or

failures to adequately support field operations.

Our current insurance programs may expose us to unexpected costs, which could have a material adverse effect on our financial condition and results of operations.

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assumptions and management estimates underlying our reserves for these losses, including unexpected increases in medical and indemnity costs, could result in materially different amounts of expense than expected under these programs.

Our annual and quarterly operating results may fluctuate significantly and could fall below the expectations of investors and securities analysts due to a number of factors,

some of which are beyond our control, resulting either in volatility or a decline in the price of our securities.

Our annual and quarterly operating results may fluctuate significantly and could fall below the expectations of investors and securities analysts due to a number of factors, some

of which are beyond our control, resulting either in volatility or a decline in the price of our securities.

Our business is not static – it changes periodically as a result of many factors, including, among other items discussed in other risk factors, the following:

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inflationary and other market conditions that affect the costs and availability of commodities, labor, energy, fuel, transportation and other inputs necessary to operate our stores effectively in a manner consistent with our strategy;

continued or increased regulations on our operations, consumer activities or social gatherings as a result of the COVID-19 pandemic or other public health conditions;

the rate at which we open new stores, the timing of new store openings and the related high initial operating costs;

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Our quarterly operating results and restaurant and retail sales may fluctuate as a result of any of these or other factors.

Accordingly, results for any one quarter are not necessarily indicative

of results to be expected for any other quarter or for any year, and restaurant and retail sales for any particular future period may decrease.

Accordingly, results for any one quarter are not necessarily indicative of

results to be expected for any other quarter or for any year, and restaurant and retail sales for any particular future period may decrease.

In the future, operating results may fall below the expectations of securities analysts and investors.

In such event, the price of our securities could fluctuate dramatically over time or could decrease generally.

such event, the price of our securities could fluctuate dramatically over time or could decrease generally.

Our reported results can be affected adversely and unexpectedly by the implementation of new, or changes in the interpretation of existing, accounting principles or financial

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Our financial reporting complies with the United States generally accepted accounting principles (“GAAP”), and GAAP is subject to change over time.

If new rules or interpretations of existing

rules require us to change our financial reporting, our reported results of operations and financial condition could be affected substantially, including requirements to restate historical financial reporting.

If new rules or interpretations of existing rules

require us to change our financial reporting, our reported results of operations and financial condition could be affected substantially, including requirements to restate historical financial reporting.

Failure of our internal control over financial reporting could adversely affect our business and financial results.

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detect and prevent fraud.

The identification of a material weakness could indicate a lack of controls adequate to generate accurate financial statements that, in turn, could cause a loss of investor confidence and decline in the market price of

our common stock.

common stock.

We cannot assure you that we will be able to timely remediate any material weaknesses that may be identified in future periods or maintain all of the controls necessary for continued compliance.

Likewise, we cannot assure you

that we will be able to retain sufficient skilled finance and accounting personnel, especially in light of the increased demand for such personnel among publicly traded companies.

Likewise, we cannot assure you that we

will be able to retain sufficient skilled finance and accounting personnel, especially in light of the increased demand for such personnel among publicly traded companies.

UNRESOLVED STAFF COMMENTS

Our home office headquarters and warehouse facilities are located on approximately 90 acres of land owned by the Company in Lebanon, Tennessee.

We use approximately 260,000 square feet of office

space for our home office headquarters and decorative fixtures warehouse.

We lease our retail distribution center, which consists of approximately 370,000 square feet of warehouse facilities and an additional approximately 10,000 square feet of

office and maintenance space.

We also lease an additional distribution center of approximately 52,000 square feet in Lebanon, Tennessee.

This additional distribution center is primarily used for ecommerce fulfillment and overflow retail storage.

We also lease 105,000 square feet located in Mount Juliet, Tennessee that is used for overflow storage for retail merchandise and supplies.

We lease office space for our MSBC headquarters which consists of approximately 15,000 square feet.

In addition to the various corporate facilities, we have three owned properties for future

development, a motel used for housing management trainees and for the general public, and four parcels of excess real property and improvements that we intend to sell.

In addition to the properties mentioned above, we own or lease the following store properties (including both our 661 Cracker Barrel Old Country Store locations and 59 locations for our MSBC

locations) as of September 13, 2023:

North Carolina

Massachusetts

South Carolina

New Hampshire

West Virginia

We believe that our properties are suitable, adequate, well-maintained and sufficient for the operations contemplated.

See “Operations" and "Store Development" in Item 1 of this Annual Report on

Form 10-K for additional information on our properties.

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What changed 10-K

Item 1A. Risk Factors