What changed in this filing

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Item 1A. Risk Factors

2025-03-11 compared with 2024-03-05 · 58 added, 56 removed, 610 unchanged (16% of the section changed)

12 unchanged sentences

• the number of visitors to areas where our restaurants are located may decline

• our inability to generate same-restaurant sales growth

• our marketing programs and limited-time menu offerings may fail to generate profits

• lower than expected same-restaurant sales growth

• unsuccessful marketing programs or limited-time menu offerings

• shortages or disruptions in the supply or delivery of frequently used food items or increases in the cost of our frequently used food items

• unsuccessful new restaurant openings

• our inability to compete successfully with other breakfast and lunch restaurants

4 unchanged sentences

• damage to our reputation and negative publicity, even if unwarranted

• our inability to effectively manage the accelerated impact of social media

• our inability to effectively manage the accelerated impact of social media and artificial intelligence

Risks Related to Information Technology and Intellectual Property

8 unchanged sentences

• potential unionization activities

• our sustainability activities, including ESG matters

• risks associated with our sustainability activities, including ESG matters

Legal and Regulatory Risks

1 unchanged sentence

• the distraction and expense of litigation

• increased labor and healthcare costs due to changes in laws and regulations

• risks associated with leasing properties subject to long-term and non-cancelable leases

4 unchanged sentences

• impairment in the carrying value of our goodwill or indefinite-lived intangible assets

• risks associated with changes to accounting estimates

• our inability to effectively manage our internal control over financial reporting

4 unchanged sentences

• our reliance on our operating subsidiaries

• our lack of significant experience managing a public company

• risks associated with our status as an emerging growth company and a Delaware corporation

• risks associated with our status as an emerging growth company

• risks associated with the anti-takeover provisions of Delaware law, our amended and restated certificate of incorporation and bylaws

• risks associated with exclusive forum jurisdiction in the Court of Chancery in the State of Delaware

Risks Related to Ownership of Our Common Stock

1 unchanged sentence

• risks associated with our status as a controlled company with highly concentrated ownership of common stock

• our expectation not to pay any dividends on our common stock in the foreseeable future

• possible significant fluctuations in our quarterly results of operations that could fall below the expectations of securities analysts and investors

• sales of substantial amounts of common stock in the public markets by Advent

• dilutive impact from grants under our equity incentive plans

7 unchanged sentences

Food service businesses depend on consumer discretionary spending and are often affected by changes in consumer tastes, national, regional and local economic conditions and demographic trends.

For example, due in large part to trends related to increased work-from-home accommodations by employers, we experienced and continue to experience changes in our breakfast and lunch business as it relates to customers who visit us before starting the workday, on their way to work or during corporate lunch breaks.

Factors such as traffic patterns, weather, fuel prices, local demographics and the type, number and locations of competing restaurants may adversely affect the performances of individual locations.

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• disruptions to our supply chain;

• changes in governmental rules and approaches to taxation;

• changes in governmental rules and approaches to taxation and trade restrictions, including tariffs;

• adverse outcomes of litigation;

• severe weather or other natural or man-made disasters affecting a large market or several closely located markets that may temporarily but significantly impact our restaurant operations in such markets;

• severe weather or other natural or man-made disasters affecting a large market or several closely located markets or our supply chain;

• changes in climate, including changes to the frequency of severe weather events, that impact the cost and availability of goods and services, energy and other materials throughout our supply chain;

25 unchanged sentences

Restaurants we open in new markets may take longer to reach expected sales and profit levels on a consistent basis and may have higher construction, occupancy and operating costs than existing restaurants.

Any failure on our part to recognize or respond to these challenges may adversely affect the success of any new restaurants and could have a material adverse effect on our business, financial condition and results of operations.

Any failure on our part to recognize or respond to these challenges may adversely affect the

success of any new restaurants and could have a material adverse effect on our business, financial condition and results of operations.

Our failure to manage our growth effectively could harm our business and results of operations.

25 unchanged sentences

Changes in the cost of food could have a material adverse effect on our business, financial condition and results of operations.

Our profitability depends in part on our ability to anticipate and react to changes in food and beverage costs, including, among other things, our costs for pork, coffee, eggs, avocados, potatoes, bread, cheese, fresh fruit and produce items.

We are susceptible to increases in the cost of food due to factors beyond our control, such as freight and delivery charges, general economic conditions, seasonal economic fluctuations, weather conditions, global demand, food safety concerns, infectious diseases, fluctuations in the U.S.

dollar, tariffs and import taxes, product recalls and government regulations.

In 2022-2023, for example, we experienced significant increases in the cost of eggs, primarily due to an outbreak of avian influenza.

In 2024 and continuing into 2025, for example, we have experienced significant increases in the cost of eggs, primarily due to an outbreak of avian influenza, as well as coffee and avocados, primarily due to the impact of climate and weather conditions.

Dependence on frequent deliveries of fresh produce and other food products subjects our business to the risk that shortages or interruptions in supply could adversely affect the availability, quality or cost of ingredients or require us to incur additional costs to obtain adequate supplies.

Further, increases in fuel prices could result in increased distribution costs.

In 2022, for example, we experienced significant increases in distribution costs as a result of material increases in fuel prices.

Changes in the price or availability of certain food products could affect our profitability and reputation.

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In addition, many of our competitors have greater name recognition nationally or in some of the local markets in which we have or plan to have restaurants.

We also compete with a number of non-traditional market participants, such as convenience stores, grocery stores, coffee shops, meal kit delivery services, and “ghost” or dark kitchens, where meals are prepared at separate takeaway premises rather than a restaurant.

We also compete with a number of non-traditional market participants, such as convenience stores, grocery stores, coffee shops, and meal kit delivery services.

Competition from food delivery services companies has also increased in recent years.

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Similar incidents or reports occurring at competitors in our industry unrelated to us could likewise create negative publicity, which could adversely impact consumer behavior towards us.

Our food safety controls, procedures and training may not be fully effective in preventing all food safety and public health issues at our restaurants, including any occurrences of pathogens, bacteria, parasites or other toxins infecting our food

These potential public health issues, in addition to food tampering, could adversely affect food prices and availability of certain food products, generate negative publicity, and lead to closure of restaurants resulting in a decline in our sales or profitability.

our sales or profitability.

In addition, there is no guarantee that our restaurant locations will maintain the high levels of internal controls and training we require at our restaurants.

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If our broad-line distributor does not adequately perform its obligations or is unable to scale with our business, or our distribution is disrupted for any reason, there could be an adverse effect on our business, financial condition and results of operations.

For example, in January 2024, unionized drivers at our broad-line distributor went on strike at a number of distribution centers, which adversely effected our operations and supply chain for several weeks resulting in the incurrence of higher costs and delays in food deliveries.

As of December 29, 2024, we purchased substantially all of our pork from two suppliers, substantially all of our eggs from one supplier and all of our coffee from one supplier.

We purchase these ingredients pursuant to purchase orders at prevailing market or negotiated contract prices and are not limited by minimum purchase requirements.

The cancellation of our supply arrangements with any one of these suppliers or the disruption, delay or inability of these suppliers to deliver these major products to our restaurants or distribution centers due to problems in production or distribution, inclement weather, unanticipated demand or other conditions may materially and adversely affect our results of operations while we establish alternative supplier and distribution channels.

The cancellation of our supply arrangements with any one of these suppliers or the disruption, delay or inability of these suppliers to deliver these major products to our restaurants or distribution centers due to problems in production or distribution, inclement weather, unanticipated demand, trade restrictions (such as increased tariffs or quotas, embargoes or customs restrictions) or other conditions may materially and adversely affect our results of operations while we establish alternative supplier and distribution channels.

Accordingly, although we believe that alternative supply and distribution sources are available, we may not be able to identify or negotiate with such sources on terms that are commercially reasonable to us.

9 unchanged sentences

Our restaurants in the southeast portion of the United States represented approximately 41% of our system-wide restaurants as of December 29, 2024.

Our restaurants in Florida represented approximately 23% of our system-wide restaurants as of

December 31, 2023.

Our restaurants in Florida represented approximately 23% of our system-wide restaurants as of December 29, 2024.

Adverse changes in demographic, unemployment, economic, regulatory or weather conditions in the southeast portion of the United States have had, and may continue to have, material adverse effects on our business, financial condition and results of operations.

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This harm may be immediate, without affording us an opportunity for redress or correction.

In addition, the rapid evolution and increased adoption of artificial intelligence technologies may affect our customers’ expectations, requirements or tastes in ways we cannot adequately anticipate or adapt to, and adversely affect our business financial condition and results of operations.

In addition, the rapid evolution and increased adoption of artificial intelligence technologies may affect our customers’ expectations, requirements or tastes in ways we cannot adequately anticipate or adapt to, adversely affect our business financial condition and results of operations, and may require us to develop artificial intelligence-specific systems.

Risks Related to Information Technology and Intellectual Property

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Further, the California Privacy Rights Act, which became fully effective in January 2023, significantly modifies the CCPA.

These modifications will require us to incur additional costs and expenses in our effort to comply.

Virginia, Connecticut, Colorado and Utah have enacted similar data privacy legislation that took effect in 2023, and Delaware, Indiana, Iowa, Montana, Oregon, Tennessee and Texas have enacted similar data privacy legislation that will take effect at various points in 2024 and beyond.

Colorado, Connecticut, Colorado, Delaware, Iowa, Montana, Nebraska, New Hampshire, New Jersey, Oregon, Texas, Utah and Virginia have enacted similar data privacy legislation and Indiana, Kentucky, Maryland, Minnesota, Rhode Island and Tennessee have enacted similar data privacy legislation that will take effect at various points in 2025 and beyond.

Several other states and countries are considering expanding or passing privacy laws in the near term.

These laws and regulations have required and will require us to incur additional costs and expenses in our effort to comply.

Our failure to adhere to or successfully implement appropriate processes to adhere to the requirements of evolving laws and regulations in this area could expose us and our franchisees to financial penalties and legal liability.

1 unchanged sentence

Any failure, or perceived failure, by us to comply with our posted privacy policies or with any federal or state privacy or consumer protection-related laws, regulations, industry self-regulatory principles, industry standards or codes of conduct, regulatory guidance, orders to which we may be subject or other legal obligations relating to privacy or consumer protection could adversely affect our reputation, brand and business, and may result in claims, proceedings or actions against us by governmental entities, customers, suppliers or others or other liabilities or may require us to change our operations and/or cease using certain data sets.

We may also be contractually required to indemnify and hold harmless third parties from the costs or consequences of non-compliance with any laws, regulations or other legal obligations relating to privacy or consumer protection or any inadvertent or unauthorized use or disclosure of data that we store or handle as part of operating our business.

We may also be contractually required to indemnify and hold harmless third parties from the costs or consequences of non-compliance with any laws, regulations or other legal obligations relating to

privacy or consumer protection or any inadvertent or unauthorized use or disclosure of data that we store or handle as part of operating our business.

Federal and state governmental authorities continue to evaluate the privacy implications inherent in the use of third-party “cookies” and other methods of online tracking for behavioral advertising and other purposes.

9 unchanged sentences

We intend to continue to work in good faith to complete a review of our books and records related to unclaimed or abandoned property during the periods required under the program.

In the fourth quarter of 2023, the Company recorded a charge of $0.8 million for est imated probable losses that might arise from this matter.

Amounts incurred and paid to resolve past due unclaimed property obligations in Delaware could have a material adverse effect on our financial condition and results of operations.

In the fourth quarter of 2023 , the Company recorded a charge of $0.8 million for e st imated probable losses that might arise from this matter.

In the second quarter of 2024 , the Company paid $0.7 million to the State of Delaware to resolve escheat matters related to unclaimed gift card balances.

We believe we are not currently required to remit any amounts relating to future unredeemed gift cards to states as our subsidiary that is the issuer of our gift cards was re-domiciled in Florida on December 9, 2022, a jurisdiction which exempts gift cards from the abandoned and unclaimed property laws.

9 unchanged sentences

The success of our business strategy depends on our continued ability to use our existing trademarks and service marks in order to increase brand awareness and develop our branded products.

If our efforts to protect our intellectual property are not adequate, or if any third-party misappropriates or infringes on our intellectual property, whether in print, on the Internet or through other media, the value of our brands may be adversely affected, which could have a material adverse effect on our business, including the failure of our brands and branded products to achieve and maintain market acceptance.

If our efforts to protect our intellectual property are not adequate, or if any

third-party misappropriates or infringes on our intellectual property, whether in print, on the Internet or through other media, the value of our brands may be adversely affected, which could have a material adverse effect on our business, including the failure of our brands and branded products to achieve and maintain market acceptance.

We or our suppliers maintain the seasonings and additives for our menu items, as well as certain standards, specifications and operating procedures, as trade secrets or confidential information.

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The inability to retain or recruit qualified employees, increased costs of attracting qualified employees or delays in restaurant openings could have a material adverse effect on our business, financial condition and results of operations.

Since the start of the COVID-19 pandemic, the restaurant industry has experienced aggressive competition for talent, wage inflation and pressure to improve benefits and workplace conditions to remain competitive.

In recent years, the restaurant industry has experienced aggressive competition for talent, wage inflation and pressure to improve benefits and workplace conditions to remain competitive.

In addition, our existing wages and benefits programs, combined with the highly competitive wage pressure resulting from the labor shortage, may be insufficient to attract and retain the best talent.

4 unchanged sentences

As we continue to grow, we may find it difficult to maintain the innovation, teamwork, passion and focus on execution that we believe are important aspects of our corporate culture.

Any failure to preserve our culture could adversely impact our operations, including our ability to retain and recruit personnel and to effectively focus on and pursue our corporate objectives.

Any failure to preserve our culture could adversely impact our operations, including our ability to retain and recruit personnel and to effectively focus

on and pursue our corporate objectives.

If we cannot maintain our corporate culture as we grow, it could have a material adverse effect on our business, financial condition and results of operations.

8 unchanged sentences

We could also incur additional costs and require additional resources to monitor, report and comply with various ESG practices, laws and regulations, which could increase our operating costs and affect our results of operations and financial condition.

In addition, from time to time, we may communicate certain initiatives regarding climate change and other ESG matters.

In addition, from time to time, we may communicate certain initiatives regarding climate change, animal welfare and other ESG matters.

We could fail or be perceived to fail to achieve such initiatives, which may adversely affect our reputation.

The future adoption of new technology or processes to achieve such initiatives could also result in the impairment of existing assets.

At the same time, stockholders and regulators have increasingly expressed opposing views and expectations with respect to ESG initiatives, including the enactment of “Anti-ESG” legislation or policies.

Legal and Regulatory Risks

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In addition, they may generate negative publicity, which could reduce customer traffic and sales.

Although we maintain what we believe to be adequate levels of insurance, insurance may not be available at all or in sufficient amounts to cover any liabilities with respect to these or other matters.

Although we maintain what we believe to be adequate levels of insurance, insurance may not be

available at all or in sufficient amounts to cover any liabilities with respect to these or other matters.

A judgment or other liability in excess of our insurance coverage for any claims or any adverse publicity resulting from claims could have a material adverse effect on our business, financial condition and results of operations.

Additionally, if we or our franchisees are unable to properly identify unauthorized workers, such workers will be subject to deportation and may subject us to fines or penalties.

If any of our workers are found to be unauthorized, we could experience adverse publicity that may

adversely impact our brand, disrupt our operations, make it more difficult to hire and keep qualified employees, cause temporary increases in our labor costs as we train new employees and result in adverse publicity.

If any of our workers are found to be unauthorized, we could experience adverse publicity that may adversely impact our brand, disrupt our operations, make it more difficult to hire and keep qualified employees, cause temporary increases in our labor costs as we train new employees and result in adverse publicity.

We could be party to litigation that could distract management, increase our expenses or subject us to material monetary damages or other remedies.

21 unchanged sentences

Even if we close a restaurant, we are required to perform our obligations under the applicable lease, which could include, among other things, a payment of the base rent, property taxes, insurance and common area maintenance costs for the balance of the lease term, which would impact our profitability.

In addition, as leases expire for restaurants that we will continue to operate, we may, at the end of the lease term and any renewal period for a restaurant, be unable to negotiate renewals, either on commercially acceptable terms or at all.

In addition, as leases expire for

restaurants that we will continue to operate, we may, at the end of the lease term and any renewal period for a restaurant, be unable to negotiate renewals, either on commercially acceptable terms or at all.

As a result, we may close or relocate the restaurant, which could subject us to construction costs related to leasehold improvements and other costs and risks.

8 unchanged sentences

We will need to hire more employees in the future to comply with these requirements, which will increase our costs and expenses.

To comply with the requirements of being a public company, including the Sarbanes-Oxley Act, we have and will need to continue to undertake various actions, such as implementing new internal controls and procedures and hiring accounting or internal audit staff or outsourcing certain functions to third parties, which could have a material adverse effect on our business, financial condition and results of operations.

To comply with the requirements of being a public company, including the Sarbanes-Oxley Act, we have undertaken and will need to continue to undertake various actions, such as implementing new internal controls and procedures and hiring accounting or internal audit staff or outsourcing certain functions to third parties, which could have a material adverse effect on our business, financial condition and results of operations.

Fluctuations in our tax obligations and effective tax rate and realization of our deferred tax assets may result in volatility of our results of operations.

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Alcoholic beverage control regulations relate to numerous aspects of daily operations of our restaurants, including minimum age of patrons and employees, hours of operation, advertising, trade practices, wholesale purchasing, other relationships with alcoholic beverages manufacturers, wholesalers and distributors, inventory control and handling, storage and dispensing of alcoholic beverages.

Any future failure to comply with these regulations and obtain or retain licenses could have a material adverse effect on our business, financial condition and results of operations.

failure to comply with these regulations and obtain or retain licenses could have a material adverse effect on our business, financial condition and results of operations.

We are also subject in certain states to “dram shop” statutes, which generally provide a person injured by an intoxicated person the right to recover damages from an establishment that wrongfully served alcoholic beverages to the intoxicated person.

Recent litigation against restaurant chains has resulted in significant judgments and settlements under dram shop statutes.

Because these cases often seek punitive damages, which may not be covered by insurance, such litigation could

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

Because these cases often seek punitive damages, which may not be covered by insurance, such litigation could have a material effect on our business, financial condition and results of operations.

Regardless of whether any claims against us are valid or whether we are liable, claims may be expensive to defend and may divert time and money away from operations and hurt our financial performance.

22 unchanged sentences

Failure to comply with the laws and regulatory requirements of federal, state and local authorities could result in, among other things, revocation of required licenses, administrative enforcement actions, fines and civil and criminal liability.

In addition, certain laws, including the Americans with Disabilities Act, which, among other things, requires our restaurants to meet federally mandated requirements for the disabled, could require us to expend significant funds to make modifications to our restaurants if we failed to comply with applicable standards.

to our restaurants if we failed to comply with applicable standards.

Compliance with all these laws and regulations can be costly and can increase our exposure to litigation or governmental investigations or proceedings.

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Our level of indebtedness could have a material adverse effect on our business, financial condition and results of operations.

Our principal amount of our term loan outstanding was $92.5 million, excluding unamortized debt discount and deferred issuance costs, and we had drawn $30.0 million on our revolving credit facility as of December 31, 2023.

Our principal amounts of our term loans outstanding wa s $193.8 million , excluding unamortized debt discount and deferred issuance costs as of December 29, 2024.

Our indebtedness could have significant effects on our business, such as:

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does not expect to pay dividends on its common stock for the foreseeable future, if it is unable to obtain funds from its subsidiaries, it may be unable to, or its Board may exercise its discretion not to, pay dividends.

Our management does not have significant experience managing a public company and our current resources may not be sufficient to fulfill our public company obligations.

We are subject to various regulatory requirements, including those of the SEC and Nasdaq.

These requirements include record keeping, financial reporting and corporate governance rules and regulations.

Our management team does not have significant experience in managing a public company and, historically, has not had the resources typically found in a public company.

Our internal infrastructure may not be adequate to support our increased reporting obligations and we may be unable to hire, train or retain necessary staff and may be reliant on engaging outside consultants or professionals to overcome our lack of experience or employees.

If our internal infrastructure is inadequate, we are unable to engage outside consultants at a reasonable rate or attract talented employees to perform these functions or are otherwise unable to fulfill our public company obligations, it could have a material adverse effect on our business, financial condition and results of operations.

For as long as we are an emerging growth company, we will not be required to comply with certain reporting requirements, including those relating to accounting standards and disclosure about our executive compensation, that apply to other public companies.

As an emerging growth company, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and of stockholder approval of any golden parachute payments not previously approved.

We may take advantage of some of these exemptions.

We have taken and may continue to take advantage of some of these exemptions.

If we do, we do not know if some investors will find our common stock less attractive as a result.

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• establish advance notice requirements for nominations for election to our Board or for proposing matters that can be acted on by stockholders at stockholder meetings.

In addition, our Facilities impose, and we anticipate that documents governing our future indebtedness may impose, limitations on our ability to enter into change of control transactions.

In addition, our credit agreement for our debt facilities imposes, and we anticipate that documents governing our future indebtedness may impose, limitations on our ability to enter into change of control transactions.

Thereunder, the occurrence of a change of control transaction could constitute an event of default permitting acceleration of the indebtedness, thereby impeding our ability to enter into certain transactions.

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Debt securities convertible into equity could be subject to adjustments in the conversion ratio pursuant to which certain events may increase the number of equity securities issuable upon conversion.

Preferred shares could have a preference with respect to liquidating distributions or a preference with respect to dividend payments that could limit our ability to pay dividends to the holders of our common

Our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, which may have a material adverse effect on the amount, timing, or nature of our future offerings.

1 unchanged sentence

If the ownership of our common stock continues to be highly concentrated, it may prevent you and other minority stockholders from influencing significant corporate decisions and may result in conflicts of interest.

Advent indirectly beneficially owns approximately 56.9% of our outstanding common stock.

As a result, Advent beneficially owns shares sufficient for majority votes over all matters requiring stockholder votes, including:

Although we are no

longer a “controlled company” within the meaning of the rules of the Nasdaq, Advent continues to exert substantial influence over us.

As of December 29, 2024, Advent indirectly beneficially owned approximately 32% of our outstanding common stock.

Although we are no longer a “controlled company” within the meaning of the Nasdaq listing rules, Advent beneficially owns shares sufficient to significantly influence all matters requiring stockholder votes, including:

the election of directors;

9 unchanged sentences

In addition, this concentration of share ownership may adversely affect the trading price of our common stock because investors may perceive disadvantages in owning shares in a company with significant stockholders.

As a controlled company, we are not subject to all of the corporate governance rules of Nasdaq.

We are considered a “controlled company” under the rules of Nasdaq.

Controlled companies are exempt from the corporate governance rules requiring that listed companies have (i) a majority of the Board consist of “independent” directors under the listing standards of Nasdaq, (ii) independent director oversight of director nominations and (iii) a compensation committee composed entirely of independent directors.

Although we are eligible to use some or all of these exemptions, our Board is comprised of a majority of independent directors, and our nominating and corporate governance committee and compensation committee consists entirely of independent directors.

However, if we are to use some or all of these exemptions in the future, you may not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of Nasdaq.

We do not anticipate paying any dividends on our common stock in the foreseeable future.

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Of our issued and outstanding shares, all the common stock sold in our initial public offering is freely transferable, except for any shares held by our “affiliates,” as that term is defined in Rule 144 under the Securities Act.

Approximately 56.9% of our outstanding common stock is indirectly beneficially owned by Advent, and can be resold into the public markets in the future in accordance with the requirements of Rule 144.

As of December 29, 2024, approximately 32% of our outstanding common stock was indirectly beneficially owned by Advent, and can be resold into the public markets in the future in accordance with the requirements of Rule 144.

The market price of our common stock may decline significantly in connection with any sales by Advent of its common stock.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors