What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-07-09 compared with 2024-04-04 · 96 added, 117 removed, 252 unchanged (46% of the section changed)

8 unchanged sentences

Business Trends

During the six months ended February 29, 2024, we opened nine restaurants and expanded our restaurant base to 59 restaurants in seventeen states and Washington, DC.

We expect to open 13 to 14 new restaurants in fiscal year 2024 and therefore, we expect our revenue and restaurant operating costs to increase in fiscal year 2024.

During the nine months ended May 31, 2024, we opened 13 restaurants and expanded our restaurant base to 63 restaurants in seventeen states and Washington, DC.

We expect to open a total of 14 new restaurants in fiscal year 2024 and therefore, we expect our revenue and restaurant operating costs to increase in fiscal year 2024.

We also expect our general and administrative expenses to increase on a dollar basis in fiscal 2024 to support the growth of the company and the compliance requirements of no longer being an emerging growth company.

We have experienced inflationary pressures affecting our operations in certain areas such as labor, repairs and maintenance, restaurant supplies and energy costs.

We have been able to offset these inflationary and other cost pressures to some extent through various actions, such as increasing menu prices, productivity improvements, and supply chain initiatives.

Although inflation has steadied so far in 2024, inflation may continue to affect our results in the near future.

We have been able to partially offset these inflationary and other cost pressures to some extent through various actions, such as increasing menu prices, productivity improvements, and supply chain initiatives.

Although inflation has moderated so far in 2024, inflation may continue to affect our results in the near future.

In addition, our restaurant sales have softened since mid-April due to macroeconomic conditions of lower consumer spending.

Key Financial Definitions

25 unchanged sentences

Results of Operations

The following tables present selected comparative results of operations for the three and six months ended February 29, 2024 and February 28, 2023.

The following tables present selected comparative results of operations for the three and nine months ended May 31, 2024 and May 31, 2023.

Our financial results for these periods are not necessarily indicative of the financial results that we will achieve in future periods.

Certain totals for the tables below may not recalculate or sum to 100% due to rounding.

Three Months Ended

February 29, 2024

February 28, 2023

Three Months Ended May 31,

(dollar amounts in thousands)

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Total operating expenses

Operating loss

Operating (loss) income

Other expense (income):

1 unchanged sentence

Interest income

Loss before income taxes

(Loss) income before income taxes

Income tax expense

Six Months Ended

February 29, 2024

February 28, 2023

Net (loss) income

Nine Months Ended May 31,

(dollar amounts in thousands)

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Income tax expense

Three Months Ended

Six Months Ended

February 29, 2024

February 28, 2023

February 29, 2024

February 28, 2023

Three Months Ended May 31,

Nine Months Ended May 31,

(as a percentage of sales)

8 unchanged sentences

Total operating expenses

Operating loss

Operating (loss) income

Other expense (income):

1 unchanged sentence

Interest income

Loss before income taxes

(Loss) income before income taxes

Income tax expense

Three Months Ended February 29, 2024 Compared to Three Months Ended February 28, 2023

Sales were $57.3 million for the three months ended February 29, 2024 compared to $43.9 million for the three months ended February 28, 2023, representing an increase of $13.4 million, or 30.4%.The increase in sales was primarily driven by the sales resulting from fourteen new restaurants opened subsequent to February 28, 2023, as well as increases in menu prices during the same period.

Comparable restaurant sales increased 3.0% for the three months ended February 29, 2024, as compared to the three months ended February 28, 2023.

Net (loss) income

Three Months Ended May 31, 2024 Compared to Three Months Ended May 31, 2023

Sales were $63.1 million for the three months ended May 31, 2024 compared to $49.2 million for the three months ended May 31, 2023, representing an increase of $13.9 million, or 28.1%.

The increase in sales was primarily driven by the sales resulting from seventeen new restaurants opened subsequent to May 31, 2023, as well as increases in menu prices during the same period.

Comparable restaurant sales increased 0.6% for the three months ended May 31, 2024, as compared to the three months ended May 31, 2023.

Food and beverage costs.

Food and beverage costs were $16.9 million for the three months ended February 29, 2024 compared to $13.2 million for the three months ended February 28, 2023, representing an increase of $3.7 million, or 27.9%.

The increase in food and beverage costs was primarily driven by costs associated with sales from fourteen new restaurants opened subsequent to February 28, 2023.

As a percentage of sales, food and beverage costs decreased to 29.6% in the three months ended February 29, 2024 as compared to 30.1% in the three months ended February 28, 2023, primarily due to increases in menu prices and supply chain initiatives.

Food and beverage costs were $18.4 million for the three months ended May 31, 2024 compared to $14.8 million for the three months ended May 31, 2023, representing an increase of $3.6 million, or 24.5%.

The increase in food and beverage costs was primarily driven by costs associated with sales from seventeen new restaurants opened subsequent to May 31, 2023.

As a percentage of sales, food and beverage costs decreased to 29.2% in the three months ended May 31, 2024 as compared to 30.0% in the three months ended May 31, 2023, primarily due to increases in menu prices and supply chain initiatives.

Labor and related costs.

Labor and related costs were $18.8 million for the three months ended February 29, 2024 compared to $13.9 million for the three months ended February 28, 2023, representing an increase of $4.9 million, or 35.5%.

This increase in labor and related costs was primarily driven by additional labor costs incurred from fourteen new restaurants opened subsequent to February 28, 2023.

As a percentage of sales, labor and related costs increased to 32.8% in the three months ended February 29, 2024 as compared to 31.5% in the three months ended February 28, 2023.

The increase in cost as a percentage of sales was primarily due to increases in wage rates, higher pre-opening labor costs and the impact of adverse weather conditions.

Labor and related costs were $20.4 million for the three months ended May 31, 2024 compared to $14.4 million for the three months ended May 31, 2023, representing an increase of $6.0 million, or 41.9%.

This increase in labor and related costs was primarily driven by additional labor costs incurred from seventeen new restaurants opened subsequent to May 31, 2023.

As a percentage of sales, labor and related costs increased to 32.3% in the three months ended May 31, 2024 as compared to 29.2% in the three months ended May 31, 2023.

The increase in cost as a percentage of sales was primarily due to increases in wage rates and higher pre-opening labor costs.

Occupancy and related expenses.

Occupancy and related expenses were $4.0 million for the three months ended February 29, 2024 compared to $3.1 million for the three months ended February 28, 2023, representing an increase of $0.9 million, or 29.0%.

The increase was primarily a result of additional lease expense related to the opening of fourteen new restaurants subsequent to February 28, 2023.

As a percentage of sales, occupancy and related expenses remained consistent at 6.9% in the three months ended February 29, 2024 as compared to 7.0% in the three months ended February 28, 2023.

Occupancy and related expenses were $4.3 million for the three months ended May 31, 2024 compared to $3.6 million for the three months ended May 31, 2023, representing an increase of $0.7 million, or 21.5%.

The increase was primarily a result of additional lease expense related to the opening of seventeen new restaurants subsequent to May 31, 2023.

As a percentage of sales, occupancy and related expenses decreased to 6.8% in the three months ended May 31, 2024 as compared to 7.2% in the three months ended May 31, 2023, primarily driven by leverage benefits from the increase in sales.

Depreciation and amortization expenses.

Depreciation and amortization expenses incurred as part of restaurant operating costs were $2.7 million for the three months ended February 29, 2024 compared to $1.8 million for the three months ended February 28, 2023, representing an increase of $0.9 million, or 53.2%.

The increase consists of depreciation of property and equipment related to the fourteen new restaurants that opened subsequent to February 28, 2023.

As a percentage of sales, depreciation and amortization expenses at the restaurant level increased to 4.7% in the three months ended February 29, 2024 as compared to 4.0% in the three months ended February 28, 2023.

Depreciation and amortization expenses incurred at the corporate level were $0.1 million for both the three months ended February 29, 2024 and February 28, 2023, and as a percentage of sales were both 0.2%, respectively.

Other costs were $8.4 million for the three months ended February 29, 2024 compared to $5.9 million for the three months ended February 28, 2023, representing an increase of $2.5 million, or 42.4%.

The increase was primarily driven by an increase in costs related to the fourteen new restaurants that opened subsequent to February 28, 2023.

As a percentage of sales, other costs increased to 14.6% in the three months ended February 29, 2024 as compared to 13.3% in the three months ended February 28, 2023, primarily driven by advertising and promotion, repairs and maintenance and travel expenses.

Depreciation and amortization expenses incurred as part of restaurant operating costs were $3.1 million for the three months ended May 31, 2024 compared to $2.0 million for the three months ended May 31, 2023, representing an increase of $1.1 million, or 58.2%.

The increase consists of depreciation of property and equipment related to the seventeen new restaurants that opened subsequent to May 31, 2023.

As a percentage of sales, depreciation and amortization expenses at the restaurant level increased to 5.0% in the three months ended May 31, 2024 as compared to 4.0% in the three months ended May 31, 2023, primarily driven by increases in depreciation and amortization due to the new restaurants opened as well as accelerated depreciation on planned restaurant remodels.

Depreciation and amortization expenses incurred at the corporate level were $0.1 million for both the three months ended May 31, 2024 and May 31, 2023, and as a percentage of sales were both 0.2%, respectively.

Other costs were $9.1 million for the three months ended May 31, 2024 compared to $6.2 million for the three months ended May 31, 2023, representing an increase of $2.9 million, or 47.2%.

The increase was primarily driven by an increase in costs related to the seventeen new restaurants that opened subsequent to May 31, 2023.

As a percentage of sales, other costs increased to 14.4% in the three months ended May 31, 2024 as compared to 12.5% in the three months ended May 31, 2023, primarily driven by advertising and promotion, software licenses, repairs and maintenance, utilities, operating supplies and travel expenses.

General and administrative expenses.

General and administrative expenses were $8.2 million for the three months ended February 29, 2024 compared to $7.1 million for the three months ended February 28, 2023, representing an increase of $1.1 million, or 14.7%.

This increase was primarily due to increases in compensation-related costs of $0.5 million due to additional headcount, $0.4 million in professional fees and $0.1 million in travel expenses.

As a percentage of sales, general and administrative expenses decreased to 14.3% in the three months ended February 29, 2024 as compared to 16.2% in the three months ended February 28, 2023, primarily driven by leverage benefits from the increase in sales.

General and administrative expenses were $8.9 million for the three months ended May 31, 2024 compared to $7.0 million for the three months ended May 31, 2023, representing an increase of $1.9 million, or 26.3%.

This increase was primarily due to increases in $0.7 million in professional fees, $0.6 million in litigation accrual, compensation-related costs of $0.4 million due to additional headcount and $0.2 million in travel expenses.

As a percentage of sales, general and administrative expenses decreased to 14.0% in the three months ended May 31, 2024 as compared to 14.2% in the three months ended May 31, 2023, primarily driven by leverage benefits from the increase in sales.

Interest expense.

Interest expense was $12 thousand for the three months ended February 29, 2024 compared to $14 thousand for the three months ended February 28, 2023, respectively.

Interest expense was $15 thousand for the three months ended May 31, 2024 compared to $23 thousand for the three months ended May 31, 2023, respectively.

Interest income.

Interest income was $754 thousand for the three months ended February 29, 2024 compared to $63 thousand for the three months ended February 28, 2023.

Interest income was $686 thousand for the three months ended May 31, 2024 compared to $436 thousand for the three months ended May 31, 2023.

The increase was primarily driven by investing our net cash proceeds from our $64.3 million follow-on offering completed in April 2023 into cash and cash equivalents and short-term investments.

Income tax expense.

Income tax expense was $50 thousand for the three months ended February 29, 2024 compared to an income tax expense of $15 thousand for the three months ended February 28, 2023.

Income tax expense was $60 thousand for the three months ended May 31, 2024 compared to an income tax expense of $41 thousand for the three months ended May 31, 2023.

For further discussion of our income taxes, see “Note 9.

Income Taxes” in the Notes to Condensed Financial Statements.

Six Months Ended February 29, 2024 Compared to Six Months Ended February 28, 2023

Sales were $108.8 million for the six months ended February 29, 2024 compared to $83.3 million for the six months ended February 28, 2023, representing an increase of $25.5 million, or 30.6%.

The increase in sales was primarily driven by the sales resulting from fourteen new restaurants opened subsequent to February 28, 2023, as well as increases in menu prices during the same period.

Comparable restaurant sales increased 3.5% for the six months ended February 29, 2024, as compared to the six months ended February 28, 2023.

Nine Months Ended May 31, 2024 Compared to Nine Months Ended May 31, 2023

Sales were $171.8 million for the nine months ended May 31, 2024 compared to $132.5 million for the nine months ended May 31, 2023, representing an increase of $39.3 million, or 29.7%.

The increase in sales was primarily driven by the sales resulting from seventeen new restaurants opened subsequent to May 31, 2023, as well as increases in menu prices during the same period.

Comparable restaurant sales increased 2.4% for the nine months ended May 31, 2024, as compared to the nine months ended May 31, 2023.

Food and beverage costs.

Food and beverage costs were $32.3 million for the six months ended February 29, 2024 compared to $25.7 million for the six months ended February 28, 2023, representing an increase of $6.6 million, or 25.8%.

The increase in food and beverage costs was primarily driven by costs associated with sales from fourteen new restaurants opened subsequent to February 28, 2023.

As a percentage of sales, food and beverage costs decreased to 29.7% in the six months ended February 29, 2024 as compared to 30.8% in the six months ended February 28, 2023, primarily due to increases in menu prices and supply chain initiatives.

Food and beverage costs were $50.7 million for the nine months ended May 31, 2024 compared to $40.4 million for the nine months ended May 31, 2023, representing an increase of $10.3 million, or 25.3%.

The increase in food and beverage costs was primarily driven by costs associated with sales from seventeen new restaurants opened subsequent to May 31, 2023.

As a percentage of sales, food and beverage costs decreased to 29.5% in the nine months ended May 31, 2024 as compared to 30.5% in the nine months ended May 31, 2023, primarily due to increases in menu prices and supply chain initiatives.

Labor and related costs.

Labor and related costs were $35.0 million for the six months ended February 29, 2024 compared to $26.4 million for the six months ended February 28, 2023, representing an increase of $8.6 million, or 32.7%.

This increase in labor and related costs was primarily driven by additional labor costs incurred from fourteen new restaurants opened subsequent to February 28, 2023.

As a percentage of sales, labor and related costs increased to 32.2% in the six months ended February 29, 2024 as compared to 31.7% in the six months ended February 28, 2023.

Labor and related costs were $55.4 million for the nine months ended May 31, 2024 compared to $40.8 million for the nine months ended May 31, 2023, representing an increase of $14.6 million, or 36.0%.

This increase in labor and related costs was primarily driven by additional labor costs incurred from seventeen new restaurants opened subsequent to May 31, 2023.

As a percentage of sales, labor and related costs increased to 32.2% in the nine months ended May 31, 2024 as compared to 30.8% in the nine months ended May 31, 2023.

The increase in cost as a percentage of sales was primarily due to increases in wage rates and higher pre-opening labor costs.

Occupancy and related expenses.

Occupancy and related expenses were $7.9 million for the six months ended February 29, 2024 compared to $6.0 million for the six months ended February 28, 2023, representing an increase of $1.9 million, or 32.1%.

The increase was primarily a result of additional lease expense related to the opening of fourteen new restaurants opened subsequent to February 28, 2023.

As a percentage of sales, occupancy and related expenses remained consistent at 7.2% in the six months ended February 29, 2024, compared to 7.1% in the six months ended February 28, 2023.

Occupancy and related expenses were $12.2 million for the nine months ended May 31, 2024 compared to $9.5 million for the nine months ended May 31, 2023, representing an increase of $2.7 million, or 28.1%.

The increase was primarily a result of additional lease expense related to the opening of seventeen new restaurants opened subsequent to May 31, 2023.

As a percentage of sales, occupancy and related expenses remained consistent at 7.1% in the nine months ended May 31, 2024, compared to 7.2% in the nine months ended May 31, 2023.

Depreciation and amortization expenses.

Depreciation and amortization expenses incurred as part of restaurant operating costs were $5.2 million for the six months ended February 29, 2024 compared to $3.3 million for the six months ended February 28, 2023, representing an increase of $1.9 million, or 55.1%.

The increase consists of depreciation of property and equipment related to fourteen new restaurants opened subsequent to February 28, 2023.

As a percentage of sales, depreciation and amortization expenses at the restaurant level increased to 4.8% for the six months ended February 29, 2024 as compared to 4.0% for the six months ended February 28, 2023.

Depreciation and amortization expenses incurred at the corporate level were $0.2 million for the six months ended February 29, 2024 and February 28, 2023, and as a percentage of sales were both 0.2%, respectively.

Other costs were $15.9 million for the six months ended February 29, 2024 compared to $11.2 million for the six months ended February 28, 2023, representing an increase of $4.7 million, or 42.5%.

The increase was primarily driven by an increase in costs related to fourteen new restaurants opened subsequent to February 28, 2023.

As a percentage of sales, other costs increased to 14.7% in the six months ended February 29, 2024 from 13.4% in the six months ended February 28, 2023, primarily driven by advertising and promotion and travel expenses.

Depreciation and amortization expenses incurred as part of restaurant operating costs were $8.3 million for the nine months ended May 31, 2024 compared to $5.3 million for the nine months ended May 31, 2023, representing an increase of $3.0 million, or 56.2%.

The increase consists of depreciation of property and equipment related to seventeen new restaurants opened subsequent to May 31, 2023.

As a percentage of sales, depreciation and amortization expenses at the restaurant level increased to 4.8% for the nine months ended May 31, 2024 as compared to 4.0% for the nine months ended May 31, 2023, primarily driven by increases in depreciation and amortization due to the new restaurants opened as well as accelerated depreciation on planned restaurant remodels.

Depreciation and amortization expenses incurred at the corporate level were $0.3 million for the nine months ended May 31, 2024 and May 31, 2023, and as a percentage of sales were both 0.2%, respectively.

Other costs were $25.0 million for the nine months ended May 31, 2024 compared to $17.4 million for the nine months ended May 31, 2023, representing an increase of $7.6 million, or 44.2%.

The increase was primarily driven by an increase in costs related to seventeen new restaurants opened subsequent to May 31, 2023.

As a percentage of sales, other costs increased to 14.6% in the nine months ended May 31, 2024 from 13.1% in the nine months ended May 31, 2023, primarily driven by operating supplies, advertising and promotion, software licenses, repairs and maintenance, travel expenses and utilities.

General and administrative expenses.

General and administrative expenses were $16.8 million for the six months ended February 29, 2024 compared to $13.8 million for the six months ended February 28, 2023, representing an increase of $3.0 million, or 21.9%.

This increase was primarily due to increases in compensation related costs of $1.5 million due to additional headcount, $0.9 million in professional fees, $0.3 million in travel expenses and $0.2 million in legal costs.

As a percentage of sales, general and administrative expenses decreased to 15.4% in the six months ended February 29, 2024 from 16.5% in the six months ended February 28, 2023, primarily driven by leverage benefits from the increase in sales.

General and administrative expenses were $25.6 million for the nine months ended May 31, 2024 compared to $20.8 million for the nine months ended May 31, 2023, representing an increase of $4.8 million, or 23.4%.

This increase was primarily due to increases in compensation related costs of $1.9 million due to additional headcount, $1.4 million in professional fees, $0.8 million in litigation accrual, $0.4 million in travel expenses and $0.3 in accounts with differences under $0.1 million.

As a percentage of sales, general and administrative expenses decreased to 14.9% in the nine months ended May 31, 2024 from 15.7% in the nine months ended May 31, 2023, primarily driven by leverage benefits from the increase in sales.

Interest expense.

Interest expense was $20 thousand for the six months ended February 29, 2024 compared to $30 thousand for the six months ended February 28, 2023.

Interest expense was $35 thousand for the nine months ended May 31, 2024 compared to $53 thousand for the nine months ended May 31, 2023.

Interest income.

Interest income was $1.6 million for the six months ended February 29, 2024 compared to $0.2 million for the six months ended February 28, 2023.

Interest income was $2.3 million for the nine months ended May 31, 2024 compared to $0.6 million for the nine months ended May 31, 2023.

The increase was primarily driven by investing our net cash proceeds from our $64.3 million follow-on offering completed in April 2023 into cash and cash equivalents and short-term investments.

Income tax expense.

Income tax expense was $88 thousand for the six months ended February 29, 2024 compared to $25 thousand for the six months ended February 28, 2023.

Income tax expense was $148 thousand for the nine months ended May 31, 2024 compared to $66 thousand for the nine months ended May 31, 2023.

For further discussion of our income taxes, see “Note 9.

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EBITDA, Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP measures which are intended as supplemental measures of our performance and are neither required by, nor presented in accordance with, GAAP.

We believe that EBITDA, Adjusted EBITDA and Adjusted EBITDA margin provide useful information to management and investors regarding certain financial and business trends relating to our financial condition and

operating results.

We believe that EBITDA, Adjusted EBITDA and Adjusted EBITDA margin provide useful

information to management and investors regarding certain financial and business trends relating to our financial condition and operating results.

However, these measures may not provide a complete understanding of the operating results of the Company as a whole and such measures should be reviewed in conjunction with our GAAP financial results.

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The following table reconciles net loss to EBITDA and Adjusted EBITDA:

Three Months Ended

Six Months Ended

February 29, 2024

February 28, 2023

February 29, 2024

February 28, 2023

Three Months Ended May 31,

Nine Months Ended May 31,

(amounts in thousands)

Net (loss) income

Interest income, net

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(b) Non-cash lease expense includes lease expense from the date of possession of our restaurants that did not require cash outlay in the respective periods.

Restaurant-level Operating Profit and Restaurant-level Operating Profit Margin

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The following table reconciles operating loss to Restaurant-level Operating Profit and Restaurant-level Operating Profit margin:

Three Months Ended

Six Months Ended

February 29, 2024

February 28, 2023

February 29, 2024

February 28, 2023

Three Months Ended May 31,

Nine Months Ended May 31,

(amounts in thousands)

Operating loss

Operating (loss) income

Depreciation and amortization expenses

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Restaurant-level operating profit

Operating loss margin

Operating (loss) income margin

Restaurant-level operating profit margin

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The following table shows the comparable restaurant sales performance:

Three Months Ended

Six Months Ended

February 29, 2024

February 28, 2023

February 29, 2024

February 28, 2023

Three Months Ended May 31,

Nine Months Ended May 31,

Comparable restaurant sales performance (%)

6 unchanged sentences

The following table shows the growth in our restaurant base:

Three Months Ended

Six Months Ended

February 29, 2024

February 28, 2023

February 29, 2024

February 28, 2023

Three Months Ended May 31,

Nine Months Ended May 31,

Restaurant activity:

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We made no payments to directors, officers or persons owning 10% or more of our common stock or to their associates, or to our affiliates.

During the six months ended February 29, 2024, we had no borrowings under the Revolving Credit Agreement and have $45.0 million of availability remaining.

As of February 29, 2024, we did not have any material off-balance sheet arrangements.

During the nine months ended May 31, 2024, we had no borrowings under the Revolving Credit Agreement and have $45.0 million of availability remaining.

As of May 31, 2024, we did not have any material off-balance sheet arrangements.

The significant components of our working capital are liquid assets such as cash, cash equivalents, receivables and short-term investments reduced by accounts payable and accrued expenses.

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The following table summarizes our cash flows for the periods presented:

Six Months Ended

February 29, 2024

February 28, 2023

Nine Months Ended May 31,

Statement of Cash Flow data:

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Cash Flows Provided by Operating Activities

Net cash provided by operating activities during the six months ended February 29, 2024 was $6.2 million, primarily due to a net loss of $3.0 million, non-cash charges of $5.4 million for depreciation and amortization, $2.0 million for stock-based compensation, and $2.3 million in non-cash lease expense, and net cash outflows of $0.3 million from changes in operating assets and liabilities.

Net cash provided by operating activities during the six months ended February 28, 2023 was $1.7 million, which results from a net loss of $3.1 million, non-cash charges of $3.5 million for depreciation and amortization, $1.6 million for stock-based compensation, and $1.8 million in non-cash lease expense, and net cash outflows of $2.1 million from changes in operating assets and liabilities.

Net cash provided by operating activities during the nine months ended May 31, 2024 was $14.9 million, primarily due to a net loss of $3.6 million, non-cash charges of $8.6 million for depreciation and amortization, $3.2 million for stock-based compensation, and $3.4 million in non-cash lease expense, and net cash outflows of $3.4 million from changes in operating assets and liabilities.

Net cash provided by operating activities during the nine months ended May 31, 2023 was $7.1 million, which results from a net loss of $1.4 million, non-cash charges of $5.6 million for depreciation and amortization, $2.6 million for stock-based compensation, and $2.8 million in non-cash lease expense, and net cash outflows of $2.5 million from changes in operating assets and liabilities.

Cash Flows Used in Investing Activities

Net cash used in investing activities during the six months ended February 29, 2024 was $20.6 million, primarily due to $3.5 million in purchases of short-term investments, $22.8 million in purchases of property and equipment and $0.1 million in purchases of liquor licenses offset by $5.9 million of redemption of short-term investments.

The increase in purchases of property and equipment in the six months ended February 29, 2024 is primarily related to capital expenditures for current and future restaurant openings and renovations, maintaining our existing restaurants and other projects.

Net cash used in investing activities during the six months ended February 28, 2023 was $15.4 million, primarily due to $14.3 million in purchases of property and equipment and $0.8 million in purchases of liquor licenses.

The purchases of property and equipment in the six months ended February 28, 2023 is primarily related to capital expenditures for current and future restaurant openings and renovations, maintaining our existing restaurants and other projects.

Net cash used in investing activities during the nine months ended May 31, 2024 was $27.3 million, primarily due to $3.3 million in purchases of short-term investments, $34.0 million in purchases of property and equipment and $0.2 million in purchases of liquor licenses offset by $10.5 million of redemption of short-term investments.

The increase in purchases of property and equipment in the nine months ended May 31, 2024 is primarily related to capital expenditures for current and future restaurant openings and renovations, maintaining our existing restaurants and other projects.

Net cash used in investing activities during the nine months ended May 31, 2023 was $37.2 million, primarily due to $8.7 million in purchases of short-term investments, $27.2 million in purchases of property and equipment and $0.9 million in purchases of liquor licenses.

The purchases of property and equipment in the nine months ended May 31, 2023 is primarily related to capital expenditures for current and future restaurant openings and renovations, maintaining our existing restaurants and other projects.

Cash Flows Provided by Financing Activities

Net cash provided by financing activities during the six months ended February 29, 2024 was $1.5 million and is primarily due to $1.9 million of proceeds from exercise of stock options offset by $0.4 million in taxes paid on vested stock options and RSUs.

Net cash provided by financing activities during the six months ended February 28, 2023 was $0.2 million and is primarily due $0.6 million of proceeds from the exercise of stock options offset by $0.3 million in repayments of principal on finance leases.

Net cash provided by financing activities during the nine months ended May 31, 2024 was $2.0 million and is primarily due to $2.3 million of proceeds from exercise of stock options offset by $0.2 million in taxes paid on vested RSUs.

Net cash provided by financing activities during the nine months ended May 31, 2023 was $64.9 million and is primarily due to aggregate net proceeds of $64.3 million after deducting the underwriting discounts and commissions and offering expenses payable, and $1.0 million of proceeds from exercise of stock options offset by $0.4 million in repayments of principal on finance leases.

Material Cash Requirements

As of February 29, 2024, we had $10.1 million in contractual obligations relating to the construction of new restaurants and purchase commitments for goods related to restaurant operations.

As of May 31, 2024, we had $13.0 million in contractual obligations relating to the construction of new restaurants and purchase commitments for goods related to restaurant operations.

All contractual obligations are expected to be paid during the next 12 months utilizing cash and cash equivalents on hand and provided by operations.

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Quantitative and Qualitati ve Disclosures About Market Risk.

There have been no material changes to our market risk during the six months ended February 29, 2024.

There have been no material changes to our market risk during the nine months ended May 31, 2024.

For a discussion of our exposure to market risk, refer to our market risk disclosures set forth in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” of our 2023 Form 10-K.

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-Q

Item 2. Management’s Discussion and Analysis