26 unchanged sentences
the ability to continue to attract franchisees;
−Removed: the impact of the new minimum wage legislation in New York State or other changes in labor laws, including court decisions which could render a franchisor as a “joint employee”
+Added: the impact of the minimum wage legislation in New York State or other changes in labor laws, including court decisions which could render a franchisor as a “joint employee”
or the impact of our union contracts;
30 unchanged sentences
Our revenues are generated primarily from selling products under Nathan’s Branded Product Program, operating Company-owned restaurants, licensing agreements for the sale of Nathan’s products within supermarkets and club stores, the sale of Nathan’s products directly to other foodservice operators and the manufacture of certain proprietary spices by third parties and the royalties, fees and other sums we can earn from franchising the Nathan’s restaurant concept (including the Branded Menu Program and virtual or “ghost”
−Removed: At September 26, 2021, our restaurant system, excluding virtual or “ghost”
+Added: At December 26, 2021, our restaurant system, excluding virtual or “ghost”
kitchens, consisted of 242 Nathan’s franchised units, including 120 Branded Menu Program units, and four Company-owned units (including one seasonal unit), located in 18 states, and 14 foreign countries.
−Removed: At September 27, 2020, our restaurant system, excluding virtual or “ghost”
+Added: At December 27, 2020, our restaurant system, excluding virtual or “ghost”
kitchens, consisted of 215 Nathan’s franchised units, including 93 Branded Menu Program units, and four Company-owned units (including one seasonal unit), located in 19 states, and 9 foreign countries.
Our strategic emphasis is focused on increasing the number of distribution points for our products across all of our business platforms, including our Licensing Program for distribution of Nathan’s Famous branded consumer packaged goods, our Branded Products Program for distribution of Nathan’s Famous branded bulk products to the foodservice industry, and our namesake restaurant system comprised of both Company-owned and franchised units, including virtual or “ghost”
−Removed: The primary drivers of our recent growth have been our Licensing and Branded Product Programs which have been the largest contributors to the Company’s profits.
−Removed: We remain committed to these parts of our business and we continue to reinvigorate our restaurant system.
+Added: The primary drivers of our growth have been our Licensing and Branded Product Programs which have been the largest contributors to the Company’s profits.
+Added: We continue to reinvigorate our restaurant system.
The operating plan we have adopted in this regard is focused on surrounding our core items, Nathan’s World Famous Beef Hot Dogs and crinkle-cut French fried potatoes, with other much higher quality menu items, including fresh angus hamburgers and hand-dipped chicken sandwiches, developed to deliver best-in-class customer experience and greater customer frequency.
1 unchanged sentence
The goal is to improve the performance of the existing restaurant system and to grow it through franchising efforts, including virtual or “ghost”
−Removed: While we do not expect to significantly increase the number of company-owned restaurants, we do expect to opportunistically and strategically invest in a small number of new units as showcase locations for prospective franchisees and master developers as we seek to grow our franchise system.
+Added: While we do not expect to significantly increase the number of Company-owned restaurants, we may opportunistically and strategically invest in a small number of new units as showcase locations for prospective franchisees and master developers as we seek to grow our franchise system.
We continue to seek opportunities to drive sales in a variety of ways as we adapt to the ever-changing consumer and environment.
3 unchanged sentences
as our principal supplier and the dependence of our licensing revenue and overall profitability on our agreement with John Morrell & Co.
−Removed: In addition, our future operating results could be impacted by supply constraints on beef or by increased costs of beef compared to earlier periods in addition to the potential impact that any future tariffs may have on the business.
−Removed: On November 1, 2017, the Company issued $150,000,000 of 6.625% Senior Secured Notes due 2025 (the “2025 Notes”) and used the majority of the proceeds of this offering to redeem (the “Redemption”) the Company’s 10.000% Senior Secured Notes due 2020 (the “2020 Notes”), paid a portion of the special $5.00 cash dividend and used any remaining proceeds for general corporate purposes, including working capital.
−Removed: Our future results could also be impacted by our obligations under the 2025 Notes.
−Removed: As a result of the issuance of the 2025 Notes, Nathan’s incurs interest expense of $9,937,500 per annum.
−Removed: Nathan’s expects to incur annual amortization of debt issuance costs of approximately $691,000 through November 1, 2025.
+Added: In addition, our future operating results could be impacted by supply constraints on beef or by increased costs of beef, beef trimmings and other commodities compared to earlier periods in addition to the potential impact that any future tariffs may have on the business.
+Added: On November 1, 2017, the Company issued $150,000,000 of 6.625% Senior Secured Notes due 2025 (the “2025 Notes”) and used the majority of the proceeds of this offering to redeem the Company’s 10.000% Senior Secured Notes due 2020, paid a portion of the special $5.00 cash dividend and used any remaining proceeds for general corporate purposes, including working capital.
+Added: On January 26, 2022, the Company redeemed $40,000,000 in aggregate principal amount of its 2025 Notes.
+Added: As a result of the partial redemption, the Company expects to reduce its future cash interest exposure by $2,650,000 per annum.
As described below, we are also including information relating to EBITDA and Adjusted EBITDA, which are non-GAAP financial measures, in the Form 10-Q quarterly report.
2 unchanged sentences
In March 2020, the World Health Organization declared the novel strain of coronavirus (“COVID-19”) a global pandemic.
−Removed: During the fiscal 2022 period, the number of COVID-19 cases continued to stabilize with approved vaccines being more widely distributed and administered and, as a result, more regions continued to loosen restrictions, adhering to state and local guidelines.
−Removed: Although the Company has experienced some recovery from the initial impact of COVID-19, the long-term impact of COVID-19 on the economy and on the Company’s business remains uncertain, the duration and scope of which cannot currently be predicted.
−Removed: Our ability to attract and retain employees at our Company-owned restaurants has become more challenging, as the job market for these employees has become more competitive.
+Added: During the first half of the fiscal 2022 period, the number of COVID-19 cases continued to stabilize with approved vaccines being more widely distributed and administered and, as a result, more regions continued to loosen restrictions, adhering to state and local guidelines.
+Added: Although the Company experienced higher revenue in the first nine months of fiscal 2022 compared to the first nine months of fiscal 2021, there continues to be uncertainty around the COVID-19 pandemic as the Omicron variant of COVID-19, which appears to be the most transmissible variant to date, has caused a recent increase in COVID-19 cases globally and has also led to evolving recommendations and restrictions by federal, state and local government officials.
+Added: Our ability to attract and retain employees at our Company-owned restaurants remains challenged, as the job market for these employees has become more competitive.
The challenges in the labor market have also affected some suppliers, resulting in some intermittent product shortages.
−Removed: The Company cannot predict if new variants of COVID-19 will be discovered or if there will be another surge, what additional restrictions may be enacted, to what extent it can maintain off-premises sales volumes, whether it can maintain sufficient staffing levels, or if individuals will be comfortable returning to its dining rooms or venues such as professional sports arenas, amusement parks, shopping malls or movie theaters during or following social distancing protocols, and what long-lasting effects the COVID-19 pandemic may have on the Company as a whole.
+Added: The Company cannot predict if new variants of COVID-19, in addition to the Delta variant and the Omicron variant, will be discovered or if there will be another surge, what additional restrictions may be enacted, to what extent it can maintain off-premises sales volumes, whether it can maintain sufficient staffing levels, or if individuals will be comfortable returning to its dining rooms or venues such as professional sports arenas, amusement parks, shopping malls or movie theaters during or following social distancing protocols, and what long-lasting effects the COVID-19 pandemic may have on the Company as a whole.
The full impact of the COVID-19 pandemic continues to evolve as of the date of this report.
10 unchanged sentences
Except for the adoption in Note B –
−Removed: simplifying the accounting for income taxes, there have been no other significant changes to the Company’s accounting policies subsequent to March 28, 2021.
+Added: ASU 2019-12, “
+Added: Income Taxes (Topic 740):
+Added: Simplifying the Accounting for Income Taxes, ”
+Added: there have been no other significant changes to the Company’s accounting policies subsequent to March 28, 2021.
Adoption of New Accounting Standard                   
−Removed: Please refer to Note B of the preceding consolidated financial statements for our discussion of the Adoption of the New Accounting Standard.
−Removed: New Accounting Standard Not Yet Adopted          
−Removed: Please refer to Note C of the preceding consolidated financial statements for our discussion of the New Accounting Standard Not Yet Adopted.
+Added: Please refer to Note B of the preceding consolidated interim financial statements for our discussion of the Adoption of the New Accounting Standard.
+Added: New Accounting Standards Not Yet Adopted          
+Added: Please refer to Note C of the preceding consolidated interim financial statements for our discussion of New Accounting Standard Not Yet Adopted.
EBITDA and Adjusted EBITDA
9 unchanged sentences
The following is a reconciliation of net income to EBITDA and Adjusted EBITDA (in thousands):
−Removed:                   
+Added:                 
Thirteen weeks ended
−Removed: Twenty-six weeks ended
−Removed: September 26,
−Removed: September 27,
−Removed: September 26,
−Removed: September 27,
+Added: Thirty-nine weeks ended
Interest expense
5 unchanged sentences
                  
−Removed: Thirteen weeks ended September 26, 2021 compared to thirteen weeks ended September 27, 2020
−Removed: Total revenues increased by 51% to $32,878,000 for the thirteen weeks ended September 26, 2021 (“second quarter fiscal 2022”) as compared to $21,839,000 for the thirteen weeks ended September 27, 2020 (“second quarter fiscal 2021”) as we continue to lap the significant impact of COVID-19 on our results beginning in March 2020.
−Removed: Total sales increased by 85% to $23,500,000 for the second quarter fiscal 2022 as compared to $12,692,000 for the second quarter fiscal 2021.
−Removed: Foodservice sales from the Branded Product Program increased by 97% to $19,063,000 for the second quarter fiscal 2022 as compared to sales of $9,698,000 for the second quarter fiscal 2021.
+Added: Thirteen weeks ended December 26, 2021 compared to thirteen weeks ended December 27, 2020
+Added: Total revenues increased by 44% to $25,913,000 for the thirteen weeks ended December 26, 2021 (“third quarter fiscal 2022”) as compared to $18,030,000 for the thirteen weeks ended December 27, 2020 (“third quarter fiscal 2021”) as we continued to lap the significant impact of COVID-19 on our results beginning in March 2020.
+Added: Total sales increased by 65% to $18,637,000 for the third quarter fiscal 2022 as compared to $11,322,000 for the third quarter fiscal 2021.
+Added: Foodservice sales from the Branded Product Program increased by 69% to $16,901,000 for the third quarter fiscal 2022 as compared to sales of $10,003,000 for the third quarter fiscal 2021.
The sales from our Branded Product Program have increased as certain government mandated restrictions associated with the COVID-19 pandemic have eased with approved vaccines being more widely distributed and administered.
−Removed: As a result, most of our Branded Product Program customers have reopened adhering to state and local guidelines, such as professional sports arenas, amusement parks, shopping malls and movie theaters.
−Removed: During the second quarter fiscal 2022, the total pounds of hot dogs sold in the Branded Product Program increased by approximately 92% as compared to the second quarter fiscal 2021.
−Removed: Our average selling prices increased by approximately 3.7% as compared to the second quarter fiscal 2021.
−Removed: Total Company-owned restaurant sales increased by 48% to $4,437,000 during the second quarter fiscal 2022 as compared to $2,994,000 during the second quarter fiscal 2021.
−Removed: The increase was primarily due to an increase in traffic at our Coney Island locations driven, in part, by the re-opening of Luna Park, the amusement park in Coney Island, as well as the easing of certain government mandated restrictions as a result of the public health measures taken to reduce exposure to the COVID-19 virus compared to the second quarter fiscal 2021.
−Removed: License royalties decreased by 7% to $7,658,000 in the second quarter fiscal 2022 as compared to $8,268,000 in the second quarter fiscal 2021.
+Added: Most of our Branded Product Program customers have reopened adhering to state and local guidelines, such as professional sports arenas, amusement parks, shopping malls and movie theaters.
+Added: During the third quarter fiscal 2022, the total pounds of hot dogs sold in the Branded Product Program increased by approximately 40% as compared to the third quarter fiscal 2021.
+Added: Our average selling prices increased by approximately 19% as compared to the third quarter fiscal 2021.
+Added: Total Company-owned restaurant sales increased by 32% to $1,736,000 during the third quarter fiscal 2022 as compared to $1,319,000 during the third quarter fiscal 2021.
+Added: The increase was primarily due to an increase in our average check and an increase in traffic at our Coney Island locations due to the easing of certain government mandated restrictions as a result of the public health measures taken to reduce exposure to the COVID-19 virus compared to the third quarter fiscal 2021.
+Added: The higher average check was driven by an increase in menu prices and the mix of items sold.
+Added: License royalties decreased by 0.3% to $5,878,000 in the third quarter fiscal 2022 as compared to $5,898,000 in the third quarter fiscal 2021.
Total royalties earned on sales of hot dogs from our license agreement with John Morrell & Co.
−Removed: at retail and foodservice, substantially from sales of hot dogs to WalMart, decreased 9% to $7,042,000 for the second quarter fiscal 2022 as compared to $7,716,000 in the second quarter fiscal 2021.
−Removed: The decrease is due to a 6% decrease in retail volume during the second quarter fiscal 2022 period and a 2% decrease in average net selling price as compared to the second quarter fiscal 2021.
−Removed: The foodservice business earned lower royalties of $11,000 as compared to the second quarter fiscal 2021.
−Removed: Royalties earned from all other licensing agreements for the manufacture and sale of Nathan’s products increased by $65,000 during the second quarter fiscal 2022 as compared to the second quarter fiscal 2021 primarily due to additional royalties earned on sales of proprietary spices, offset in part, by lower royalties earned on pickles and French fries.
−Removed: Franchise fees and royalties were $1,167,000 in the second quarter fiscal 2022 as compared to $476,000 in the second quarter fiscal 2021.
+Added: at retail and foodservice, substantially from sales of hot dogs to WalMart, decreased 0.8% to $5,239,000 for the third quarter fiscal 2022 as compared to $5,284,000 in the third quarter fiscal 2021.
+Added: The decrease is due to an 11% decrease in retail volume during the third quarter fiscal 2022 period which was offset by a 14% increase in average net selling price as compared to the third quarter fiscal 2021.
+Added: The foodservice business earned lower royalties of $8,000 as compared to the third quarter fiscal 2021.
+Added: Royalties earned from all other licensing agreements for the manufacture and sale of Nathan’s products increased by $24,000 during the third quarter fiscal 2022 as compared to the third quarter fiscal 2021 primarily due to additional royalties earned on sales of proprietary spices, cocktail franks and mozzarella sticks, offset in part, by lower royalties earned on french fries.
+Added: Franchise fees and royalties were $919,000 in the third quarter fiscal 2022 as compared to $420,000 in the third quarter fiscal 2021.
The increase was primarily due to the continued momentum associated with the recovery from the COVID-19 pandemic.
−Removed: Total royalties were $1,037,000 in the second quarter fiscal 2022 as compared to $409,000 in the second quarter fiscal 2021.
−Removed: Royalties earned under the Branded Menu Program were $207,000 in the second quarter fiscal 2022 as compared to $70,000 in the second quarter fiscal 2021.
+Added: Total royalties were $744,000 in the third quarter fiscal 2022 as compared to $361,000 in the third quarter fiscal 2021.
+Added: Royalties earned under the Branded Menu program were $101,000 in the third quarter fiscal 2022 as compared to $65,000 in the third quarter fiscal 2021.
Royalties earned under the Branded Menu Program are not based upon a percentage of restaurant sales but are based upon product purchases.
−Removed: Ghost kitchen royalties were $97,000 in the second quarter fiscal 2022.
−Removed: Traditional franchise royalties were $733,000 in the second quarter fiscal 2022 as compared to $339,000 in the second quarter fiscal 2021.
−Removed: Franchise restaurant sales increased to $15,644,000 in the second quarter fiscal 2022 as compared to $6,969,000 in the second quarter fiscal 2021 primarily due to the reopening of a majority of our franchised locations.
−Removed: Approximately 87% of our franchise system was open at the end of the second quarter fiscal 2022 as compared to 58% at the end of the second quarter fiscal 2021.
−Removed: Comparable domestic franchise sales (consisting of 47 Nathan’s outlets, excluding sales under the Branded Menu Program) were $11,425,000 in the second quarter fiscal 2022 as compared to $5,991,000 in the second quarter fiscal 2021.         
−Removed: At September 26, 2021, 224 franchised outlets, including domestic, international and Branded Menu Program outlets were operating as compared to 214 franchised outlets, including domestic, international and Branded Menu Program outlets at September 27, 2020.
−Removed: Total franchise fee income was $130,000 in the second quarter fiscal 2022 compared to $67,000 in the second quarter fiscal 2021.
−Removed: Domestic franchise fee income was $38,000 in the second quarter fiscal 2022 compared to $31,000 in the second quarter fiscal 2021.
−Removed: International franchise fee income was $56,000 in the second quarter fiscal 2022 compared to $26,000 during the second quarter fiscal 2021.
−Removed: We recognized $36,000 and $10,000 in forfeited fees in the second quarter fiscal 2022 and the second quarter fiscal 2021, respectively.
−Removed: During the second quarter fiscal 2022, two new traditional franchised outlets opened, as well as eleven new Branded Menu Program outlets.
−Removed: Additionally, 54 new virtual kitchens opened.
−Removed: During the second quarter fiscal 2021, two new traditional franchised outlets opened, including one new Branded Menu Program outlet.
−Removed: Advertising fund revenue, after eliminating Company contributions, was $553,000 during the second quarter fiscal 2022, as compared to $403,000 during the second quarter fiscal 2021.
+Added: Ghost kitchen royalties were $88,000 in the third quarter fiscal 2022.
+Added: Traditional franchise royalties were $555,000 in the third quarter fiscal 2022 as compared to $296,000 in the third quarter fiscal 2021.
+Added: Franchise restaurant sales increased to $12,280,000 in the third quarter fiscal 2022 as compared to $6,178,000 in the third quarter fiscal 2021 primarily due to the reopening of a majority of our franchised locations.
+Added: Approximately 88% of our franchise system was open at the end of the third quarter fiscal 2022 as compared to 62% at the end of the third quarter fiscal 2021.
+Added: Comparable domestic franchise sales (consisting of 48 Nathan’s outlets, excluding sales under the Branded Menu Program) were $8,884,000 in the third quarter fiscal 2022 as compared to $4,912,000 in the third quarter fiscal 2021.
+Added: At December 26, 2021, 242 franchised outlets, including domestic, international and Branded Menu Program outlets were operating as compared to 215 domestic and international franchised or Branded Menu Program franchise outlets at December 27, 2020.
+Added: Total franchise fee income was $175,000 in the third quarter fiscal 2022 as compared to $59,000 in the third quarter fiscal 2021.
+Added: Domestic franchise fee income was $36,000 in the third quarter fiscal 2022 as compared to $34,000 in the third quarter fiscal 2021.
+Added: International franchise fee income was $63,000 in the third quarter fiscal 2022 as compared to $25,000 during the third quarter fiscal 2021.
+Added: We recognized $76,000 in forfeited fees in the third quarter fiscal 2022.
+Added: We did not recognize any forfeited fees in the third quarter fiscal 2021.
+Added: During the third quarter fiscal 2022, twelve franchised outlets opened, as well as fourteen Branded Menu Program outlets.
+Added: Additionally, 39 ghost kitchens opened.
+Added: During the third quarter fiscal 2021, one franchised outlet opened.
+Added: Advertising fund revenue, after eliminating Company contributions, was $479,000 during the third quarter fiscal 2022 and $390,000 during the third quarter fiscal 2021 period.
Costs and Expenses
−Removed: Overall, our cost of sales increased by 103% to $20,131,000 in the second quarter fiscal 2022 as compared to $9,927,000 in the second quarter fiscal 2021.
−Removed: Our gross profit (representing the difference between sales and cost of sales) increased to $3,369,000 or 14.3% of sales during the second quarter fiscal 2022 as compared to $2,765,000 or 21.8% of sales during the second quarter fiscal 2021.
−Removed: Cost of sales in the Branded Product Program increased by 115% to $17,389,000 in the second quarter fiscal 2022 as compared to $8,087,000 in the second quarter fiscal 2021, primarily due to the 92% increase in the volume of product sold as discussed above, as well as a 16% increase in the average cost per pound of our hot dogs.
−Removed: Beginning in July 2021, the cost of hot dogs increased significantly due to ongoing supply chain challenges associated with increased consumer demand as a result of the continued recovery from the COVID-19 pandemic which caused some delays and shortages.
−Removed: This trend continued during the summer months of August and September 2021.
−Removed: We did not make any purchase commitments of beef during the second quarter fiscal 2022 or the second quarter fiscal 2021.
+Added: Overall, our cost of sales increased by 79% to $16,040,000 in the third quarter fiscal 2022 as compared to $8,937,000 in the third quarter fiscal 2021.
+Added: Our gross profit (representing the difference between sales and cost of sales) increased to $2,597,000 or 14% of sales during the third quarter fiscal 2022 as compared to $2,385,000 or 21% of sales during the third quarter fiscal 2021.
+Added: Cost of sales in the Branded Product Program increased by 85% to $14,724,000 in the third quarter fiscal 2022 as compared to $7,948,000 in the third quarter fiscal 2021, primarily due to the 40% increase in the volume of product sold as discussed above, as well as a 31% increase in the average cost per pound of our hot dogs.
+Added: Beginning in July 2021, the cost of hot dogs has increased significantly due to higher costs for beef and beef trimmings, labor, packaging and transportation, as well as supply chain challenges associated with increased consumer demand as a result of the continued recovery from the COVID-19 pandemic.
+Added: We did not make any purchase commitments of beef during the third quarter fiscal 2022 or the third quarter fiscal 2021.
If the cost of beef and beef trimmings increases and we are unable to pass on these higher costs through price increases or otherwise reduce any increase in our costs through the use of purchase commitments, our margins will be adversely impacted.
−Removed: With respect to Company-owned restaurants, our cost of sales during the second quarter fiscal 2022 was $2,742,000 or 61.8% of restaurant sales, as compared to $1,840,000 or 61.5% of restaurant sales during the second quarter fiscal 2021.
−Removed: The increase in cost of sales, during the second quarter of fiscal 2022 was primarily due to the 48% increase in sales as discussed above, in addition to higher commodity costs and restaurant labor costs.
+Added: With respect to Company-owned restaurants, our cost of sales during the third quarter fiscal 2022 was $1,316,000 or 76% of restaurant sales, as compared to $989,000 or 75% of restaurant sales in the third quarter fiscal 2021.
+Added: The increase in cost of sales, during the third quarter of fiscal 2022 was primarily due to the 32% increase in sales as discussed above, in addition to higher commodity costs and restaurant labor costs.
The availability of labor remains a challenge at our Company-owned restaurants and it has required us to remain flexible as it relates to staffing levels and costs.
−Removed: Our labor costs were impacted by the additional increase in minimum wage requirements in New York State which commenced on July 1, 2021.
+Added: Our labor costs were also impacted by the additional increase in minimum wage requirements in New York State which commenced on July 1, 2021.
Our food costs may be impacted by increases in commodity costs, as well as the mix of products that we sell.
−Removed: Restaurant operating expenses were $1,216,000 in the second quarter fiscal 2022 as compared to $1,011,000 in the second quarter fiscal 2021.
−Removed: We incurred higher occupancy expenses of $123,000, higher insurance expenses of $33,000, higher repairs and maintenance expenses of $26,000 and higher delivery charges of $23,000 associated with offsite consumption.
−Removed: Depreciation and amortization, which primarily consists of the depreciation of fixed assets, including leasehold improvements and equipment, was $270,000 in the second quarter fiscal 2022 as compared to $302,000 in the second quarter fiscal 2021.
−Removed: General and administrative expenses increased by $657,000 or 25% to $3,269,000 in the second quarter fiscal 2022 as compared to $2,612,000 in the second quarter fiscal 2021.
−Removed: The increase in general and administrative expenses was primarily attributable to higher corporate payroll expenses of $171,000, a higher incentive compensation accrual of $95,000, higher insurance costs of $46,000 and higher marketing expenses of $162,000.
−Removed: Advertising fund expense, after eliminating Company contributions, was $553,000 during the second quarter fiscal 2022, as compared to $403,000 in the second quarter fiscal 2021.
−Removed: Interest expense of $2,651,000 in both the second quarter fiscal 2022 and the second quarter fiscal 2021 represented accrued interest of $2,478,000 on the 2025 Notes at 6.625% per annum and amortization of debt issuance costs of $173,000.
−Removed: Interest income was $28,000 in the second quarter fiscal 2022 as compared to $103,000 in the second quarter fiscal 2021.
−Removed: Other income, which primarily relates to a sublease of a franchised restaurant, was $5,000 in the second quarter fiscal 2022, as compared to $22,000 in the second quarter fiscal 2021.
+Added: Restaurant operating expenses were $547,000 in the third quarter fiscal 2022 as compared to $759,000 in the third quarter fiscal 2021.
+Added: We incurred lower occupancy expenses of $286,000, which were offset, in part, by higher utility expenses of $22,000, higher insurance expenses of $26,000 and higher delivery charges associated with offsite consumption.
+Added: Depreciation and amortization, which primarily consists of the depreciation of fixed assets, including leasehold improvements and equipment, was $259,000 in the third quarter fiscal 2022 as compared to $288,000 in the third quarter fiscal 2021.
+Added: General and administrative expenses decreased by $278,000 or 8% to $2,975,000 in the third quarter fiscal 2022 as compared to $3,253,000 in the third quarter fiscal 2021.
+Added: The decrease in general and administrative expenses was primarily attributable to lower corporate payroll expenses of $428,000, which were offset, in part, by higher insurance costs of $76,000 and higher marketing and trade show related expenses of $108,000.
+Added: Advertising fund expense, after eliminating Company contributions, was $479,000 during the third quarter fiscal 2022, as compared to $390,000 in the third quarter fiscal 2021.
+Added: Interest expense of $2,650,000 in both the third quarter fiscal 2022 and the third quarter fiscal 2021 represented accrued interest of $2,477,000 on the 2025 Notes and amortization of debt issuance costs of $173,000.
+Added: Interest income was $24,000 for the third quarter fiscal 2022 as compared to $89,000 in the third quarter fiscal 2021.
+Added: Other income, primarily relates to a sublease of a franchised restaurant offset, in part, by a termination fee associated with the Brooklyn Guaranty.
Provision for Income Taxes
−Removed: The income tax provision for the second quarter fiscal 2022 and second quarter fiscal 2021 reflect effective tax rates of 26.5% and 27.7%, respectively.
−Removed: The amount of unrecognized tax benefits at September 26, 2021 was $433,000 all of which would impact Nathan’s effective tax rate, if recognized.
−Removed: As of September 26, 2021 Nathan’s had $293,000 of accrued interest and penalties in connection with unrecognized tax benefits.
−Removed: Nathan’s estimates that its unrecognized tax benefit excluding accrued interest and penalties could be further reduced by up to $19,000 during the fiscal year ending March 27, 2022.
+Added: The income tax provision for the third quarter fiscal 2022 and third quarter fiscal 2021 reflect effective tax rates of 28.8% and 26.6%, respectively.
+Added: During the third quarter fiscal 2022, the Company’s effective tax rate was unfavorably affected by 0.2% due to its return to provision adjustment in connection with the filing of its March 2021 tax returns.
+Added: During the third quarter fiscal 2021, the Company’s effective tax rate was favorably affected by 1.0% due to its return to provision adjustment in connection with the filing of its March 2020 tax returns.
+Added: The amount of unrecognized tax benefits at December 26, 2021 was $445,000 all of which would impact Nathan’s effective tax rate, if recognized.
+Added: As of December 26, 2021, Nathan’s had $307,000 of accrued interest and penalties in connection with unrecognized tax benefits.
+Added: Nathan’s estimates that its unrecognized tax benefits excluding accrued interest and penalties could be further reduced by up to $19,000 during the fiscal year ending March 27, 2022.
Results of Operations
−Removed: Twenty-six weeks ended September 26, 2021 compared to twenty-six weeks ended September 27, 2020
−Removed: Total revenues increased by 62% to $64,197,000 for the twenty-six weeks ended September 26, 2021 (“fiscal 2022 period”) as compared to $39,525,000 for the twenty-six weeks ended September 27, 2020 (“fiscal 2021 period”) as we continue to lap the significant impact of COVID-19 on our results beginning in March 2020.
+Added: Thirty-nine weeks ended December 26, 2021 compared to thirty-nine weeks ended December 27, 2020
+Added: Total revenues increased by 57% to $90,110,000 for the thirty-nine weeks ended December 26, 2021 (“fiscal 2022 period”) as compared to $57,555,000 for the thirty-nine weeks ended December 27, 2020 (“fiscal 2021 period”) as we continued to lap the significant impact of COVID-19 on our results beginning in March 2020.
Total sales increased by 100% to $61,462,000 for the fiscal 2022 period as compared to $30,697,000 for the fiscal 2021 period.
1 unchanged sentence
The sales from our Branded Product Program have increased as certain government mandated restrictions associated with the COVID-19 pandemic have eased with approved vaccines being more widely distributed and administered.
−Removed: As a result, most of our Branded Product Program customers have reopened adhering to state and local guidelines, such as professional sports arenas, amusement parks, shopping malls and movie theaters.
+Added: Most of our Branded Product Program customers have reopened adhering to state and local guidelines, such as professional sports arenas, amusement parks, shopping malls and movie theaters.
During the fiscal 2022 period, the total pounds of hot dogs sold in the Branded Product Program increased by approximately 98% as compared to the fiscal 2021 period.
−Removed: Our average selling prices decreased by approximately 0.3% as compared to the fiscal 2021 period.
+Added: Our average selling prices increased by approximately 7% as compared to the fiscal 2021 period.
Total Company-owned restaurant sales increased by 52% to $9,502,000 during the fiscal 2022 period as compared to $6,247,000 during the fiscal 2021 period.
−Removed: The increase was primarily due to an increase in traffic at our Coney Island locations driven, in part, by the re-opening of Luna Park, the amusement park in Coney Island, as well as the easing of certain government mandated restrictions as a result of the public health measures taken to reduce exposure to the COVID-19 virus compared to the fiscal 2021 period.
+Added: The increase was primarily due to an increase in our average check and an increase in traffic at our Coney Island locations due to the easing of certain government mandated restrictions as a result of the public health measures taken to reduce exposure to the COVID-19 virus compared to the fiscal 2021 period.
+Added: The higher average check was driven by an increase in menu prices and the mix of items sold.
License royalties decreased by 2% to $24,218,000 in the fiscal 2022 period as compared to $24,689,000 in the fiscal 2021 period.
1 unchanged sentence
at retail and foodservice, substantially from sales of hot dogs to WalMart, decreased 3% to $22,161,000 for the 2022 fiscal period as compared to $22,743,000 in the fiscal 2021 period.
−Removed: The decrease is due to a 1.5% increase in retail volume during the fiscal 2022 period which was offset by a 4% decrease in average net selling price as compared to the fiscal 2021 period.
+Added: The decrease is due to a 1.4% decrease in retail volume during the fiscal 2022 period and a 0.6% decrease in average net selling price as compared to the fiscal 2021 period.
The foodservice business earned higher royalties of $84,000 as compared to the fiscal 2021 period.
−Removed: Royalties earned from all other licensing agreements for the manufacture and sale of Nathan’s products increased by $87,000 during the fiscal 2022 period as compared to the fiscal 2021 period primarily due to additional royalties earned on sales of proprietary spices, offset, in part, by lower royalties earned on French fries.
+Added: Royalties earned from all other licensing agreements for the manufacture and sale of Nathan’s products increased by $111,000 during the fiscal 2022 period as compared to the fiscal 2021 period primarily due to additional royalties earned on sales of proprietary spices, cocktail franks and mozzarella sticks, offset, in part, by lower royalties earned on french fries.
Franchise fees and royalties were $2,993,000 in the fiscal 2022 period as compared to $1,087,000 in the fiscal 2021 period.
6 unchanged sentences
Franchise restaurant sales increased to $40,910,000 in the fiscal 2022 period as compared to $15,366,000 in the fiscal 2021 period primarily due to the reopening of a majority of our franchised locations.
−Removed: Comparable domestic franchise sales (consisting of 49 Nathan’s outlets, excluding sales under the Branded Menu Program) were $21,793,000 in the fiscal 2022 period as compared to $7,565,000 in the fiscal 2021 period.         
−Removed: At September 26, 2021, 224 franchised outlets, including domestic, international and Branded Menu Program outlets were operating as compared to 214 franchised outlets, including domestic, international and Branded Menu Program outlets at September 27, 2020.
+Added: Comparable domestic franchise sales (consisting of 52 Nathan’s outlets, excluding sales under the Branded Menu Program) were $30,780,000 in the fiscal 2022 period as compared to $12,213,000 in the fiscal 2021 period.
+Added: At December 26, 2021, 242 franchised outlets, including domestic, international and Branded Menu Program outlets were operating as compared to 215 domestic and international franchised or Branded Menu Program franchise outlets at December 27, 2020.
Total franchise fee income was $412,000 in the fiscal 2022 period as compared to $207,000 in the fiscal 2021 period.
−Removed: Domestic franchise fee income was $73,000 in the fiscal 2022 period compared to $64,000 in the fiscal 2021 period.
+Added: Domestic franchise fee income was $109,000 in the fiscal 2022 period as compared to $98,000 in the fiscal 2021 period.
International franchise fee income was $173,000 in the fiscal 2022 period as compared to $76,000 during the fiscal 2021 period.
−Removed: We recognized $54,000 and $33,000 in forfeited fees in the fiscal 2022 period and fiscal 2021 period, respectively.
−Removed: During the fiscal 2022 period, three new franchised outlets opened, as well as eighteen new Branded Menu Program outlets.
−Removed: Additionally, 125 new virtual kitchens opened.
−Removed: During the fiscal 2021 period, six new traditional franchised outlets opened, including three new Branded Menu Program outlets.
−Removed: Advertising fund revenue, after eliminating Company contributions, was $958,000 during the fiscal 2022 period, as compared to $692,000 during the fiscal 2021 period.
+Added: We recognized $130,000 and $33,000 of forfeited fees in the fiscal 2022 and fiscal 2021 periods, respectively.
+Added: During the fiscal 2022 period, fifteen franchised outlets opened, as well as thirty-two Branded Menu Program outlets.
+Added: Additionally, 164 ghost kitchens opened.
+Added: During the fiscal 2021 period, five franchised outlets opened, including one Branded Menu Program outlet.
+Added: Additionally, 75 ghost kitchens opened during the fiscal 2021 period.
+Added: Advertising fund revenue, after eliminating Company contributions, was $1,437,000 in the fiscal 2022 period, as compared to $1,082,000 during the fiscal 2021 period.
Costs and Expenses
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Cost of sales in the Branded Product Program increased by 127% to $45,343,000 during the fiscal 2022 period as compared to $19,988,000 during the fiscal 2021 period, primarily due to the 98% increase in the volume of product sold as discussed above, as well as a 14% increase in the average cost per pound of our hot dogs.
−Removed: We did not make any purchase commitments of beef during the fiscal 2022 period or the fiscal 2021 period.
+Added: Beginning in July 2021, the cost of hot dogs has increased significantly due to higher costs for beef and beef trimmings, labor, packaging and transportation, as well as supply chain challenges associated with increased consumer demand as a result of the continued recovery from the COVID-19 pandemic.
+Added: We did not make any purchase commitments for beef during the fiscal 2022 and 2021 periods.
If the cost of beef and beef trimmings increases and we are unable to pass on these higher costs through price increases or otherwise reduce any increase in our costs through the use of purchase commitments, our margins will be adversely impacted.
2 unchanged sentences
The availability of labor remains a challenge at our Company-owned restaurants and it has required us to remain flexible as it relates to staffing levels and costs.
−Removed: Our labor costs were impacted by the additional increase in minimum wage requirements in New York State which commenced on July 1, 2021.
+Added: Our labor costs were also impacted by the additional increase in minimum wage requirements in New York State which commenced on July 1, 2021.
Our food costs may be impacted by increases in commodity costs, as well as the mix of products that we sell.
Restaurant operating expenses were $2,874,000 in the fiscal 2022 period as compared to $2,622,000 in the fiscal 2021 period.
−Removed: We incurred higher occupancy expenses of $212,000, higher utility expenses of $31,000, higher insurance expense of $65,000, higher repairs and maintenance expenses of $42,000 and higher delivery charges of $60,000 associated with offsite consumption.
−Removed: Depreciation and amortization, which primarily consists of the depreciation of fixed assets, including leasehold improvements and equipment, was $548,000 in the fiscal 2022 period as compared to $612,000 in the fiscal 2021 period.
+Added: We incurred lower occupancy expenses of $74,000, which were offset by higher utility expenses of $52,000, higher repairs and maintenance expenses of $50,000, higher insurance expenses of $90,000 and higher delivery charges associated with offsite consumption.
+Added: Depreciation and amortization, which primarily consists of the depreciation of fixed assets, including leasehold improvements and equipment, were $807,000 in the fiscal 2022 period as compared to $900,000 in the fiscal 2021 period.
General and administrative expenses increased by $993,000 or 11% to $9,702,000 in the fiscal 2022 period as compared to $8,709,000 in the fiscal 2021 period.
−Removed: The increase in general and administrative expenses was primarily attributable to higher corporate payroll expenses of $241,000, a higher incentive compensation accrual of $354,000, higher insurance costs of $83,000 and higher marketing expenses of $181,000.
−Removed: Advertising fund expense, after eliminating Company contributions, was $958,000 during the fiscal 2022 period, as compared to $692,000 in the fiscal 2021 period.
−Removed: Interest expense of $5,301,000 in both the fiscal 2022 period and the fiscal 2021 period represented accrued interest of $4,955,000 on the 2025 Notes at 6.625% per annum and amortization of debt issuance costs of $346,000.
−Removed: Interest income was $64,000 in the fiscal 2022 period as compared to $220,000 in the fiscal 2021 period.
−Removed: Other income, which primarily relates to a sublease of a franchised restaurant, was $21,000 and $22,000 in the fiscal 2022 and fiscal 2021 periods, respectively.
+Added: The increase in general and administrative expenses was primarily attributable to a higher incentive compensation accrual of $324,000, higher insurance costs of $159,000 and higher marketing and trade show related expenses of $360,000.
+Added: Advertising fund expense, after eliminating Company contributions, was $1,437,000 in the fiscal 2022 period, as compared to $1,082,000 in the fiscal 2021 period.
+Added: Interest expense of $7,951,000 in both the fiscal 2022 period and the fiscal 2021 period represented accrued interest of $7,433,000 on the 2025 Notes and amortization of debt issuance costs of $518,000.
+Added: Interest income was $88,000 for the fiscal 2022 period as compared to $309,000 in the fiscal 2021 period.
+Added: Other income, primarily relates to a sublease of a franchised restaurant offset, in part, by a termination fee associated with the Brooklyn Guaranty.
Provision for Income Taxes
The income tax provision for the fiscal 2022 period and fiscal 2021 period reflect effective tax rates of 28.1% and 27.7%, respectively.
−Removed: The amount of unrecognized tax benefits at September 26, 2021 was $433,000 all of which would impact Nathan’s effective tax rate, if recognized.
−Removed: As of September 26, 2021, Nathan’s had $293,000 of accrued interest and penalties in connection with unrecognized tax benefits.
−Removed: Nathan’s estimates that its unrecognized tax benefit excluding accrued interest and penalties could be further reduced by up to $19,000 during the fiscal year ending March 27, 2022.
+Added: The amount of unrecognized tax benefits at December 26, 2021 was $445,000 all of which would impact Nathan’s effective tax rate, if recognized.
+Added: As of December 26, 2021, Nathan’s had $307,000 of accrued interest and penalties in connection with unrecognized tax benefits.
+Added: Nathan’s estimates that its unrecognized tax benefits excluding accrued interest and penalties could be further reduced by up to $19,000 during the fiscal year ending March 27, 2022.
Off-Balance Sheet Arrangements
−Removed: At September 26, 2021 and September 27, 2020, Nathan’s did not have any open purchase commitments for hot dogs.
+Added: At December 26, 2021 and December 27, 2020, Nathan’s did not have any open purchase commitments for hot dogs.
Nathan’s may enter into purchase commitments in the future as favorable market conditions become available.
Liquidity and Capital Resources          
−Removed: Cash and cash equivalents at September 26, 2021 aggregated $86,756,000, a $5,692,000 increase during the fiscal 2022 period as compared to cash and cash equivalents of $81,064,000 at March 28, 2021.
−Removed: Net working capital increased to $87,267,000 from $80,072,000 at March 28, 2021.
+Added: Cash and cash equivalents at December 26, 2021 aggregated $86,168,000, a $5,104,000 increase during the fiscal 2022 period as compared to cash and cash equivalents of $81,064,000 at March 28, 2021.
+Added: Net working capital decreased to $48,204,000 from $80,072,000 at March 28, 2021 due to the irrevocable notice of redemption of $40,000,000 of the Company’s 2025 Notes and the designation of such 2025 Notes to be redeemed as a current liability.
We paid our semi-annual interest payments for fiscal 2022 of $4,968,750 on May 1, 2021 and November 1, 2021, respectively.
−Removed: We paid our first and second quarter fiscal 2022 dividend payments of $1,440,000 on June 25, 2021 and September 3, 2021, respectively.
−Removed: We expect to pay our third quarter dividend on December 3, 2021.
+Added: We paid our first, second and third quarter fiscal 2022 dividend payments of $1,440,000 on June 25, 2021, September 3, 2021 and December 3, 2021, respectively.
+Added: We expect to pay our fourth quarter dividend on March 4, 2022.
In November 2017, the Company refinanced its then-outstanding 2020 Notes totaling $135.0 million at 10.000% per annum by issuing $150.0 million 2025 Notes at 6.625% per annum.
+Added: On December 15, 2021, the Company announced its intent to complete the partial redemption, in the principal amount of $40,000,000, of the 2025 Notes.
+Added: On January 26, 2022, the Company completed the redemption by paying cash of $41,288,094, inclusive of the redemption premium and accrued interest, and recognized a loss on early extinguishment of approximately $1,400,000 that primarily reflected the redemption premium and the write-off of a portion of previously recorded debt issuance costs.
Please refer to Note Q –
−Removed: Long Term Debt in the accompanying Consolidated Financial Statements, for further discussion of the Redemption.
+Added: Long-Term Debt in the accompanying consolidated interim financial statements for a further discussion regarding the Company’s indebtedness.
The 2025 Notes bear interest at 6.625% per annum, payable semi-annually on May 1 st and November 1 st of each year, beginning on May 1, 2018.
1 unchanged sentence
Cash provided by operations of $9,896,000 in the fiscal 2022 period is primarily attributable to net income of $11,438,000 in addition to other non-cash operating items of $1,395,000, offset by changes in other operating assets and liabilities of $2,937,000.
−Removed: Non-cash operating expenses consist principally of depreciation and amortization of $548,000, amortization of debt issuance costs of $346,000, share-based compensation expense of $58,000, and non-cash rental expense of $208,000.
+Added: Non-cash operating expenses consist principally of depreciation and amortization of $807,000, amortization of debt issuance costs of $518,000, share-based compensation expense of $66,000, and bad debts of $112,000.
In the fiscal 2022 period, accounts and other receivables increased by $2,635,000 due primarily to higher Branded Product Program receivables of $3,705,000, higher receivables due to the Advertising Fund of $890,000 which were offset, in part, by lower franchise and license royalties receivable of $2,232,000.
−Removed: Prepaid expenses and other current assets decreased by $713,000 due primarily to the reduction of prepaid income taxes, insurance and marketing expenses of $280,000, $226,000, and $196,000, respectively.
−Removed: In the fiscal 2022 period, accounts payable, accrued expenses and other current liabilities increased by $830,000 due to an increase in accrued rebates of $328,000 due under the Branded Product Program as a result of higher sales;
−Removed: an increase in accrued rent and occupancy costs of $385,000;
−Removed: as well as increase in accrued corporate income taxes of $621,000.
−Removed: Accounts payable increased by $1,043,000 due principally to seasonally higher product purchases for the Branded Product Program.
−Removed: These increases were partially offset by a decline in accrued payroll and other benefits of $851,000 resulting primarily from the payment of year-end fiscal 2021 incentive compensation and earned deferred revenue of $640,000.
+Added: Prepaid expenses and other current assets decreased by $504,000 due primarily to the reduction of prepaid income taxes and insurance of $280,000 and $131,000, respectively.
+Added: In the fiscal 2022 period, accounts payable, accrued expenses and other current liabilities decreased by $1,395,000 due to lower accrued interest of $2,505,000 as a result of timing of our interest payments on our 2025 Notes, deferred revenue of $841,000 that was earned during the fiscal 2022 period and the reduction in accrued payroll and other benefits of $586,000 primarily from the payment of year-end fiscal 2021 incentive compensation.
+Added: Rebates due under the Branded Product Program were higher by $156,000 due primarily to increased sales as a result of the recovery from the COVID-19 pandemic.
+Added: Accounts payable increased by $1,673,000 due principally to higher product purchases for the Branded Product Program.
Cash used in investing activities was $465,000 in the fiscal 2022 period primarily in connection with capital expenditures incurred for our Branded Product Program and our Coney Island restaurants.
−Removed: Cash used in financing activities of $2,887,000 in the fiscal 2022 period relates to the payments of the Company’s quarterly $0.35 per share cash dividends on June 25, 2021 and September 3, 2021 totaling $2,880,000.
−Removed: During the period from October 2001 through September 26, 2021, Nathan’s purchased 5,254,081 shares of its common stock at a cost of approximately $84,770,000 pursuant to its stock repurchase plans previously authorized by the Board of Directors (the “Board”).
+Added: Cash used in financing activities of $4,327,000 in the fiscal 2022 period relates primarily to the payments of the Company’s quarterly $0.35 per share cash dividends on June 25, 2021, September 3, 2021 and December 3, 2021 totaling $4,320,000.
+Added: During the period from October 2001 through December 26, 2021, Nathan’s purchased 5,254,081 shares of its common stock at a cost of approximately $84,770,000 pursuant to its stock repurchase plans previously authorized by the Board of Directors (the “Board”).
During the fiscal 2022 period, we did not repurchase any shares of common stock.
1 unchanged sentence
In 2016, the Board authorized increases to the sixth stock repurchase plan for the purchase of up to 1,200,000 shares of its common stock on behalf of the Company.
−Removed: As of September 26, 2021, Nathan’s has repurchased 1,066,450 shares at a cost of $37,108,000 under the sixth stock repurchase plan.
−Removed: At September 26, 2021, there were 133,550 shares remaining to be repurchased pursuant to the sixth stock repurchase plan.
+Added: As of December 26, 2021, Nathan’s has repurchased 1,066,450 shares at a cost of $37,108,000 under the sixth stock repurchase plan.
+Added: At December 26, 2021, there were 133,550 shares remaining to be repurchased pursuant to the sixth stock repurchase plan.
The plan does not have a set expiration date.
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During the fiscal 2021 period, the Company repurchased in open market transactions 26,676 shares of the Company’s common stock at an average share price of $56.26 for a total cost of $1,501,000 under the 10b5-1 Plan.
−Removed: Effective June 1, 2020, the Board authorized the repurchase of up to $10,000,000 of the 2025 Notes by the Company (at a price equal to or less than par) from time to time.
−Removed: There is no set time limit on the repurchases.
−Removed: As discussed above, we had cash and cash equivalents at September 26, 2021 aggregating $86,756,000.
+Added: As discussed above, we had cash and cash equivalents at December 26, 2021 aggregating $86,168,000.
Our Board routinely monitors and assesses its cash position and our current and potential capital requirements.
2 unchanged sentences
On June 14, 2019, the Board authorized the increase of its regular quarterly dividend to $0.35 from $0.25.
−Removed: The Company paid its first quarter fiscal 2022 dividend of $1,440,000 on June 25, 2021 and its second quarter fiscal 2022 dividend of $1,440,000 on September 3, 2021.
−Removed: Effective November 5, 2021, the Company declared its third quarter dividend of $0.35 per common share to stockholders of record as of the close of business on November 22, 2021, which is payable on December 3, 2021.
+Added: Effective February 4, 2022, the Board authorized the increase of its regular quarterly dividend to $0.45 from $0.35.
+Added: The Company paid its first quarter fiscal 2022 dividend of $1,440,000 on June 25, 2021, its second quarter fiscal 2022 dividend of $1,440,000 on September 3, 2021 and its third quarter fiscal 2022 dividend of $1,440,000 on December 3, 2021.
+Added: Effective February 4, 2022, the Company declared its fourth quarter dividend of $0.45 per common share to stockholders of record as of the close of business on February 21, 2022, which is payable on March 4, 2022.
We expect that in the future we will make investments in certain existing restaurants, support the growth of the Branded Product and Branded Menu Programs, service the outstanding debt, fund our dividend program and may continue our stock repurchase programs, funding those investments from our operating cash flow.
We may also incur capital and other expenditures or engage in investing activities in connection with opportunistic situations that may arise on a case-by-case basis.
−Removed: During the fiscal year ending March 27, 2022, we will be required to make interest payments of $9,937,500, of which all have been made as of November 1, 2021.
+Added: During the fiscal year ending March 27, 2022, we will be required to make interest payments of $10,563,194 which include its required semi-annual interest payments of $4,968,750 on May 1, 2021 and November 1, 2021, and $625,694 on January 25, 2022 in connection with the partial redemption discussed above.
Management believes that available cash, cash equivalents and cash generated from operations should provide sufficient capital to finance our operations, satisfy our debt service requirements, fund dividend distributions and stock repurchases for at least the next 12 months.
−Removed: At September 26, 2021, we sublet one property to a franchisee that we lease from a third party.
+Added: At December 26, 2021, we sublet one property to a franchisee that we lease from a third party.
We remain contingently liable for all costs associated with this property including:
1 unchanged sentence
We may incur future cash payments with respect to such property, consisting primarily of future lease payments, including costs and expenses associated with terminating such lease.
−Removed: Our contractual obligations primarily consist of the 2025 Notes and the related interest payments, operating leases, and employment agreement with certain executive officers.
+Added: Our contractual obligations primarily consist of the 2025 Notes and the related interest payments, operating leases, and employment agreements with certain executive officers.
These contractual obligations impact our short-term and long-term liquidity and capital resource needs.
−Removed: There have been no material changes in our contractual obligations since March 28, 2021.
+Added: There have been no material changes in our contractual obligations since March 28, 2021 other than as described in connection with the partial redemption of the 2025 Notes discussed above.
On February 27, 2017, a wholly-owned subsidiary of the Company executed a Guaranty of Lease (the “Brooklyn Guaranty”) in connection with its re-franchising of a restaurant located in Brooklyn, New York.
−Removed: The Company is obligated to make payments under the Brooklyn Guaranty in the event of a default by the tenant/franchisee.
−Removed: The Brooklyn Guaranty has an initial term of 10 years and one 5-year renewal option and is limited to 24 months of rent for the first three years of the term.
−Removed: For the remainder of the term, the Brooklyn Guaranty is limited to 12 months of rent plus reasonable costs of collection and attorney’s fees.
−Removed: As of September 26, 2021, Nathan’s has recorded a liability of $113,000 in connection with the Brooklyn Guaranty which does not include potential percentage rent, real estate tax increases, attorney’s fees and other costs as these amounts are not reasonably determinable at this time.
−Removed: Nathan’s has received a personal guaranty from the franchisee for all obligations under the Brooklyn Guaranty.
+Added: The Company was obligated to make payments under the Brooklyn Guaranty in the event of a default by the tenant/franchisee.
+Added: The Brooklyn Guaranty had an initial term of 10 years and one 5-year option and was limited to 24 months of rent for the first three years of the term.
+Added: For the remainder of the term, the Brooklyn Guaranty was limited to 12 months of rent plus reasonable costs of collection and attorney’s fees.
+Added: The Company entered into a termination of lease agreement effective January 15, 2022 (the “Termination Date”).
+Added: As consideration for all outstanding amounts due and payable under the Brooklyn Guaranty, the Company agreed to pay a termination fee in the amount of $75,000, of which the Company agreed to pay 50% or $37,500 and the tenant/franchisee agreed to pay 50% or $37,500.
+Added: The Company paid its share of the termination fee in January 2022.
Inflationary Impact
−Removed: We do not believe that general inflation has materially impacted earnings.
+Added: Historically, we do not believe that general inflation has materially impacted earnings.
However, we have experienced significant volatility in our costs for our hot dogs and certain food products, distribution costs and utilities.
−Removed: Our average cost of hot dogs between April 2021 and September 2021 was approximately 6% higher than between April 2020 and September 2020.
−Removed: Beginning in July 2021, the cost of hot dogs increased significantly due to ongoing supply chain challenges associated with increased consumer demand as a result of the continued recovery from the COVID-19 pandemic which caused some delays and shortages.
−Removed: This trend continued during the summer months of August and September 2021.
+Added: Our average cost of hot dogs between April 2021 and December 2021 was approximately 14% higher than between April 2020 and December 2020.
+Added: Beginning in July 2021, the cost of hot dogs has increased significantly due to higher costs for beef and beef trimmings, labor, packaging and transportation, as well as supply chain challenges associated with increased consumer demand as a result of the continued recovery from the COVID-19 pandemic.
We are unable to predict the future cost of our hot dogs and expect to experience price volatility for our beef products during the remainder of fiscal 2022.
7 unchanged sentences
Effective December 31, 2019, the minimum wage was $15.00 in New York City and increased to $13.75 per hour for the remainder of New York State.
−Removed: The minimum hourly rate of pay for the remainder of New York State increased to $14.50 on Dec.
−Removed: 31, 2020, and increased to $15.00 on July 1, 2021.
+Added: The minimum hourly rate of pay for the remainder of New York State increased to $14.50 on December 31, 2020 and increased to $15.00 on July 1, 2021.
All of Nathan’s Company-owned restaurants are within New York State and have been affected by this new legislation.
−Removed: We may attempt to offset the effects of wage inflation, at least in part, through periodic menu price increases.
−Removed: However, no assurance can be given that we will be able to offset these wage increases in the future.
−Removed: Effective November 27, 2017, the City of New York Fair Work Week Legislation package of bills took effect that covers City of New York fast food workers by giving them more predictable work schedules.
−Removed: A key component of the package is a requirement that fast food restaurants schedule their workers at least two weeks in advance or pay employees between $10 to $75 per scheduling change, depending on the situation.
−Removed: Due to Nathan’s dependency on weather conditions at our two Coney Island beach locations during the summer season, we are unable to determine the potential impact on our results of operations, which could be material.
−Removed: We believe that we have been able to implement tools to minimize the financial impact of this legislation.
Continued increases in labor, food and other operating expenses, including health care, could adversely affect our operations and those of the restaurant industry and we might have to further reconsider our pricing strategy as a means to offset reduced operating margins.
8 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.