18 unchanged sentences
the impact of the COVID-19 pandemic;
−Removed: the status of our licensing and supply agreements, including our licensing revenue and overall profitability being substantially dependent on our agreement with John Morrell & Co., a wholly-owned subsidiary of Smithfield Foods, Inc., the impact of our debt service and repayment obligations under the 2025 Notes, including the effect on our ability to fund working capital, operations and make new investments;
−Removed: economic (including inflationary pressures like those currently being experienced), weather (including the impact on the supply of cattle and the impact on sales at our restaurants, particularly during the summer months), and change in the price of beef trimmings;
−Removed: our ability to pass on the cost of any price increases in beef and beef trimmings, or labor costs;
+Added: increases in the cost of food and paper products;
+Added: the impact of price increases on customer visits;
+Added: the status of our licensing and supply agreements, including our licensing revenue and overall profitability being substantially dependent on our agreement with Smithfield Foods, Inc.;
+Added: the impact of our debt service and repayment obligations under the 2025 Notes (as defined below), including the effect on our ability to fund working capital, operations and make investments;
+Added: economic (including inflationary pressures like those currently being experienced);
+Added: weather (including the impact on sales at our restaurants particularly during the summer months), and changes in the price of beef and beef trimmings;
+Added: our ability to pass on the cost of any price increases in beef and beef trimmings;
legislative and business conditions;
−Removed: the collectibility of receivables;
+Added: the collectability of receivables;
changes in consumer tastes;
the continued viability of Coney Island as a destination location for visitors;
−Removed: the ability to continue to attract franchisees;
+Added: the ability to attract franchisees;
the impact of the minimum wage legislation on labor costs in New York State or other changes in labor laws, including regulations which could render a franchisor as a “joint employee”
23 unchanged sentences
trademarks through several different channels of distribution.
−Removed: Historically, our business has been the operation and franchising of quick-service restaurants featuring Nathan’s World Famous Beef Hot Dogs, crinkle-cut French-fried potatoes, and a variety of other menu offerings.
−Removed: Our Company-owned and franchised units operate under the name “Nathan’s Famous,”
+Added: Historically, our business has been the operation and franchising of quick-service restaurants featuring Nathan’s World Famous Beef Hot Dogs, crinkle-cut French fries, and a variety of other menu offerings.
+Added: Our Company-owned and franchised restaurants operate under the name “Nathan’s Famous,”
the name first used at our original Coney Island restaurant opened in 1916.
3 unchanged sentences
Our Branded Menu Program is a limited franchise program, under which foodservice operators may sell a greater variety of Nathan’s Famous menu items than under the Branded Product Program.
−Removed: 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 kitchens).
−Removed: At December 25, 2022, our restaurant system, excluding virtual kitchens, consisted of 233 Nathan’s franchised units, including 120 Branded Menu Program units, and four Company-owned units (including one seasonal unit), located in 17 states, and 12 foreign countries (including 2 Branded Menu units in Ukraine which are temporarily closed as a result of the Russia-Ukraine conflict).
−Removed: Our virtual kitchens in operation consisted of 226 units located in 19 states and four foreign countries.
−Removed: At December 26, 2021, our restaurant system, excluding virtual 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: Our virtual kitchens in operation consisted of 277 units located in 20 states and six foreign countries.
−Removed: Our primary focus is to expand the market penetration of the Nathan’s Famous brand by 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 kitchens.
−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: While we do not expect to significantly increase the number of Company-owned units, 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.
−Removed: We continue to seek opportunities to drive sales in a variety of ways as we adapt to the ever-changing consumer and environment.
−Removed: As described in our Annual Report on Form 10-K for the year ended March 27, 2022, our future results could be materially impacted by many developments including the impact of the COVID-19 pandemic on our business, our dependence on Smithfield Foods, Inc.
+Added: 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, 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 kitchens).
+Added: At June 25, 2023, our restaurant system, excluding virtual kitchens, consisted of 235 locations, including 121 Branded Menu Program locations, and four Company-owned restaurants (including one seasonal unit), located in 17 states, and 13 foreign countries (including 2 Branded Menu Program locations in Ukraine which are temporarily closed as a result of the Russia-Ukraine conflict.) Our virtual kitchens in operation consisted of 263 locations in 19 states and 6 foreign countries.
+Added: At June 26, 2022, our restaurant system, excluding virtual kitchens, consisted of 238 locations, including 121 Branded Menu Program locations, and four Company-owned restaurants (including one seasonal unit), located in 18 states, and 12 foreign countries.
+Added: Our virtual kitchens in operation consisted of 196 locations in 15 states and 5 foreign countries.
+Added: Our primary focus is to expand the market penetration of the Nathan’s Famous brand by 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 restaurants and franchised locations, including virtual kitchens.
+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 revenues and profits.
+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.
+Added: We continue to seek opportunities to drive sales in a variety of ways as we adapt to the ever-changing consumer and business climate.
+Added: As described in our Annual Report on Form 10-K for the year ended March 26, 2023, our future results could be materially impacted by many developments including our dependence on Smithfield Foods, Inc.
as our principal supplier and the dependence of our licensing revenue and overall profitability on our agreement with Smithfield Foods, Inc.
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 due to inflationary pressures compared to earlier periods.
−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 Company’s 10.000% Senior Secured Notes due 2020, paid a portion of the special $5.00 cash dividend and used the remaining proceeds for general corporate purposes, including working capital.
+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 a special $5.00 cash dividend and used the remaining proceeds for general corporate purposes, including working capital.
On January 26, 2022, the Company redeemed $40,000,000 in aggregate principal amount of its 2025 Notes.
−Removed: As a result of the partial redemption, the Company expects to reduce its future cash interest expense by $2,650,000 per annum.
+Added: Subsequently, on March 21, 2023, the Company redeemed an additional $30,000,000 in aggregate principal amount of its 2025 Notes.
+Added: $80,000,000 of the 2025 Notes were outstanding as of June 25, 2023. On May 1, 2023, the Company paid its first semi-annual interest payment of fiscal 2024.
+Added: Our future results may be impacted by our interest obligations under the 2025 Notes.
+Added: As a result of the outstanding balance of the 2025 Notes, the Company expects to incur annual interest expense of $5,300,000 and annual amortization costs of approximately $369,000.
As described below, we are also including information relating to EBITDA and Adjusted EBITDA, which are non-GAAP financial measures, in this Form 10-Q quarterly report.
See “Reconciliation of GAAP and Non-GAAP Measures.”
−Removed: Impact of COVID-19 Pandemic
−Removed: In March 2020, the World Health Organization declared a global pandemic related to the outbreak of a novel strain of coronavirus, designated COVID-19.
−Removed: COVID-19 related pressures have continued during the thirty-nine weeks ended December 25, 2022 (“fiscal 2023 period”), although to a lesser extent than during the thirty-nine weeks ended December 26, 2021 (“fiscal 2022 period”).
−Removed: As approved vaccines continue to be distributed and administered, state and local restrictions continue to be lessened.
−Removed: Despite the fact that vaccines are now widely available across the country, there have been increases in diagnosed cases reported due to the spread of additional COVID-19 variants.
−Removed: Customer traffic at our Company-owned restaurants, in particular at Coney Island, during the fiscal 2023 period increased by approximately 12% over the fiscal 2022 period.
−Removed: Additionally, we experienced increased customer traffic within our franchise system, including airport locations;
−Removed: highway travel plazas;
−Removed: shopping malls;
−Removed: movie theaters;
−Removed: and casino locations, primarily in Las Vegas, Nevada.
−Removed: The increase in customer traffic translated into higher Company-owned restaurant sales and higher franchise fees and royalties during the fiscal 2023 period than during the fiscal 2022 period.
−Removed: Additionally, as the level of comfort of consumers gathering in social settings increases and travel continues to increase, our Branded Product Program customers, including professional sports arenas, amusement parks, shopping malls and movie theaters have experienced stronger attendance contributing to higher sales.
−Removed: We continue to follow guidance from health officials in determining the appropriate restrictions, if any, to place within our operations.
−Removed: Our Company-owned and franchised restaurants could be disrupted by COVID-19 related employee absences or due to changes in the availability and cost of labor.
−Removed: There continues to be uncertainty around the COVID-19 pandemic as variants including Omicron and others have caused increases in the number of reported COVID-19 cases.
−Removed: We cannot predict the ultimate duration, scope and severity of the COVID-19 pandemic or its ultimate impact on our business in the short or long-term.
−Removed: The ongoing economic impacts and health concerns associated with the pandemic may continue to affect consumer behavior, spending levels, and may result in reduced customer traffic and consumer spending trends that may adversely impact our financial condition and results of operations.
−Removed: We remain in regular contact with our major suppliers and to date we have not experienced significant disruptions in our supply chain;
−Removed: however, we have experienced rising transportation costs, rising costs of hot dogs due to the higher costs for beef and beef trimmings, and other food costs and paper products, which could continue to increase as the impact of COVID-19 continues across the supply chain.
−Removed: The ongoing effects of COVID-19 and its variants, along with other macroeconomic events could lead to further wage inflation, product cost inflation and supply chain challenges during the remainder of fiscal 2023 and may impact our operations.
−Removed: In general, we have been able to offset cost increases resulting from inflation by increasing prices.
+Added: Recent events
+Added: Inflationary Factors
+Added: The Company continues to experience rising labor costs, as well as higher commodity prices, including beef and beef trimmings.
+Added: We expect this trend to continue throughout the remainder of fiscal year 2024.
+Added: In general, we have been able to offset cost increases resulting from inflation by increasing prices and adjusting product mix.
We continue to monitor these inflationary pressures and will continue to implement mitigation plans as needed.
+Added: Inherent volatility in commodity markets, including beef and beef trimmings, could have a significant impact on our results of operations.
Delays in implementing price increases, competitive pressures, consumer spending levels and other factors may limit our ability to implement further price increases in the future.
+Added: COVID-19 Pandemic
+Added: The COVID-19 pandemic had an adverse effect on the Company and the economy.
+Added: The impacts were most severe in fiscal 2021, improved in fiscal 2022, and had a minimal effect in fiscal 2023.
+Added: While the disruptions to our business from the COVID-19 pandemic have subsided, the resurgence of COVID-19 or variants, as well as an outbreak of other widespread health epidemics or pandemics, may disrupt our operations in the future, including employee absences and changes in the availability and cost of labor.
Critical Accounting Policies and Estimates
−Removed: As discussed in our Form 10-K for the fiscal year ended March 27, 2022, the discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in conformity with accounting principles generally accepted in the United States of America.
+Added: As discussed in our Form 10-K for the fiscal year ended March 26, 2023, the discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”).
The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the amounts of assets, liabilities, revenues and expenses reported in those consolidated financial statements.
4 unchanged sentences
and income taxes (including uncertain tax positions).
−Removed: Since March 27, 2022, there have been no material changes in our critical accounting policies or significant changes to the assumptions and estimates related to them.
−Removed: New Accounting Standard Not Yet Adopted          
−Removed: Please refer to Note B of the preceding consolidated financial statements for our discussion of the New Accounting Standard Not Yet Adopted.
+Added: As discussed in Note B, the Company adopted ASU 2016-13, “
+Added: Financial Instruments –
+Added: Credit Losses (Topic 326):
+Added: Measurement of Credit Losses on Financial Instruments, ”
+Added: effective March 27, 2023.
+Added: There have been no other significant changes to the Company’s accounting policies subsequent to March 26, 2023.
+Added: Adoption of New Accounting Standard          
+Added: Please refer to Note B of the preceding consolidated financial statements for our discussion of the Adoption of the New Accounting Standard.
EBITDA and Adjusted EBITDA
2 unchanged sentences
The following is provided to supplement certain Non-GAAP financial measures.
−Removed: In addition to disclosing results that are determined in accordance with Generally Accepted Accounting Principles in the United States of America ("US GAAP"), the Company has provided EBITDA, a non-GAAP financial measure, which is defined as net income excluding (i) interest expense;
+Added: In addition to disclosing results that are determined in accordance with US GAAP, the Company has provided EBITDA, a non-GAAP financial measure, which is defined as net income excluding (i) interest expense;
(ii) provision for income taxes and (iii) depreciation and amortization expense.
−Removed: The Company has also provided Adjusted EBITDA, a non-GAAP financial measure, which is defined as EBITDA, excluding (i) the loss on disposal of property and equipment and (ii) share-based compensation that the Company believes will impact the comparability of its results of operations.
+Added: The Company has also provided Adjusted EBITDA, a non-GAAP financial measure, which is defined as EBITDA, excluding share-based compensation that the Company believes will impact the comparability of its results of operations.
EBITDA and Adjusted EBITDA are not recognized terms under US GAAP and should not be viewed as alternatives to net income or other measures of financial performance or liquidity in conformity with US GAAP.
3 unchanged sentences
Thirteen weeks ended
−Removed: Thirty-nine weeks ended
+Added: June 25, 2023
+Added: June 26, 2022
Interest expense
1 unchanged sentence
Depreciation and amortization
−Removed: Loss on disposal of property and equipment
Share-based compensation
1 unchanged sentence
Our routine business pattern is affected by seasonal fluctuations, including the effects of weather and economic conditions.
−Removed: Historically, sales from our Company-owned locations, principally at Coney Island, and franchised restaurants from which franchised royalties are earned and the Company’s earnings have been highest during our first two fiscal quarters, with the fourth quarter representing the slowest period.
−Removed: Additionally, revenues from our Branded Product Program and retail licensing program generally follow similar seasonal fluctuations, although not to the same degree.
+Added: Historically, sales from our Company-owned restaurants, principally at Coney Island, and franchised restaurants from which franchised royalties are earned and the Company’s earnings have been highest during our first two fiscal quarters, with the fourth quarter representing the slowest period.
+Added: Additionally, revenues from our Branded Product Program, Branded Menu Program and retail licensing program generally follow similar season fluctuations, although not to the same degree.
Working capital requirements may vary throughout the year to support these seasonal patterns.
−Removed: Due to the above seasonal factors, as well as the COVID-19 pandemic and inflationary pressures, our results of operations for the thirteen and thirty-nine weeks ended December 25, 2022 are not necessarily indicative of those for a full fiscal year.
+Added: Due to the above seasonal factors, as well as inflationary pressures, our results of operations for the thirteen weeks ended June 25, 2023 are not necessarily indicative of those for a full fiscal year.
Results of Operations
                  
−Removed: Thirteen weeks ended December 25, 2022 compared to thirteen weeks ended December 26, 2021
−Removed: Total revenues increased by 1% to $26,154,000 for the thirteen weeks ended December 25, 2022 (“third quarter fiscal 2023”) as compared to $25,913,000 for the thirteen weeks ended December 26, 2021 (“third quarter fiscal 2022”).
−Removed: Total sales decreased by 2% to $18,340,000 for the third quarter fiscal 2023 as compared to $18,637,000 for the third quarter fiscal 2022 which included foodservice sales from the Branded Product Program decreasing by 1% to $16,661,000 for the third quarter fiscal 2023 as compared to sales of $16,901,000 for the third quarter fiscal 2022.
−Removed: During the third quarter fiscal 2023, the volume of hot dogs sold in the Branded Product Program increased by approximately 3% as compared to the third quarter fiscal 2022.
−Removed: Our average selling prices decreased by approximately 3% as compared to the third quarter fiscal 2022.
−Removed: Total Company-owned restaurant sales decreased by 3% to $1,679,000 during the third quarter fiscal 2023 as compared to $1,736,000 during the third quarter fiscal 2022.
−Removed: The decrease was primarily due to a decline in traffic at our Yonkers, New York and Oceanside, New York locations which were partially offset by an increase in traffic at our Coney Island locations.
−Removed: License royalties increased by 8% to $6,337,000 in the third quarter fiscal 2023 as compared to $5,878,000 in the third quarter fiscal 2022.
−Removed: Total royalties earned on sales of hot dogs from our license agreement with Smithfield Foods, Inc.
−Removed: at retail and foodservice, including sales of hot dogs to WalMart, increased 5% to $5,489,000 for the third quarter fiscal 2023 as compared to $5,239,000 in the third quarter fiscal 2022.
−Removed: The increase is primarily due to a 7% increase in retail volume as compared to the third quarter fiscal 2022, which was offset by a 3% decline in average net selling price.
−Removed: The foodservice business earned higher royalties of $63,000 as compared to the third quarter fiscal 2022.
−Removed: Royalties earned from all other licensing agreements for the manufacture and sale of Nathan’s products increased by $209,000 during the third quarter fiscal 2023 as compared to the third quarter fiscal 2022 primarily due to additional royalties earned on sales of French fries and seasonings.
−Removed: Franchise fees and royalties were $976,000 in the third quarter fiscal 2023 as compared to $919,000 in the third quarter fiscal 2022.
−Removed: Total royalties were $829,000 in the third quarter fiscal 2023 as compared to $744,000 in the third quarter fiscal 2022.
−Removed: Royalties earned under the Branded Menu program were $151,000 in the third quarter fiscal 2023 as compared to $101,000 in the third quarter fiscal 2022.
−Removed: Royalties earned under the Branded Menu Program are not based upon a percentage of restaurant sales but are based upon product purchases.
−Removed: Virtual kitchen royalties were $30,000 in the third quarter fiscal 2023 as compared to $88,000 in the third quarter fiscal 2022.
−Removed: Traditional franchise royalties were $648,000 in the third quarter fiscal 2023 as compared to $555,000 in the third quarter fiscal 2022.
−Removed: Franchise restaurant sales increased to $14,761,000 in the third quarter fiscal 2023 as compared to $12,280,000 in the third quarter fiscal 2022 primarily due to higher sales at airport locations;
−Removed: highway travel plazas;
−Removed: shopping malls;
−Removed: movie theaters;
−Removed: and casino locations, primarily in Las Vegas, Nevada.
−Removed: Comparable domestic franchise sales (consisting of 61 Nathan’s units, excluding sales under the Branded Menu Program) were $12,369,000 in the third quarter fiscal 2023 as compared to $9,811,000 in the third quarter fiscal 2022.
−Removed: At December 25, 2022, 233 franchised units, including domestic, international and Branded Menu Program units were operating as compared to 242 franchised units, including domestic, international franchised and Branded Menu Program units at December 26, 2021.
−Removed: Total franchise fee income was $147,000 in the third quarter fiscal 2023 as compared to $175,000 in the third quarter fiscal 2022.
−Removed: Domestic franchise fee income was $27,000 in the third quarter fiscal 2023 as compared to $36,000 in the third quarter fiscal 2022.
−Removed: International franchise fee income was $61,000 in the third quarter fiscal 2023 as compared to $63,000 during the third quarter fiscal 2022.
−Removed: We recognized $59,000 and $76,000 in forfeited fees in the third quarter fiscal 2023 and the third quarter fiscal 2022, respectively.
−Removed: During the third quarter fiscal 2023, two franchised units opened, as well as two Branded Menu Program units.
−Removed: Additionally, 9 virtual kitchens opened.
−Removed: During the third quarter fiscal 2022, twelve franchised units opened, as well as fourteen Branded Menu Program units.
−Removed: Additionally, 39 virtual kitchens opened.
−Removed: Advertising fund revenue, after eliminating Company contributions, was $501,000 during the third quarter fiscal 2023 as compared to $479,000 during the third quarter fiscal 2022 period.
−Removed: Costs and Expenses
−Removed: Overall, our cost of sales decreased by 7% to $14,925,000 in the third quarter fiscal 2023 as compared to $16,040,000 in the third quarter fiscal 2022.
−Removed: Our gross profit (representing the difference between sales and cost of sales) increased to $3,415,000 or 19% of sales during the third quarter fiscal 2023 as compared to $2,597,000 or 14% of sales during the third quarter fiscal 2022.
−Removed: Cost of sales in the Branded Product Program decreased by 7% to $13,681,000 in the third quarter fiscal 2023 as compared to $14,724,000 in the third quarter fiscal 2022, primarily due to the 9% decrease in the average cost per pound of our hot dogs, partially offset by the 3% increase in the volume of hot dogs sold as discussed above.
−Removed: Beef prices declined during the third quarter fiscal 2023 as compared to the significantly higher commodity costs experienced during the third quarter fiscal 2022.
−Removed: We did not make any purchase commitments of beef during the third quarter fiscal 2023 or the third quarter fiscal 2022.
−Removed: 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 third quarter fiscal 2023 was $1,244,000 or 74% of restaurant sales as compared to $1,316,000 or 76% of restaurant sales in the third quarter fiscal 2022.
−Removed: The decrease in cost of sales during the third quarter of fiscal 2023 was primarily due to the 3% decrease in sales as discussed above.
−Removed: Food and paper costs as a percentage of Company-owned restaurant sales were 31%, down from 32% in the comparable period of the prior year.
−Removed: Labor and related expenses as a percentage of Company-owned restaurant sales were 43%, down from 44% in the comparable period in the prior year.
−Removed: 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: Restaurant operating expenses were $932,000 in the third quarter fiscal 2023 as compared to $547,000 in the third quarter fiscal 2022.
−Removed: We incurred higher occupancy expenses of $324,000, higher utility expenses of $18,000, and higher insurance costs of $22,000.
−Removed: Depreciation and amortization, which primarily consists of the depreciation of fixed assets, including leasehold improvements and equipment, was $303,000 in the third quarter fiscal 2023 as compared to $259,000 in the third quarter fiscal 2022.
−Removed: General and administrative expenses increased by $186,000 or 6% to $3,161,000 in the third quarter fiscal 2023 as compared to $2,975,000 in the third quarter fiscal 2022.
−Removed: The increase in general and administrative expenses was primarily attributable to higher compensation expenses of $287,000 offset, in part, by a decrease in travel expenses of $37,000 and a reduction in bad debt expense of $52,000.
−Removed: Advertising fund expense, after eliminating Company contributions, was $501,000 during the third quarter fiscal 2023 as compared to $479,000 in the third quarter fiscal 2022.
−Removed: Interest expense of $1,944,000 in the third quarter fiscal 2023 represented interest expense of $1,817,000 on the 2025 Notes and amortization of debt issuance costs of $127,000.
−Removed: Interest expense of $2,650,000 in the third quarter fiscal 2022 represented interest expense of $2,477,000 on the 2025 Notes and amortization of debt issuance costs of $173,000.
−Removed: Interest income was $158,000 for the third quarter fiscal 2023 as compared to $24,000 in the third quarter fiscal 2022.
−Removed: Other expense, net was $60,000 in the third quarter fiscal 2023 which primarily relates to a loss on disposal of assets for capitalized software no longer in use of $101,000 offset by sublease income from a franchised restaurant.
−Removed: Provision for Income Taxes
−Removed: The effective income tax rate for the third quarter fiscal 2023 was 27.3% compared to 28.8% in the third quarter fiscal 2022.
−Removed: The effective income tax rate for the third quarter fiscal 2023 reflected income tax expense of $1,223,000 recorded on $4,486,000 of pre-tax income.
−Removed: The effective income tax rate for the third quarter fiscal 2022 reflected income tax expense of $860,000 recorded on $2,990,000 of pre-tax income.
−Removed: The effective tax rates are higher than the statutory rates primarily due to state and local taxes.
−Removed: The amount of unrecognized tax benefits at December 25, 2022 was $437,000 all of which would impact the Company’s effective tax rate, if recognized.
−Removed: As of December 25, 2022, the Company had approximately $315,000 accrued for the payment of 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 $16,000 during the fiscal year ending March 26, 2023.
−Removed: Results of Operations
−Removed: Thirty-nine weeks ended December 25, 2022 compared to thirty-nine weeks ended December 26, 2021
−Removed: Total revenues increased by 15% to $103,371,000 for the thirty-nine weeks ended December 25, 2022 (“fiscal 2023 period”) as compared to $90,110,000 for the thirty-nine weeks ended December 26, 2021 (“fiscal 2022 period”).
−Removed: Total sales increased by 18% to $72,535,000 for the fiscal 2023 period as compared to $61,462,000 for the fiscal 2022 period which included foodservice sales from the Branded Product Program increasing by 19% to $61,862,000 for the fiscal 2023 period as compared to sales of $51,960,000 for the fiscal 2022 period.
−Removed: During the fiscal 2023 period, the volume of hot dogs sold increased by approximately 14% as compared to the fiscal 2022 period.
−Removed: Our average selling prices increased by approximately 5% as compared to the fiscal 2022 period.
−Removed: Total Company-owned restaurant sales increased by 12% to $10,673,000 during the fiscal 2023 period as compared to $9,502,000 during the fiscal 2022 period.
−Removed: The increase was primarily due to an increase in traffic at our Coney Island locations.
+Added: Thirteen weeks ended June 25, 2023 compared to thirteen weeks ended June 26, 2022
+Added: Total revenues increased by 6% to $41,985,000 for the thirteen weeks ended June 25, 2023 (“fiscal 2024 period”) as compared to $39,720,000 for the thirteen weeks ended June 26, 2022 (“fiscal 2023 period”).
+Added: Total sales increased by 7% to $28,828,000 for the fiscal 2024 period as compared to $26,894,000 for the fiscal 2023 period which included foodservice sales from the Branded Product Program increasing by 9% to $25,170,000 for the fiscal 2024 period as compared to sales of $23,171,000 in the fiscal 2023 period.
+Added: During the fiscal 2024 period, the volume of hot dogs sold in the Branded Product Program increased by approximately 2% as compared to the fiscal 2023 period.
+Added: Our average selling prices, which are partially correlated to the beef markets, increased by approximately 5% as compared to the fiscal 2023 period.
+Added: Total Company-owned restaurant sales decreased by 2% to $3,658,000 during the fiscal 2024 period as compared to $3,723,000 during the fiscal 2023 period.
+Added: The decrease was primarily due to lower sales at our Coney Island locations as a result of unfavorable weather conditions during June 2023.
License royalties increased by 3% to $11,658,000 in the fiscal 2024 period as compared to $11,314,000 in the fiscal 2023 period.
Total royalties earned on sales of hot dogs from our license agreement with Smithfield Foods, Inc.
−Removed: at retail and foodservice, including sales of hot dogs to WalMart, increased 6% to $23,594,000 for the 2023 fiscal period as compared to $22,161,000 in the fiscal 2022 period.
−Removed: The increase is due to a 9% increase in average net selling price as compared to the fiscal 2022 period which was offset, in part, by a 3% decrease in retail volume.
+Added: at retail and foodservice, increased 3% to $10,796,000 in the fiscal 2024 period as compared to $10,450,000 in the fiscal 2023 period.
+Added: The increase is due to a 3% increase in retail volume, as well as a 0.4% increase in average net selling price as compared to the fiscal 2023 period.
The foodservice business earned higher royalties of $54,000 as compared to the fiscal 2023 period.
−Removed: Royalties earned from all other licensing agreements for the manufacture and sale of Nathan’s products increased by $413,000 during the fiscal 2023 period as compared to the fiscal 2022 period primarily due to additional royalties earned on sales of French fries, cocktail franks, mozzarella sticks, pickles and seasonings.
+Added: Royalties earned from all other licensing agreements for the manufacture and sale of Nathan’s products decreased by $2,000 during the fiscal 2024 period as compared to the fiscal 2023 period primarily due to lower royalties earned on sales of pickles, offset by higher royalties earned on sales of cocktail franks and mozzarella sticks.
Franchise fees and royalties were $1,075,000 in the fiscal 2024 period as compared to $1,093,000 in the fiscal 2023 period.
6 unchanged sentences
highway travel plazas;
−Removed: shopping malls;
−Removed: movie theaters;
−Removed: and casino locations, primarily in Las Vegas, Nevada.
−Removed: Comparable domestic franchise sales (consisting of 63 Nathan’s units, excluding sales under the Branded Menu Program) were $40,192,000 in the fiscal 2023 period as compared to $31,434,000 in the fiscal 2022 period.
−Removed: At December 25, 2022, 233 franchised units, including domestic, international and Branded Menu Program units were operating as compared to 242 franchised units, including domestic, international and Branded Menu Program franchise units at December 26, 2021.
+Added: shopping malls and movie theaters.
+Added: Comparable domestic franchise sales (consisting of 63 Nathan’s franchised restaurants, excluding sales under the Branded Menu Program) were $14,481,000 in the fiscal 2024 period as compared to $13,250,000 in the fiscal 2023 period.         
+Added: At June 25, 2023, 235 franchised locations, including domestic, international and Branded Menu Program units were operating as compared to 238 franchised locations, including domestic, international and Branded Menu Program units at June 26, 2022.
Total franchise fee income was $95,000 in the fiscal 2024 period as compared to $192,000 in the fiscal 2023 period.
1 unchanged sentence
International franchise fee income was $60,000 in the fiscal 2024 period as compared to $70,000 during the fiscal 2023 period.
−Removed: We recognized $208,000 and $130,000 in forfeited fees in the fiscal 2023 period and fiscal 2022 period, respectively.
−Removed: During the fiscal 2023 period, six franchised units opened, as well as two Branded Menu Program units.
−Removed: Additionally, 67 virtual kitchens opened.
−Removed: During the fiscal 2022 period, fifteen franchised units opened, as well as thirty-two Branded Menu Program units.
+Added: We recognized $8,000 and $93,000 in forfeited fees in the fiscal 2024 and fiscal 2023 periods, respectively.
+Added: During the fiscal 2024 period, seven franchise locations opened and four franchise locations closed.
+Added: Additionally, four virtual kitchens opened.
+Added: During the fiscal 2023 period, three franchise locations opened and four franchise locations closed.
Additionally, 15 virtual kitchens opened.
−Removed: Advertising fund revenue, after eliminating Company contributions, was $1,504,000 in the fiscal 2023 period, as compared to $1,437,000 during the fiscal 2022 period.
+Added: Advertising fund revenue, after eliminating Company contributions, was $424,000 in the fiscal 2024 period as compared to $419,000 in the fiscal 2023 period.
Costs and Expenses
Overall, our cost of sales increased by 9% to $24,684,000 in the fiscal 2024 period as compared to $22,667,000 in the fiscal 2023 period.
−Removed: Our gross profit (representing the difference between sales and cost of sales) increased to $13,045,000 or 18% of sales during the fiscal 2023 period as compared to $9,926,000 or 16% of sales during the fiscal 2022 period.
−Removed: Cost of sales in the Branded Product Program increased by 17% to $53,056,000 during the fiscal 2023 period as compared to $45,343,000 during the fiscal 2022 period, primarily due to the 14% increase in the volume of hot dogs sold as discussed above, as well as a 3% increase in the average cost per pound of our hot dogs.
−Removed: We continue to experience commodity inflation, including beef and beef trimmings.
−Removed: We did not make any purchase commitments of beef during the fiscal 2023 period or the fiscal 2022 period.
+Added: Our gross profit (representing the difference between sales and cost of sales) decreased to $4,144,000 or 14% of sales during the fiscal 2024 period as compared to $4,227,000 or 16% of sales during the fiscal 2023 period.
+Added: Cost of sales in the Branded Product Program increased by 11% to $22,568,000 in the fiscal 2024 period as compared to $20,400,000 in the fiscal 2023 period, primarily due to the 2% increase in the volume of hot dogs sold as discussed above, as well as an 8% increase in the average cost per pound of our hot dogs.
+Added: We continue to experience pricing pressures on commodities, including beef and beef trimmings.
+Added: We did not make any purchase commitments of beef during the fiscal 2024 and 2023 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.
With respect to Company-owned restaurants, our cost of sales during the fiscal 2024 period was $2,116,000 or 58% of restaurant sales, as compared to $2,267,000 or 61% of restaurant sales in the fiscal 2023 period.
−Removed: The increase in cost of sales during the fiscal 2023 period was primarily due to the 12% increase in sales discussed above.
−Removed: The decrease in cost of sales, as a percent of total restaurant sales, was due to an increase in customer counts driving higher sales which were offset by higher commodity costs and restaurant labor costs.
+Added: The decrease in cost of sales during the fiscal 2024 period was primarily due to the 2% decrease in sales discussed above.
Food and paper costs as a percentage of Company-owned restaurant sales were 28%, down from 29% in the comparable period of the prior year.
−Removed: Labor and related expenses as a percentage of Company-owned restaurant sales were 31%, down from 35% in the comparable period in the prior year due to labor wage increases as a result of competitive pressures, offset by higher sales.
+Added: Labor and related expenses as a percentage of Company-owned restaurant sales were 30%, down from 32% in the comparable period in the prior year due to tighter management and staffing stabilization.
Restaurant operating expenses were $1,043,000 in the fiscal 2024 period as compared to $1,032,000 in the fiscal 2023 period.
−Removed: We incurred higher occupancy expenses of $118,000, higher utility expenses of $54,000, higher marketing expenses of $51,000, and higher insurance costs of $77,000 .
−Removed: Depreciation and amortization, which primarily consists of the depreciation of fixed assets, including leasehold improvements and equipment, were $837,000 in the fiscal 2023 period as compared to $807,000 in the fiscal 2022 period.
+Added: We incurred higher occupancy expenses of $8,000 and higher contract maintenance costs of $6,000.
+Added: Depreciation and amortization, which primarily consists of the depreciation of fixed assets, including leasehold improvements and equipment, was $313,000 in the fiscal 2024 period as compared to $233,000 in the fiscal 2023 period.
General and administrative expenses increased by $469,000 or 13% to $4,058,000 in the fiscal 2024 period as compared to $3,589,000 in the fiscal 2023 period.
−Removed: The increase in general and administrative expenses was primarily attributable to higher compensation expenses of $232,000, and higher marketing and trade show expenses of $295,000.
+Added: The increase in general and administrative expenses was primarily attributable to higher incentive compensation expenses of $129,000, higher share-based compensation expense of $169,000 and higher professional fees of $108,000.
Advertising fund expense, after eliminating Company contributions, was $424,000 in the fiscal 2024 period as compared to $419,000 in the fiscal 2023 period.
−Removed: The Company has determined that the Advertising Fund normal seasonal deficit is not to be fully recovered during the remainder of the fiscal 2023 period and has reflected the projected deficit of $175,000 in the fiscal 2023 period.
Interest expense of $1,414,000 in the fiscal 2024 period represented interest expense of $1,322,000 on the 2025 Notes and amortization of debt issuance costs of $92,000.
Interest expense of $1,944,000 in the fiscal 2023 period represented interest expense of $1,817,000 on the 2025 Notes and amortization of debt issuance costs of $127,000.
−Removed: Interest income was $260,000 for the fiscal 2023 period as compared to $88,000 in the fiscal 2022 period.
−Removed: Other expense, net was $4,000 in the fiscal 2023 period which primarily relates to a net loss on disposal of assets for capitalized software no longer in use of $87,000, offset by sublease income from a franchised restaurant.
+Added: The reduction in interest expense of $530,000 is due to the reduction in the outstanding balance of the Company’s 2025 Notes as a result of the $30,000,000 partial redemption completed in March 2023.
+Added: Interest income of $62,000 in the fiscal 2024 period represented amounts earned by the Company on its interest bearing bank and money market accounts, as compared to $22,000 in the fiscal 2023 period.
+Added: Other income, net was $21,000 and $22,000 in the fiscal 2024 and fiscal 2023 periods, respectively, which primarily relates to sublease income from a franchised restaurant.
Provision for Income Taxes
−Removed: The effective income tax rate for the fiscal 2023 period was 27.1% compared to 28.1% in the fiscal 2022 period.
+Added: The effective income tax rate for the fiscal 2024 period was 27.1% as compared to 27.8% in the fiscal 2023 period.
The effective income tax rate for the fiscal 2024 period reflected income tax expense of $2,744,000 recorded on $10,132,000 of pre-tax income.
The effective income tax rate for the fiscal 2023 period reflected income tax expense of $2,743,000 recorded on $9,880,000 of pre-tax income.
−Removed: The effective tax rates are higher than the statutory rates primarily due to state and local taxes.
−Removed: The amount of unrecognized tax benefits at December 25, 2022 was $437,000 all of which would impact the Company’s effective tax rate, if recognized.
−Removed: As of December 25, 2022, the Company had approximately $315,000 accrued for the payment of 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 $16,000 during the fiscal year ending March 26, 2023.
+Added: The effective tax rates are higher than the U.S.
+Added: Federal statutory rates primarily due to state and local taxes.
+Added: The amount of unrecognized tax benefits at June 25, 2023 was $446,000 all of which would impact the Company’s effective tax rate, if recognized.
+Added: As of June 25, 2023, the Company had approximately $321,000 accrued for the payment of interest and penalties in conjunction with unrecognized tax benefits.
+Added: 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 31, 2024 due primarily to the lapse of statutes of limitations which would favorably impact the Company’s effective tax rate, although no assurances can be given in this regard.
Off-Balance Sheet Arrangements
−Removed: At December 25, 2022 and December 26, 2021, Nathan’s did not have any open purchase commitments for hot dogs.
+Added: At June 25, 2023 and June 26, 2022, 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 December 25, 2022 aggregated $55,454,000, a $5,391,000 increase during the fiscal 2023 period as compared to cash and cash equivalents of $50,063,000 at March 27, 2022.
−Removed: Net working capital increased to $58,413,000 from $48,988,000 at March 27, 2022.
−Removed: We paid our semi-annual interest payments for fiscal 2023 of $3,643,750 on May 1, 2022 and November 1, 2022, respectively.
−Removed: We paid our first, second and third quarter fiscal 2023 dividend payments of $1,852,000, $1,836,000 and $1,836,000 on June 24, 2022, September 2, 2022 and December 2, 2022, respectively.
−Removed: We expect to pay our fourth quarter dividend on March 3, 2023.
−Removed: 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.
+Added: Cash at June 25, 2023 aggregated $31,936,000, a $2,075,000 increase during the fiscal 2024 period as compared to cash of $29,861,000 at March 26, 2023.
+Added: Net working capital increased to $36,157,000 in the fiscal 2024 period from $30,652,000 at March 26, 2023.
+Added: On May 1, 2023, we paid our first semi-annual interest payment of $2,650,000 for the fiscal 2024 period.
+Added: We paid our first quarterly cash dividend of fiscal 2024 of $2,040,000 on June 28, 2023.
+Added: The 2025 Notes bear interest at 6.625% per annum, payable semi-annually on May 1 st and November 1 st of each year.
+Added: Semi-annual interest payments are $2,650,000.
The 2025 Notes have no scheduled principal amortization payments prior to its final maturity on November 1, 2025.
Cash provided by operations of $2,148,000 in the fiscal 2024 period is primarily attributable to net income of $7,388,000 in addition to other non-cash operating items of $547,000, offset by changes in other operating assets and liabilities of $5,787,000.
−Removed: Non-cash operating expenses consist principally of depreciation and amortization of $837,000, amortization of debt issuance costs of $381,000, share-based compensation expense of $81,000, bad debts of $114,000, and a loss on disposal of assets of $87,000.
−Removed: In the fiscal 2023 period, accounts and other receivables decreased by $218,000 due primarily to lower franchise and license royalties receivable of $647,000 which were offset, in part, by higher receivables due to the Advertising Fund of $329,000.
−Removed: Prepaid expenses and other current assets decreased by $332,000 due primarily to the reduction of prepaid insurance and marketing expenses of $21,000 and $281,000, respectively.
−Removed: In the fiscal 2023 period, accounts payable, accrued expenses and other current liabilities decreased by $4,856,000 due primarily to lower accrued interest expense of $1,837,000 as a result of the partial redemption of our 2025 Notes;
−Removed: a decline in accrued payroll and other benefits of $519,000 resulting primarily from the payment of year-end fiscal 2022 incentive compensation;
−Removed: earned deferred revenue of $876,000;
−Removed: and a decline in accounts payable of $2,534,000 due to the timing of product purchases for our Branded Product Program and Company-owned restaurants.
−Removed: Offsetting these declines were increases in accrued corporate income taxes of $991,000 due to the timing of estimated tax payments and higher earnings.
−Removed: Cash used in investing activities was $522,000 in the fiscal 2023 period primarily in connection with capital expenditures incurred for our Branded Product Program, our Coney Island restaurants and our general ledger and accounting system upgrade.
−Removed: Cash used in financing activities of $7,416,000 in the fiscal 2023 period relates primarily to the payments of the Company’s quarterly $0.45 per share cash dividends on June 24, 2022, September 2, 2022 and December 2, 2022 totaling $5,524,000.
−Removed: Additionally, during the fiscal 2023 period, the Company repurchased 35,434 shares of common stock for $1,892,000 under the 10b5-1 Plan.
−Removed: 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 December 25, 2022, Nathan’s has repurchased 1,101,884 shares at a cost of $39,000,000 under the sixth stock repurchase plan.
−Removed: At December 25, 2022, there were 98,116 shares remaining to be repurchased pursuant to the sixth stock repurchase plan.
+Added: Non-cash operating expenses consist principally of depreciation and amortization of $313,000, amortization of debt issuance costs of $92,000, share-based compensation expense of $177,000, and a provision for uncollectible accounts of $81,000.
+Added: In the fiscal 2024 period, accounts and other receivables increased by $6,232,000 due primarily to higher Branded Product Program receivables of $3,018,000, higher franchise and license royalties receivable of $2,572,000, and higher receivables due to the Advertising Fund of $736,000 .
+Added: Prepaid expenses and other current assets decreased by $534,000 due principally to a decrease in prepaid income taxes of $146,000 and a decrease in prepaid marketing and other expenses of $434,000.
+Added: Accounts payable, accrued expenses and other current liabilities increased by $156,000 due principally to an increase in accounts payable due to the timing of seasonal product purchases for our Branded Product Program and Company-owned restaurants, as well as an increase in accrued rebates of $95,000 as a result of higher sales.
+Added: Additionally, there was an increase in accrued corporate taxes of $2,540,000 due to the timing of estimated tax payments and higher earnings.
+Added: Offsetting these increases was a reduction in accrued payroll and other benefits of $2,100,000 resulting from the payment of year-end fiscal 2023 compensation;
+Added: a reduction in accrued interest expense of $1,329,000 resulting from our May 2023 semi-annual interest payment on our 2025 Notes;
+Added: and earned deferred revenue of $609,000.
+Added: Cash used in investing activities was $73,000 in the fiscal 2024 period primarily in connection with capital expenditures incurred for our Branded Product Program and various computer equipment.
+Added: In 2016, the Company’s Board of Directors (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.
+Added: As of June 25, 2023, Nathan’s has repurchased 1,101,884 shares at a cost of $39,000,000 under the sixth stock repurchase plan.
+Added: At June 25, 2023, there were 98,116 shares remaining to be repurchased pursuant to the sixth stock repurchase plan.
The plan does not have a set expiration date.
1 unchanged sentence
There is no set time limit on the repurchases.
−Removed: On June 14, 2022, the Board approved a 10b5-1 stock plan (the “10b5-1 Plan”) which expired on September 13, 2022.
−Removed: During the fiscal 2023 period, the Company repurchased in open market transactions 35,434 shares of the Company’s common stock at an average price of $53.39 for a total cost of $1,892,000 under the 10b5-1 Plan.
−Removed: The Company did not repurchase any shares of its common stock during the thirteen weeks ended December 25, 2022.
−Removed: As discussed above, we had cash and cash equivalents at December 25, 2022 aggregating $55,454,000.
+Added: There were no stock repurchases during the fiscal 2024 period.
+Added: As discussed above, we had cash at June 25, 2023 aggregating $31,936,000.
Our Board routinely monitors and assesses its cash position and our current and potential capital requirements.
−Removed: On May 31, 2018, the Board authorized the commencement of a regular dividend of $1.00 per share per annum, payable at the rate of $0.25 per share per quarter.
−Removed: On June 14, 2019, the Board authorized the increase of its regular quarterly dividend to $0.35 from $0.25.
−Removed: On February 4, 2022, the Board authorized the increase of its regular quarterly dividend to $0.45 from $0.35.
−Removed: On February 2, 2023, the Board authorized the increase of its regular quarterly dividend to $0.50 from $0.45.
−Removed: The Company paid its first quarter fiscal 2023 dividend of $1,852,000 on June 24, 2022, its second quarter fiscal 2023 dividend of $1,836,000 on September 2, 2022 and its third quarter fiscal 2023 dividend of $1,836,000 on December 2, 2022.
−Removed: Effective February 2, 2023, the Company declared its fourth quarter dividend of $0.50 per common share to stockholders of record as of the close of business on February 21, 2023, which is payable on March 3, 2023.
−Removed: The Company’s total cash requirement for dividends for all of fiscal 2023 would be approximately $7,564,000 based on the number of shares of common stock outstanding at February 2, 2023.
+Added: The Company paid its first quarterly cash dividend of fiscal 2024 of $2,040,000 on June 28, 2023.
+Added: Effective August 3, 2023, the Company declared its second quarter fiscal 2024 dividend of $0.50 per common share to stockholders of record as of the close of business on August 21, 2023, which is payable on September 1, 2023.
+Added: If the Company pays regular quarterly cash dividends for the remainder of fiscal 2024 at the same rate as declared in the first quarter of fiscal 2024, the Company’s total cash requirement for dividends for all of fiscal 2024 would be approximately $8,160,000 based on the number of shares of common stock outstanding at July 28, 2023.
The Company intends to declare and pay quarterly cash dividends;
3 unchanged sentences
We may also return capital to our stockholders through stock repurchases, subject to any restrictions in the Indenture, although there is no assurance that the Company will make any repurchases under its existing stock repurchase plan.
+Added: We may from time to time seek to redeem additional portions of our 2025 Notes, through open market purchases, privately negotiated transactions or otherwise.
+Added: Such repurchases, if any, will depend on market conditions, our liquidity requirements, and other factors.
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 26, 2023, we will be required to make interest payments of $7,287,500, of which all have been made as of November 1, 2022.
−Removed: 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 December 25, 2022, we sublet one property to a franchisee that we lease from a third party.
+Added: During the fiscal year ending March 31, 2024, we will be required to make interest payments of $5,300,000, of which $2,650,000 has been made on May 1, 2023.
+Added: Management believes that available cash 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.
+Added: At June 25, 2023, 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 27, 2022.
+Added: There have been no material changes in our contractual obligations since March 26, 2023.                           
Inflationary Impact
−Removed: Beginning in fiscal 2022 and continuing into the fiscal 2023 period, we have experienced inflationary pressures on commodity prices.
−Removed: We expect this trend to continue throughout the remainder of fiscal 2023.
−Removed: Our average cost of hot dogs during fiscal 2022 was approximately 19% higher than during fiscal 2021.
−Removed: Our average cost of hot dogs during fiscal 2023 was approximately 3% higher than during fiscal 2022.
−Removed: 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: Inflationary pressures on labor and rising commodity prices, most notably for beef and beef trimmings, have impacted our consolidated results of operations during the fiscal 2024 period, and this trend may continue through the remainder of fiscal year 2024.                  
+Added: Our average cost of hot dogs during the fiscal 2024 period was approximately 8% higher than during the fiscal 2023 period.
Inherent volatility experienced in certain commodity markets, such as those for beef and beef trimmings due to seasonal shifts, climate conditions, industry demand, inflationary pressures and other macroeconomic factors could have an adverse effect on our results of operations.
+Added: This impact will depend on our ability to manage such volatility through price increases and product mix.
We have experienced competitive pressure on labor rates as a result of the increase in the minimum hourly wage for fast food workers which increased to $15.00 in New York state during fiscal 2022 where our Company-owned restaurants are located.
−Removed: Additionally, with the continued recovery from the COVID-19 pandemic, there has been an increased demand for labor at all levels which has resulted in greater challenges retaining adequate staffing levels at our Company-owned restaurants;
+Added: Additionally, there has been an increased demand for labor at all levels which has resulted in greater challenges retaining adequate staffing levels at our Company-owned restaurants;
our franchised restaurants and Branded Menu Program locations;
1 unchanged sentence
We remain in contact with our major suppliers and to date we have not experienced significant disruptions in our supply chain.
−Removed: 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 2023.
+Added: New York State recently passed legislation which will increase the minimum wage on January 1, 2024 to $16.00 in New York City, Long Island and Westchester followed by $0.50 annual increases in 2025 and 2026.
+Added: Further, beginning in 2027, the minimum wage across New York State will increase annually according to the Consumer Price Index.
+Added: We are unable to predict the future cost of our hot dogs and expect to experience price volatility for our beef products during fiscal 2024.
To the extent that beef prices increase as compared to earlier periods, it could impact our results of operations.
In the past, we entered into purchase commitments for a portion of our hot dogs to reduce the impact of increasing market prices.
−Removed: Our most recent purchase commitment was completed in 2016 for approximately 2,600,000 pounds of hot dogs.
We may attempt to enter into similar purchase arrangements for hot dogs and other products in the future.
Additionally, we expect to continue experiencing volatility in oil and gas prices on our distribution costs for our food products and utility costs in the Company-owned restaurants and volatile insurance costs resulting from the uncertainty of the insurance markets.
−Removed: We must comply with the Fair Labor Standards Act and various federal and state laws governing minimum wages.
−Removed: Increases in the minimum wage and labor regulations have increased our labor costs.
−Removed: The minimum wage for New York State increased to $15.00 per hour on December 31, 2021.
−Removed: All of our Company-owned restaurants operate in New York State.
−Removed: In addition, the federal government and a number of other states are evaluating various proposals to increase their respective minimum wage.
−Removed: We believe that these increases in the minimum wage and other changes in employment law have had a significant financial impact on our financial results and the results of our franchisees that operate in New York State.
+Added: We believe that these increases in the minimum wage and other changes in employment laws have had a significant financial impact on our financial results and the results of our franchisees that operate in New York State.
Our business could be negatively impacted if the decrease in margins for our franchisees results in the potential loss of new franchisees or the closing of a significant number of franchised restaurants.
−Removed: Continued increases in labor costs, commodity prices and other operating expenses, including healthcare, could adversely affect our operations.
+Added: Continued increases in labor costs, commodity prices and other operating expenses, including health care, could adversely affect our operations.
We attempt to manage inflationary pressure, and rising commodity costs, at least in part, through raising prices.
7 unchanged sentences
in our Form 10-K for our fiscal year ended March 26, 2023.
−Removed: Quantitative and Qualitative Disclosures About Market Risk.
−Removed: Cash                                     
−Removed: We have historically invested our cash and cash equivalents in money market funds or short-term, fixed rate, highly rated and highly liquid instruments which are generally reinvested when they mature.
−Removed: Although these existing investments are not considered at risk with respect to changes in interest rates or markets for these instruments, our rate of return on short-term investments could be affected at the time of reinvestment as a result of intervening events.
−Removed: As of December 25, 2022, Nathan’s cash and cash equivalents aggregated $55,454,000.
−Removed: Earnings on this cash would increase or decrease by approximately $139,000 per annum for each 0.25% change in interest rates.
−Removed: At December 25, 2022, we had $110,000,000 of 6.625% 2025 Notes outstanding which are due in November 2025.
−Removed: Interest expense on these borrowings would increase or decrease by approximately $275,000 per annum for each 0.25% change in interest rates.
−Removed: We currently do not anticipate entering into interest rate swaps or other financial instruments to hedge our borrowings.
−Removed: Commodity Costs
−Removed: Beginning in fiscal 2022 and continuing into the fiscal 2023 period, we have experienced inflationary pressures on commodity prices.
−Removed: We expect this trend to continue throughout the remainder of fiscal 2023.
−Removed: Our average cost of hot dogs during fiscal 2022 was approximately 19% higher than during fiscal 2021.
−Removed: Our average cost of hot dogs during fiscal 2023 was approximately 3% higher than during fiscal 2022.
−Removed: 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.
−Removed: Inherent volatility experienced in certain commodity markets, such as those for beef and beef trimmings due to seasonal shifts, climate conditions, industry demand, inflationary pressures and other macroeconomic factors could have an adverse effect on our results of operations.
−Removed: 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 2023.
−Removed: To the extent that beef prices increase as compared to earlier periods, it could impact our results of operations.
−Removed: In the past, we entered into purchase commitments for a portion of our hot dogs to reduce the impact of increasing market prices.
−Removed: Our most recent purchase commitment was completed in 2016 for approximately 2,600,000 pounds of hot dogs.
−Removed: We may attempt to enter into similar purchase arrangements for hot dogs and other products in the future.
−Removed: Additionally, we expect to continue experiencing volatility in oil and gas prices on our distribution costs for our food products and utility costs in the Company-owned restaurants and volatile insurance costs resulting from the uncertainty of the insurance markets.
−Removed: With the exception of purchase commitments, we have not attempted to hedge against fluctuations in the prices of the commodities we purchase using future, forward, option or other instruments.
−Removed: As a result, we expect that the majority of our future commodity purchases will be subject to market changes in the prices of such commodities.
−Removed: We have attempted to enter sales agreements with our customers that are correlated to our cost of beef, thus reducing our market volatility, or have passed through permanent increases in our commodity prices to our customers that are not on formula pricing, thereby reducing the impact of long-term increases on our financial results.
−Removed: A short-term increase or decrease of 10.0% in the cost of our food and paper products for the thirty-nine week period ended December 25, 2022 would have increased or decreased our cost of sales by approximately $5,477,000.
−Removed: Foreign Currencies
−Removed: Foreign franchisees generally conduct business with us and make payments in United States dollars, reducing the risks inherent with changes in the values of foreign currencies.
−Removed: As a result, we have not purchased future contracts, options or other instruments to hedge against changes in values of foreign currencies and we do not believe fluctuations in the value of foreign currencies would have a material impact on our financial results.
−Removed: Controls and Procedures.
−Removed: Evaluation of Disclosure Controls and Procedures
−Removed: Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as required by Exchange Act Rule 13a-15(e) and Exchange Act Rule 15d-15(e). 
−Removed: Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective to ensure that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.         
−Removed: Changes in Internal Controls
−Removed: There were no changes in our internal controls over financial reporting that occurred during the quarter ended December 25, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
−Removed: Limitations on the Effectiveness of Controls
−Removed: We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.
−Removed: Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives and our Chief Executive Officer and Chief Financial Officer have concluded that such controls and procedures are effective at the reasonable assurance level.
−Removed: OTHER INFORMATION
−Removed: Legal Proceedings.
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.