What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-06 compared with 2025-08-08 · 149 added, 72 removed, 207 unchanged (52% of the section changed)

50 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, grocery stores 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).

At June 29, 2025, our restaurant system, excluding virtual kitchens, consisted of 225 locations, including 115 Branded Menu Program locations, and four Company-owned restaurants (including one seasonal unit), located in 19 states, and 12 foreign countries.

At June 30, 2024, our restaurant system, excluding virtual kitchens, consisted of 231 locations, including 118 Branded Menu Program locations, and four Company-owned restaurants (including one seasonal unit), located in 17 states, and 13 foreign countries.

At September 28, 2025, our restaurant system, excluding virtual kitchens, was comprised of 227 locations, including 112 franchise locations, and 115 Branded Menu Program locations, as well as four Company-owned restaurants (including one seasonal unit), located in 19 states, and 12 foreign countries.

At September 29, 2024, our restaurant system, excluding virtual kitchens, was comprised of 243 locations, including 115 franchise locations, and 128 Branded Menu Program locations, as well as four Company-owned restaurants (including one seasonal unit), located in 17 states, and 13 foreign countries.

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.

9 unchanged sentences

Inflationary Factors

Inflationary pressures impacted our results of operations during the first three months of fiscal 2026, and we anticipate continued inflationary pressures on commodity prices, including beef and beef trimmings, as well as labor inflation during fiscal 2026.

Inflationary pressures impacted our results of operations during the first half of fiscal 2026, and we anticipate continued inflationary pressures on commodity prices, including beef and beef trimmings, as well as labor inflation during the remainder of fiscal 2026.

In general, we have been able to offset some of these cost increases resulting from inflation through various actions, such as increasing prices at our Company-owned restaurants and entering into sales agreements with our Branded Product Program customers that are correlated to our cost of beef and beef trimmings.

12 unchanged sentences

customer rebates and income taxes (including uncertain tax positions).

During the thirteen week period ended June 29, 2025, there have been no changes to our critical accounting estimates from those disclosed in our Annual Report on Form 10-K for the fiscal year ended March 30, 2025.

There have been no changes to our critical accounting estimates from those disclosed in our Annual Report on Form 10-K for the fiscal year ended March 30, 2025.

New Accounting Standards Not Yet Adopted

6 unchanged sentences

(ii) provision for income taxes and (iii) depreciation and amortization expense.

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.

The Company has also provided Adjusted EBITDA, a non-GAAP financial measure, which is defined as EBITDA, excluding (i) the loss on debt extinguishment and (ii) 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

June 29, 2025

June 30, 2024

Twenty-six weeks ended

September 28,

September 29,

September 28,

September 29,

Interest expense

1 unchanged sentence

Depreciation and amortization

Loss on debt extinguishment

Share-based compensation

5 unchanged sentences

Working capital requirements may vary throughout the year to support these seasonal patterns.

Due to the above seasonal factors, as well as inflationary pressures, our results of operations for the thirteen weeks ended June 29, 2025 are not necessarily indicative of those for a full fiscal year.

Due to the above seasonal factors, as well as inflationary pressures, our results of operations for the thirteen and twenty-six weeks ended September 28, 2025 are not necessarily indicative of those for a full fiscal year.

Results of Operations

Thirteen weeks ended June 29, 2025 compared to thirteen weeks ended June 30, 2024

Total revenues increased by approximately 5% to $46,998,000 for the thirteen weeks ended June 29, 2025 (“fiscal 2026 period”) as compared to $44,767,000 for the thirteen weeks ended June 30, 2024 (“fiscal 2025 period”).

Foodservice sales from the Branded Product Program increased by approximately 11% to $29,075,000 during the fiscal 2026 period as compared to $26,146,000 for the fiscal 2025 period.

During the fiscal 2026 period, the total volume of hot dogs sold in the Branded Product Program was comparable to the fiscal 2025 period.

Thirteen weeks ended September 28, 2025 compared to thirteen weeks ended September 29, 2024

Total revenues increased by approximately 11% to $45,687,000 for the thirteen weeks ended September 28, 2025 (“second quarter fiscal 2026”) as compared to $41,109,000 for the thirteen weeks ended September 29, 2024 (“second quarter fiscal 2025”).

Foodservice sales from the Branded Product Program increased by approximately 18% to $29,047,000 for the second quarter fiscal 2026 as compared to $24,536,000 for the second quarter fiscal 2025.

During the second quarter fiscal 2026, the total volume of hot dogs sold in the Branded Product Program increased by approximately 7% as compared to the second quarter fiscal 2025.

Our average selling price increased by approximately 11% as compared to the second quarter fiscal 2025.

Total Company-owned restaurant sales increased by approximately 5% to $5,624,000 during the second quarter fiscal 2026 as compared to $5,348,000 during the second quarter fiscal 2025.

Restaurant sales were primarily impacted by higher sales at our Coney Island locations due to a 7% increase in customer traffic.

License royalties decreased by approximately 3% to $9,227,000 in the second quarter fiscal 2026 as compared to $9,491,000 in the second quarter fiscal 2025.

Total royalties earned on sales of hot dogs from our license agreement with Smithfield Foods, Inc.

at retail and foodservice, decreased 2% to $8,389,000 for the second quarter fiscal 2026 as compared to $8,595,000 in the second quarter fiscal 2025.

The decrease is due to an 18% decrease in retail volume which was offset, in part, by a 19% increase in net selling price .

The price increases year over year led to a reduction in promotional activities contributing to the decline in volume.

The foodservice business earned higher royalties of $54,000 as compared to the second quarter fiscal 2025.

Royalties earned from all other licensing agreements for the manufacture and sale of Nathan’s products decreased by $58,000 during the second quarter fiscal 2026 as compared to the second quarter fiscal 2025 primarily due to lower royalties earned on sales of proprietary spices offset, in part, by higher royalties earned on beef sticks.

Franchise fees and royalties increased by approximately 4% to $1,223,000 in the second quarter fiscal 2026 period as compared to $1,174,000 in the second quarter fiscal 2025.

Total royalties were $1,138,000 in the second quarter fiscal 2026 as compared to $1,066,000 in the second quarter fiscal 2025.

Royalties earned under the Branded Menu Program were $249,000 in the second quarter fiscal 2026 as compared to $248,000 in the second quarter fiscal 2025.

Royalties earned under the Branded Menu Program are not based upon a percentage of restaurant sales but are based upon product purchases.

Virtual kitchen royalties were $21,000 in the second quarter fiscal 2026 as compared to $11,000 in the second quarter fiscal 2025.

Traditional franchise royalties were $868,000 in the second quarter fiscal 2026 as compared to $807,000 in the second quarter fiscal 2025.

Franchise restaurant sales increased to $19,873,000 in the second quarter fiscal 2026 as compared to $18,681,000 in the second quarter fiscal 2025 principally due to higher sales at travel plazas and international venues offset by lower sales at casino locations, primarily in Las Vegas, Nevada.

Comparable domestic franchise sales (consisting of 63 Nathan’s franchised restaurants, excluding sales under the Branded Menu Program) were $15,245,000 in the second quarter fiscal 2026 as compared to $15,286,000 in the second quarter fiscal 2025.

At September 28, 2025, 227 franchised locations, including domestic, international and Branded Menu Program units were operating as compared to 243 franchised locations, including domestic, international and Branded Menu Program units at September 29, 2024.

Total franchise fee income was $85,000 in the second quarter fiscal 2026 as compared to $108,000 in the second quarter fiscal 2025.

Domestic franchise fee income was $27,000 in the second quarter fiscal 2026 as compared to $35,000 in the second quarter fiscal 2025.

International franchise fee income was $53,000 in the second quarter fiscal 2026 as compared to $59,000 in the second quarter fiscal 2025.

We recognized $5,000 and $14,000 in forfeited fees in the second quarter fiscal 2026 and the second quarter fiscal 2025, respectively.

During the second quarter fiscal 2026, six franchise locations opened and four franchise locations closed.

During the second quarter fiscal 2025, eighteen franchise locations opened and six franchise locations closed.

Advertising fund revenue, after eliminating Company contributions, was $566,000 during the second quarter fiscal 2026 as compared to $560,000 during the second quarter fiscal 2025.

Costs and Expenses

Overall, our cost of sales increased by approximately 24% to $32,378,000 in the second quarter fiscal 2026 as compared to $26,029,000 in the second quarter fiscal 2025.

Our gross profit (calculated as total Branded Products sales plus total Company-owned restaurant sales less cost of sales) was $2,293,000 or 7% during the second quarter fiscal 2026 as compared to $3,855,000 or 13% during the second quarter fiscal 2025.

Cost of sales in the Branded Product Program increased by approximately 27% to $29,590,000 in the second quarter fiscal 2026 as compared to $23,318,000 in the second quarter fiscal 2025, primarily due to a 7% increase in the volume of hot dogs sold, as well as a 20% increase in the average cost per pound of our hot dogs.

A shrinking supply of cattle due to drought conditions and high input costs, combined with strong industry demand and inflationary pressures have resulted in higher commodity prices, including beef and beef trimmings, contributing to the increase in the average cost per pound of our hot dogs.

We did not make any purchase commitments of beef during the second quarter fiscal 2026 or the second quarter fiscal 2025 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 second quarter fiscal 2026 was $2,788,000 or 50% of restaurant sales as compared to $2,711,000 or 51% of restaurant sales during the second quarter fiscal 2025.

Food and paper costs as a percentage of Company-owned restaurant sales were 23.8%, down from 24.2% in the comparable period of the prior year primarily as a result of certain menu price increases.

Labor and related expenses as a percentage of Company-owned restaurant sales were 25.7%, down from 26.5% in the comparable period of the prior year primarily as a result of certain menu price increases and efforts to improve hourly and management labor efficiency, offset by legislative increases in the New York State minimum wage which became effective January 1, 2025.

Restaurant operating expenses were $1,432,000 in the second quarter fiscal 2026 as compared to $1,389,000 in the second quarter fiscal 2025.

The increase is due primarily to higher repairs and maintenance expenses of $25,000 and higher utilities expenses of $22,000.

As a percentage of Company-owned restaurant sales, restaurant operating expenses were 25% in the second quarter fiscal 2026 as compared to 26% in the second quarter fiscal 2025.

Depreciation and amortization, which primarily consists of the depreciation of fixed assets, including leasehold improvements and equipment, and the amortization of a definite-lived intangible asset, was $236,000 in the second quarter fiscal 2026 as compared to $247,000 in the second quarter fiscal 2025.

General and administrative expenses increased by $200,000 or 6% to $3,452,000 in the second quarter fiscal 2026 as compared to $3,252,000 in the second quarter fiscal 2025.

The increase in general and administrative expenses was primarily attributable to higher professional fees of $23,000, higher share-based compensation expense of $55,000, higher trade show and travel expenses of $25,000 and higher salaries and fringe expenses of $39,000 attributable to annual rate increases.

Advertising fund expense, after eliminating Company contributions, was $687,000 during the second quarter fiscal 2026 as compared to $560,000 in the second quarter fiscal 2025.

The Company projects that the Advertising Fund normal seasonal deficit will not be fully recovered during the remainder of the fiscal 2026 period and has reflected the projected deficit of $121,000 in the second quarter fiscal 2026 results of operations.

Interest expense of $739,000 in the second quarter fiscal 2026 represented interest expense of $722,000 on the Secured Overnight Financing Rate (“SOFR”) Term Loan borrowings and amortization of debt issuance costs of $17,000.

Interest expense of $1,441,000 in the second quarter fiscal 2025 represented interest expense of $458,000 and $930,000 on the 6.625% Secured Notes due 2025 (“2025 Notes”) which were redeemed in August 2024 and the SOFR Term Loan borrowings, respectively, and amortization of debt issuance costs of $35,000 and $18,000 on the 2025 Notes and the SOFR Term Loan borrowings, respectively.

The reduction in interest expense of $702,000 is due primarily to lower outstanding long-term debt and a lower interest rate associated with our Credit Agreement.

In the second quarter fiscal 2025, the Company refinanced and redeemed its outstanding 2025 Notes.

In connection with this transaction, the Company recorded a loss on extinguishment of debt of $334,000 that reflected the write-off of the remainder of previously recorded debt issuance costs.

Interest and dividend income of $236,000 in the second quarter fiscal 2026 represented amounts earned by the Company on its interest bearing money market accounts and money market funds, as compared to $219,000 in the second quarter fiscal 2025 period.

The increase is due to higher levels of invested cash earning interest at higher rates in the second quarter fiscal 2026 as compared to the second quarter fiscal 2025.

Other income, net was $22,000 and $23,000 in the second quarter fiscal 2026 and the second quarter fiscal 2025, respectively, which primarily relates to sublease income.

Provision for Income Taxes

The effective income tax rate for the second quarter fiscal 2026 was 26.0% compared to 25.5% in the second quarter fiscal 2025.

The effective income tax rate for the second quarter fiscal 2026 reflected income tax expense of $1,822,000 recorded on $7,021,000 of pre-tax income.

The effective income tax rate for the second quarter fiscal 2025 reflected income tax expense of $2,069,000 recorded on $8,099,000 of pre-tax income.

The effective tax rates are higher than the U.S.

Federal statutory rates primarily due to state and local taxes, as well as non-deductible compensation under the Internal Revenue Code Section 162(m).

The effective tax rate for the second quarter fiscal 2026 included a favorable discrete adjustment of 0.6%.

The American Rescue Plan Act of 2021 (“ARPA”), among other things, includes provisions to expand the IRC Section 162(m) disallowance for deduction of certain compensation paid by publicly held corporations.

Effective for tax years starting after December 31, 2026 (March 29, 2027 for the Company), ARPA expands the limitations to cover the next five most highly compensated employees.

We continue to evaluate the potential impact ARPA may have on our operations and condensed consolidated financial statements in future periods.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the United States.

The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, and the restoration of favorable tax treatment for certain business provisions.

The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027.

The OBBBA did not have a material impact to our provision for income taxes for the second quarter fiscal 2026.

The amount of unrecognized tax benefits at September 28, 2025 was $462,000 all of which would impact the Company’s effective tax rate, if recognized.

As of September 28, 2025, the Company had approximately $418,000 accrued for the payment of interest and penalties in conjunction with unrecognized tax benefits.

Nathan’s estimates that its unrecognized tax benefit excluding accrued interest and penalties could be further reduced by up to $55,000 during the fiscal year ending March 29, 2026 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.

Results of Operations

Twenty-six weeks ended September 28, 2025 compared to twenty-six weeks ended September 29, 2024

Total revenues increased by approximately 8% to $92,685,000 for the twenty-six weeks ended September 28, 2025 (“fiscal 2026 period”) as compared to $85,876,000 for the twenty-six weeks ended September 29, 2024 (“fiscal 2025 period”).

Foodservice sales from the Branded Product Program increased by approximately 15% to $58,122,000 for the fiscal 2026 period as compared to $50,682,000 for the fiscal 2025 period.

During the fiscal 2026 period, the total volume of hot dogs sold in the Branded Product Program increased by approximately 3% as compared to the fiscal 2025 period.

Our average selling price increased by approximately 10% as compared to the fiscal 2025 period.

Total Company-owned restaurant sales decreased by approximately 5% to $3,986,000 during the fiscal 2026 period as compared to $4,199,000 during the fiscal 2025 period.

Restaurant sales were primarily impacted by lower sales at our Coney Island locations due to a reduction in customer traffic as a result of unfavorable weather conditions.

Total Company-owned restaurant sales increased by approximately 1% to $9,610,000 during the fiscal 2026 period as compared to $9,547,000 during the fiscal 2025 period.

Restaurant sales were primarily impacted by higher sales at our Coney Island locations which were offset by lower sales at our locations in Oceanside and Yonkers, New York.

License royalties decreased by approximately 4% to $21,608,000 in the fiscal 2026 period as compared to $22,412,000 in the fiscal 2025 period.

Total royalties earned on sales of hot dogs from our license agreement with Smithfield Foods, Inc.

at retail and foodservice, decreased by approximately 4% to $11,464,000 in the fiscal 2026 period as compared to $12,010,000 in the fiscal 2025 period.

at retail and foodservice, decreased 4% to $19,853,000 for the fiscal 2026 period as compared to $20,605,000 in the fiscal 2025 period.

The decrease is due to a 17% decrease in retail volume which was offset, in part, by a 15% increase in net selling price.

1 unchanged sentence

The foodservice business earned higher royalties of $109,000 as compared to the fiscal 2025 period.

Royalties earned from all other licensing agreements for the manufacture and sale of Nathan’s products increased by $6,000 during the fiscal 2026 period as compared to the fiscal 2025 period primarily due to higher royalties earned on sales of French fries, onion rings, franks-in-a-blanket, mozzarella sticks and other hors d’oeuvres offset, in part, by lower royalties earned on sales of pickles and proprietary spices.

Franchise fees and royalties were $1,129,000 in the fiscal 2026 period as compared to $1,073,000 in the fiscal 2025 period.

Royalties earned from all other licensing agreements for the manufacture and sale of Nathan’s products decreased by $52,000 during the fiscal 2026 period as compared to the fiscal 2025 period primarily due to lower royalties earned on sales of pickles and proprietary spices offset, in part, by higher royalties earned on French fries, onion rings and beef sticks.

Franchise fees and royalties increased by approximately 5% to $2,352,000 in the fiscal 2026 period as compared to $2,247,000 in the fiscal 2025 period.

Total royalties were $2,139,000 in the fiscal 2026 period as compared to $2,047,000 in the fiscal 2025 period.

5 unchanged sentences

Comparable domestic franchise sales (consisting of 61 Nathan’s franchised restaurants, excluding sales under the Branded Menu Program) were $28,957,000 in the fiscal 2026 period as compared to $29,379,000 in the fiscal 2025 period.

At June 29, 2025, 225 franchised locations, including domestic, international and Branded Menu Program units were operating as compared to 231 franchised locations, including domestic, international and Branded Menu Program units at June 30, 2024.

Total franchise fee income was $213,000 in the fiscal 2026 period as compared to $200,000 in the fiscal 2025 period.

Domestic franchise fee income was $23,000 in the fiscal 2026 period and the fiscal 2025 period.

Domestic franchise fee income was $50,000 in the fiscal 2026 period as compared to $58,000 in the fiscal 2025 period.

International franchise fee income was $107,000 in the fiscal 2026 period as compared to $119,000 in the fiscal 2025 period.

We recognized $51,000 and $9,000 in forfeited fees in the fiscal 2026 and fiscal 2025 periods, respectively.

During the fiscal 2026 period, eight franchise locations opened and thirteen franchise locations closed.

During the fiscal 2025 period, three franchise locations opened and two franchise locations closed.

Advertising fund revenue, after eliminating Company contributions, was $427,000 in the fiscal 2026 period as compared to $428,000 in the fiscal 2025 period.

We recognized $56,000 and $23,000 in forfeited fees in the fiscal 2026 period and fiscal 2025 period, respectively.

During the fiscal 2026 period, fourteen franchise locations opened and seventeen franchise locations closed.

During the fiscal 2025 period, twenty-one franchise locations opened and eight franchise locations closed.

Advertising fund revenue, after eliminating Company contributions, was $993,000 during the fiscal 2026 period as compared to $988,000 during the fiscal 2025 period.

Costs and Expenses

Overall, our cost of sales increased by approximately 19% to $60,801,000 in the fiscal 2026 period as compared to $51,270,000 in the fiscal 2025 period.

Our gross profit (calculated as total Branded Products sales plus total Company-owned restaurant sales less cost of sales) was $4,638,000 during the fiscal 2026 period as compared to $5,104,000 during the fiscal 2025 period.

Cost of sales in the Branded Product Program increased by approximately 14% to $26,233,000 in the fiscal 2026 period as compared to $22,972,000 in the fiscal 2025 period, primarily due to a 12% increase in the average cost per pound of our hot dogs.

Our gross profit (calculated as total Branded Products sales plus total Company-owned restaurant sales less cost of sales) was $6,931,000 or 10% during the fiscal 2026 period as compared to $8,959,000 or 15% during the fiscal 2025 period.

Cost of sales in the Branded Product Program increased by 21% to $55,823,000 during the fiscal 2026 period as compared to $46,290,000 during the fiscal 2025 period, primarily due to a 3% increase in the volume of hot dogs sold, as well as a 16% increase in the average cost per pound of our hot dogs.

1 unchanged sentence

With respect to Company-owned restaurants, our cost of sales during the fiscal 2026 period was $2,190,000 or 55% of restaurant sales, as compared to $2,269,000 or 54% of restaurant sales during the fiscal 2025 period.

Food and paper costs as a percentage of Company-owned restaurant sales were 24%, down from 25% in the fiscal 2025 period, driven, in part, by a lower number of transactions and price increases across certain menu offerings.

With respect to Company-owned restaurants, our cost of sales during the fiscal 2026 period was $4,978,000 or 52% of restaurant sales which was comparable to $4,980,000 or 52% of restaurant sales in the fiscal 2025 period.

Food and paper costs as a percentage of Company-owned restaurant sales were 23.8%, down from 24.8% in the comparable period of the prior year primarily as a result of certain menu price increases.

Labor and related expenses as a percentage of Company-owned restaurant sales were 28.0%, up from 27.4% primarily as a result of legislative increases in the New York State minimum wage which became effective January 1, 2025.

Restaurant operating expenses were $2,611,000 in the fiscal 2026 period as compared to $2,518,000 in the fiscal 2025 period.

The increase is due primarily to higher credit card processing fees of $52,000.

The increase is due primarily to higher repairs and maintenance expenses of $27,000, higher utilities expenses of $16,000 and higher credit card processing fees of $48,000.

As a percentage of Company-owned restaurant sales, restaurant operating expenses were 27.1% in the fiscal 2026 period as compared to 26.4% in the fiscal 2025 period.

Depreciation and amortization, which primarily consists of the depreciation of fixed assets, including leasehold improvements and equipment, and the amortization of a definite-lived intangible asset, was $464,000 in the fiscal 2026 period as compared to $496,000 in the fiscal 2025 period.

General and administrative expenses decreased by approximately 1% to $3,950,000 in the fiscal 2026 period as compared to $3,975,000 in the fiscal 2025 period.

The reduction in general and administrative expenses was primarily attributable to lower salaries expense of $25,000 and lower trade show and travel expenses of $175,000, which were offset, in part, by higher professional fees of $97,000 and higher share-based compensation expense of $101,000.

Advertising fund expense, after eliminating Company contributions, was $427,000 in the fiscal 2026 period as compared to $428,000 in the fiscal 2025 period.

Interest expense of $758,000 in the fiscal 2026 period represented interest expense of $739,000 on the Secured Overnight Financing Rate (“SOFR”) Term Loan borrowings and amortization of debt issuance costs of $19,000.

Interest expense of $1,060,000 in the fiscal 2025 period represented interest expense of $991,000 on the 6.625% Senior Secured Notes due 2025 which were redeemed in August 2024 and amortization of debt issuance costs of $69,000.

The reduction in interest expense of $302,000 is due to primarily to lower outstanding long-term debt and a lower interest rate associated with our Credit Agreement.

General and administrative expenses increased by approximately $175,000 or 2% to $7,402,000 in the fiscal 2026 period as compared to $7,227,000 in the fiscal 2025 period.

The increase in general and administrative expenses was primarily attributable to higher professional fees of $120,000 and higher share-based compensation expense of $155,000 which were offset, in part, by lower trade show and travel expenses of $150,000.

Advertising fund expense, after eliminating Company contributions, was $1,114,000 during the fiscal 2026 period as compared to $988,000 in the fiscal 2025 period.

Interest expense of $1,497,000 in the fiscal 2026 period represented interest expense of $1,461,000 on the SOFR Term Loan borrowings and amortization of debt issuance costs of $36,000.

Interest expense of $2,501,000 in the fiscal 2025 period represented interest expense of $1,449,000 and $930,000 on the 2025 Notes and the SOFR Term Loan borrowings, respectively, and amortization of debt issuance costs of $104,000 and $18,000 on the 2025 Notes and the SOFR Term Loan borrowings, respectively.

The reduction in interest expense of $1,004,000 is due primarily to lower outstanding long-term debt and a lower interest rate associated with our Credit Agreement.

During the fiscal 2025 period, the Company refinanced and redeemed its outstanding 2025 Notes.

In connection with this transaction, the Company recorded a loss on extinguishment of debt of $334,000 that reflected the write-off of the remainder of previously recorded debt issuance costs.

Interest and dividend income of $439,000 in the fiscal 2026 period represented amounts earned by the Company on its interest bearing money market accounts and money market funds, as compared to $297,000 in the fiscal 2025 period.

The increase is due to higher levels of invested cash earning interest at higher rates in the fiscal 2026 period as compared to the fiscal 2025 period.

Other income, net was $21,000 in the fiscal 2026 period and the fiscal 2025 period, which primarily relates to sublease income from a franchised restaurant.

Other income, net was $43,000 and $44,000 in the fiscal 2026 and fiscal 2025 periods, respectively, which primarily relates to sublease income.

Provision for Income Taxes

The effective income tax rate for the fiscal 2026 period was 27.2% as compared to 27.4% in the fiscal 2025 period.

The effective income tax rate for the fiscal 2026 period was 26.7% which was comparable to the fiscal 2025 period.

The effective income tax rate for the fiscal 2026 period reflected income tax expense of $5,151,000 recorded on $19,278,000 of pre-tax income.

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The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027.

We are currently assessing its impact on our condensed consolidated financial statements.

The amount of unrecognized tax benefits at June 29, 2025 was $579,000 all of which would impact the Company’s effective tax rate, if recognized.

As of June 29, 2025, the Company had approximately $428,000 accrued for the payment of interest and penalties in conjunction with unrecognized tax benefits.

The OBBBA did not have a material impact to our provision for income taxes for the fiscal 2026 period.

The amount of unrecognized tax benefits at September 28, 2025 was $462,000 all of which would impact the Company’s effective tax rate, if recognized.

As of September 28, 2025, the Company had approximately $418,000 accrued for the payment of interest and penalties in connection with unrecognized tax benefits.

Off-Balance Sheet Arrangements

At June 29, 2025 and June 30, 2024, Nathan’s did not have any open purchase commitments for hot dogs.

At September 28, 2025 and September 29, 2024, 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.

1 unchanged sentence

Sources and uses of cash

Cash and cash equivalents at June 29, 2025 aggregated $26,867,000, a $935,000 decrease during the fiscal 2026 period as compared to cash of $27,802,000 at March 30, 2025.

Net working capital increased to $34,939,000 at June 29, 2025 as compared to $28,371,000 at March 30, 2025.

Cash and cash equivalents at September 28, 2025 aggregated $32,175,000, a $4,373,000 increase during the fiscal 2026 period as compared to cash of $27,802,000 at March 30, 2025.

Net working capital increased to $37,681,000 at September 28, 2025 as compared to $28,371,000 at March 30, 2025.

Our primary sources of liquidity and capital resources are cash flows from operations and our cash and cash equivalents.

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The following table presents summary cash flow information for the periods indicated (in thousands):

(In thousands)

Thirteen weeks ended

June 29, 2025

June 30, 2024

Net cash (used in) provided by operating activities

Twenty-six weeks ended

September 28,

September 29,

Net cash provided by operating activities

Net cash used in investing activities

Net cash used in financing activities

Net (decrease) increase in cash and cash equivalents

Net increase in cash and cash equivalents

Operating activities

Cash used in operations of $220,000 in the fiscal 2026 period is primarily attributable to net income of $8,928,000 in addition to other non-cash operating items of $567,000, offset by changes in other operating assets and liabilities of $9,715,000.

Cash provided by operations of $9,938,000 in the fiscal 2026 period is primarily attributable to net income of $14,127,000 in addition to other non-cash operating items of $1,075,000, offset by changes in other operating assets and liabilities of $5,264,000.

Non-cash operating expenses consist principally of depreciation and amortization of $464,000, amortization of debt issuance costs of $36,000, share-based compensation expense of $572,000, and a provision for credit losses of $63,000.

In the fiscal 2026 period, accounts and other receivables increased by $12,273,000 due primarily to higher Branded Product Program receivables of $4,624,000, higher franchise and license royalties receivable of $6,920,000 and higher receivables due to the Advertising Fund of $857,000.

Prepaid expenses and other current assets decreased by $576,000 due principally to a decrease in prepaid income taxes of $493,000 and a decrease in prepaid marketing and other expenses of $125,000 which was offset by an increase in prepaid real estate taxes of $75,000.

Accounts payable, accrued expenses and other current liabilities increased by $1,747,000 due principally to an increase in accounts payable of $1,272,000 due to the timing of seasonal product purchases for our Branded Product Program and Company-owned restaurants.

Additionally, there was an increase in accrued corporate taxes of $2,697,000 due to the timing of estimated tax payments.

In the fiscal 2026 period, accounts and other receivables increased by $7,612,000 due primarily to higher Branded Product Program receivables of $6,705,000, and higher receivables due to the Advertising Fund of $1,164,000.

Prepaid expenses and other current assets decreased by $1,365,000 due principally to a decrease in prepaid income taxes of $493,000, a decrease in prepaid insurance of $288,000 and a decrease in prepaid marketing and other expenses of $588,000.

Accounts payable, accrued expenses and other current liabilities increased by $1,020,000 due primarily to an increase in accounts payable of $1,979,000 due to the timing of seasonal product purchases for our Branded Product Program, an increase in accrued rebates of $319,000, and an increase in accrued corporate taxes of $639,000 due to the timing of estimated tax payments.

Offsetting these increases was a reduction in accrued payroll and other benefits of $1,326,000 resulting from the payment of year-end compensation as well as the recognition of $677,000 of deferred revenue.

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During fiscal 2026, we made $1,200,000 of mandatory principal repayments on our Term Loan borrowings under the Credit Agreement.

Subsequent to the fiscal 2026 period, we paid our next quarterly mandatory principal repayment on our Term Loan borrowings of $600,000 on June 30, 2025.

Additionally, the Company paid its first and second quarterly cash dividends of $0.50 per share totaling $4,089,000.

Subsequent to the fiscal 2026 period, we paid our next quarterly mandatory principal repayment on our Term Loan borrowings of $600,000 on September 30, 2025.

Credit Agreement

On July 10, 2024 (the “Effective Date”), the Company entered into a five-year unsecured Credit Agreement among the Company, as borrower, direct and indirect subsidiaries of the Company, as guarantors, the lenders from time to time party thereto (the “Lenders”) and Citibank, N.A., as administrative agent, swing line lender, L/C issuer and a Lender.

On July 10, 2024 (the “Effective Date”), the Company entered into a five-year unsecured Credit Agreement (the “Credit Agreement”) among the Company, as borrower, direct and indirect subsidiaries of the Company, as guarantors, the lenders from time to time party thereto (the “Lenders”) and Citibank, N.A., as administrative agent, swing line lender, L/C issuer and a Lender.

The Credit Agreement provides for a term loan facility (“Term Loan”) of $60,000,000 and a revolving credit facility (“Revolving Loan”) of up to $10,000,000.

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The Company will use any Revolving Loan borrowings under the Credit Agreement for working capital and general corporate purposes.

As of June 29, 2025, there were no outstanding borrowings under the Revolving Loan.

As of September 28, 2025, there were no outstanding borrowings under the Revolving Loan.

See Note P – LONG TERM DEBT in the accompanying condensed consolidated financial statements for additional information on the Credit Agreement.

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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.

As of June 29, 2025, Nathan’s has repurchased 1,101,884 shares at a cost of $39,000,000 under the sixth stock repurchase plan.

At June 29, 2025, there were 98,116 shares remaining to be repurchased pursuant to the sixth stock repurchase plan.

As of September 28, 2025, Nathan’s has repurchased 1,101,884 shares at a cost of $39,000,000 under the sixth stock repurchase plan.

At September 28, 2025, 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.

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Common Stock Dividends

As discussed above, we had cash and cash equivalents at June 29, 2025 aggregating $26,867,000.

As discussed above, we had cash and cash equivalents at September 28, 2025 aggregating $32,175,000.

Our Board routinely monitors and assesses its cash position and our current and potential capital requirements.

The Company paid its first quarterly cash dividend of fiscal 2026 of $2,045,000 on July 1, 2025.

Effective August 8, 2025 the Company declared its second quarter fiscal 2026 dividend of $0.50 per common share to stockholders of record as of the close of business on August 25, 2025, which is payable on September 5, 2025.

If the Company pays regular quarterly cash dividends for the remainder of fiscal 2026 at the same rate as declared in the first quarter of fiscal 2026, the Company’s total cash requirement for dividends for all of fiscal 2026 would be approximately $8,179,000 based on the number of shares of common stock outstanding at August 1, 2025.

The Company paid its first and second quarterly cash dividends of fiscal 2026 on July 1, 2025 and September 5, 2025 aggregating $4,089,000.

Effective November 6, 2025, the Company declared its third quarter fiscal 2026 dividend of $0.50 per common share to stockholders of record as of the close of business on November 24, 2025, which is payable on December 5, 2025.

Additionally, effective November 6, 2025, the Board also declared a special cash dividend of $2.50 per share to stockholders of record as of the close of business on November 24, 2025 of approximately $10,224,000 payable on December 5, 2025.

If the Company pays regular quarterly cash dividends for the remainder of fiscal 2026 at the same rate as declared in the first and second quarter of fiscal 2026, the Company’s total cash requirement for dividends for all of fiscal 2026, inclusive of the special cash dividend of $2.50 per share, would be approximately $18,403,000 based on the number of shares of common stock outstanding at November 3, 2025.

The Company intends to declare and pay quarterly cash dividends;

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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.

While our Credit Agreement bears interest at a fluctuating interest rate based on the SOFR plus a spread adjustment, if the Company makes cash interest payments on the Term Loan borrowings at the interest rate effective at August 8, 2025, then for the remainder of the fiscal year ended March 29, 2026, we expect to make cash interest payments of approximately $2,150,000 on the Term Loan borrowings.

While our Credit Agreement bears interest at a fluctuating interest rate based on the SOFR plus a spread adjustment, if the Company makes cash interest payments on the Term Loan borrowings at the interest rate effective at November 6, 2025, then for the remainder of the fiscal year ended March 26, 2026, we expect to make cash interest payments of approximately $1,384,000 on the Term Loan borrowings.

We may from time to time seek to make voluntary prepayments of our Term Loan borrowings under our Credit Agreement.

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Contractual Obligations

At June 29, 2025, we sublet one property to a franchisee that we lease from a third party.

At September 28, 2025, we sublet one property that we lease from a third party.

We remain contingently liable for all costs associated with this property including rent, property taxes and insurance.

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.

At June 29, 2025, our contractual obligations primarily consist of the Term Loan borrowings under our Credit Agreement and the mandatory debt principal repayments and the related interest payments, operating leases, and employment agreements with certain executive officers.

At September 28, 2025, our contractual obligations primarily consist of the Term Loan borrowings under our Credit Agreement and the mandatory debt principal repayments 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.

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Our average cost of hot dogs during the fiscal year ended March 30, 2025 was approximately 7% higher than during the fiscal year ended March 31, 2024.

Inherent volatility experienced in certain commodity markets, such as those for beef and beef trimmings due to seasonal shifts, industry demand, inflationary pressures and other macroeconomic factors could have an adverse effect on our results of operations.

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.

This impact will depend on our ability to manage such volatility through price increases and product mix.

We are unable to predict the future cost of our hot dogs and expect to experience price volatility for our beef products during fiscal 2026.

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 2026.

To the extent that beef prices increase as compared to earlier periods, it could impact our results of operations.

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Further, beginning in 2027, the minimum wage across New York State will increase annually according to the Consumer Price Index.

There has also 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;

as well as for certain vendors in our supply chain that we depend on for our commodities.

We remain in contact with our major suppliers and to date we have not experienced significant disruptions in our supply chain.

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.

We expect to continue experiencing volatility in oil and gas prices on our distribution costs for food products and utility costs in the Company-owned restaurants and volatile insurance costs resulting from rising rates.

We expect to continue experiencing volatility in oil and gas prices on our distribution costs for food products and utility costs in the Company-owned restaurants, as well as volatile insurance costs resulting from rising rates.

Continued increases in labor costs, commodity prices and other operating expenses, including health care, could adversely affect our operations.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis