What changed in this filing

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Item 1A. Risk Factors

2026-06-09 compared with 2025-06-10 · 95 added, 84 removed, 322 unchanged (36% of the section changed)

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See “Forward-Looking Statements” above.

Risks Related to the Merger with Smithfield Foods

The announcement and pendency of the proposed Merger with Smithfield Foods may adversely affect our business, financial condition and results of operations.

There are material uncertainties and risks associated with the proposed Merger, including the timing of the consummation of the Merger, which may adversely affect our business and ongoing operations, financial condition and results of operations, employees, customers, stockholders, other parties and business prospects and a failure to complete the Merger on the terms reflected in the Merger Agreement or at all could have a material and adverse effect on our business, financial condition, results of operations, cash flows, and stock price.

Refer to NOTE A – DESCRIPTION AND ORGANIZATION OF THE BUSINESS to our Consolidated Financial Statements in Item 1 of Part I of this Report, for further information.

Failure to complete the Merger could negatively impact the price of our common stock, as well as our future business and financial results.

The Merger Agreement contains a number of conditions that must be satisfied or waived prior to the completion of the Merger, including stockholder approval and regulatory approval.

We cannot assure you that all of the conditions to the Merger will be satisfied or waived on a timely basis.

If the conditions to the Merger are not satisfied or waived on a timely basis, we may be unable to complete the Merger as quickly as expected or at all.

If the Merger is not completed, our ongoing business may be adversely affected as follows:

(i) we may experience negative reactions from the financial markets, including negative impacts on the market price of our common stock;

(ii) some of management’s attention will have been directed to the Merger instead of being directed to our own operations and the pursuit of other opportunities that could have been beneficial to us;

(iii) the manner in which customers, suppliers and other third parties perceive us may be negatively impacted, which in turn could have an adverse effect on our business;

(iv) we may experience negative reactions from employees;

(v) we will have expended time and resources that could otherwise have been spent on our business;

and (vi) we may be required, in certain circumstances, to pay a termination fee of $10,581,814, as provided in the Merger Agreement.

In addition, any significant delay in consummating the Merger could have an adverse effect on our operating results and adversely affect our relationships with customers and suppliers and would likely lead to a significant diversion of management and employee attention.

If the Merger is not completed, neither we nor the holders of our common stock will realize these benefits of the Merger.

Moreover, we would also have nevertheless incurred substantial transaction-related fees and costs and the loss of management time and resources.

Our ability to complete the Merger is subject to certain closing conditions and the receipt of consents and approvals from government entities which may impose conditions that could adversely affect us or cause the Merger to be abandoned.

The Merger Agreement contains certain closing conditions, including, among others, the approval by the affirmative vote of the holders of a majority of our outstanding capital stock entitled to vote on the Merger to adopt and approve the Merger Agreement and the absence of any injunction or similar order issued by any government entity with jurisdiction over any party to the Merger Agreement or law that has the effect of prohibiting the consummation of the Merger or that makes consummation of the Merger illegal.

The obligation of each party to consummate the Merger is also conditioned upon the other party’s representations and warranties being true and correct to the extent specified in the Merger Agreement and the other party having performed in all material respects its obligations under the Merger Agreement.

We cannot assure you that the various closing conditions will be satisfied or will not result in the abandonment or delay of the Merger.

In addition, before the Merger may be completed, regulatory approval under the HSR Act must be obtained and the parties must also have obtained CFIUS Clearance for the Merger (the “Regulatory Approval”).

The Company made the filing required under the HSR Act on January 23, 2026 and the applicable waiting period expired on February 23, 2026.

Such conditions and the process of obtaining Regulatory Approval could have the effect of delaying completion of the Merger or of imposing additional costs or limitations on the combined company following the completion of the Merger, and the conditions may result in the failure of a closing condition under the Merger Agreement.

The Regulatory Approval may not be received at all or may not be received in a timely fashion.

Expenses related to the pending Merger are significant and will adversely affect our operating results.

We have incurred and expect to continue to incur significant expenses in connection with the pending Merger, including legal and investment banking fees.

We expect these costs to have an adverse effect on our operating results.

We must pay substantially all of these costs and expenses whether or not the Merger is completed.

If the Merger is not consummated, we may under certain circumstances be required to pay to Buyer a termination fee of $10,581,814.

Our financial position and results of operations would be adversely affected if we were required to pay the termination fee.

We are subject to business uncertainties and contractual restrictions while the Merger is pending, which could adversely affect our business.

The Merger Agreement requires us to operate in the ordinary course of business and restricts us, without the consent of Buyer, from taking certain specified actions agreed by the parties to be outside the ordinary course of business until the pending Merger occurs or the Merger Agreement terminates.

These restrictions may prevent us from pursuing otherwise attractive business opportunities and making other changes to our business before completion of the Merger or, if the Merger is not completed, termination of the Merger Agreement.

In addition, matters relating to the Merger (including integration planning) will require substantial commitments of time and resources by our management, which could divert their time and attention.

Litigation could result in substantial costs and may delay or prevent the Merger from being completed.

While no lawsuits are currently pending in connection with the Merger, we (along with our directors and officers) may be named in lawsuits to enjoin us from proceeding with or consummating the Merger, or seeking to have the Merger rescinded after its consummation.

Defending against such claims, even those without merit, could result in substantial costs and divert management’s time and resources, which may negatively impact our financial condition and adversely affect our business and results of operations.

The ultimate resolution of any such lawsuit cannot be predicted, and an adverse ruling in any such lawsuit may cause the Merger to be delayed or not to be completed, which could cause us not to realize some or all of the anticipated benefits of the Merger.

Additionally, one of the conditions to the closing of the Merger is the absence of any injunction or similar order issued by government entity with jurisdiction over any party to the Merger Agreement or law that has the effect of prohibiting the consummation of the Merger or that makes consummation of the Merger illegal.

Accordingly, if any lawsuit is successful in obtaining an injunction prohibiting the consummation of the Merger, then such injunction may prevent the Merger from becoming effective, or delay its becoming effective within the expected time frame.

Risks Related to Our Business and Operations

Our results of operations could be adversely affected by disease epidemics, public health concerns or other catastrophic events.

A recurrence of coronavirus (“COVID-19”) or the emergence of other health epidemics or pandemics could substantially impact customer traffic at our Company-owned and franchised restaurants, as well as sales to our Branded Product Program customers and royalties earned from our licensing activities.

The Company cannot predict if new variants of COVID-19 will be discovered, other health epidemics or pandemics may arise, what restrictions may be enacted by local, state and the federal government, to what extent it can maintain off-premises sales volumes, whether it can maintain sufficient staffing levels at our Company-owned restaurants, or if individuals will be comfortable congregating in our dining rooms or public venues such as professional sports arenas, amusement parks, shopping malls or movie theaters, and what long-lasting effects COVID-19 or other health epidemics or pandemics may have on the Company as a whole.

Additionally, unforeseen or other catastrophic events including natural disasters, military conflicts, terrorism, labor unrest and other political unrest could have an adverse impact on our operations, disrupt the operations of franchisees, suppliers or customers.

These events could negatively impact consumer discretionary spending, thereby reducing demand for our products and/or the ability to receive products from suppliers.

Our results of operations could be adversely affected by pandemics, disease epidemics, or other public health concerns.

The actual or perceived effects of a recurrence of coronavirus (“COVID-19”) or the emergence of other pandemics, disease epidemics or other public health concerns could negatively impact customer traffic at our Company-owned and franchised restaurants, as well as sales to our Branded Product Program customers and royalties earned from our licensing activities.

The Company cannot predict if new variants of COVID-19 will be discovered, other pandemics, disease epidemics or other public health concerns may arise, what restrictions may be enacted by local, state and the federal government, to what extent it can maintain off-premises sales volumes, whether it can maintain sufficient staffing levels at our Company-owned restaurants, or if individuals will be comfortable congregating in our dining rooms or public venues such as professional sports arenas, amusement parks, shopping malls or movie theaters, and what long-lasting effects COVID-19 or other pandemics, disease epidemics or other public health concerns may have on the Company as a whole.

Our results of operations could be adversely affected by increases in the cost of food, commodities and paper.

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We purchase large quantities of beef and beef trimmings and our beef costs represent approximately 80% to 90% of our cost of sales.

The market for beef is particularly volatile and is subject to significant price fluctuations due to seasonal shifts, adverse weather conditions, including the impact of climate change, environmental regulations, industry demand, inflationary pressures, the potential impacts of tariffs and other macroeconomic factors beyond our control.

While inflationary pressures eased slightly during fiscal year 2025, we may continue to experience increases in the cost of food, commodity and paper products which, in turn, may adversely affect our business, results of operations and financial condition.

The market for beef is particularly volatile and is subject to significant price fluctuations due to shrinking cattle herds due, in part, to a multi-year drought and high input costs, as well as seasonal shifts, environmental regulations, strong consumer demand, inflationary pressures, the potential impacts of tariffs and other macroeconomic factors beyond our control.

Although we are unable to predict these inflationary pressures, we may continue to experience increases in the cost of food, commodity and paper products which, in turn, may adversely affect our business, results of operations and financial condition.

We cannot assure that our Company-owned restaurants or our franchised restaurants will be able to purchase its food, commodity or paper products at reasonable prices, or that the cost of such food, commodity or paper products will remain stable in the future.

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The Company and our franchisees have increased prices on selected menu items in order to offset rising food and commodity costs.

Although we have not experienced significant resistance to our past price increases, future price increases may deter customers from visiting our Company-owned and franchised restaurants, may decrease our ability to attract new customers, may decrease demand for our products at our Company-owned and franchised restaurants and may adversely affect our restaurant operations.

Our licensing revenue and overall profitability is substantially dependent on our agreement with Smithfield Foods, Inc.

and the loss or a significant reduction of this revenue would have a material adverse effect on our financial condition and results of operations.

We earned license royalties from Smithfield Foods, Inc.

of approximately $33,589,000 in fiscal 2025 and approximately $30,067,000 in fiscal 2024 representing 23% and 22% of total revenues, respectively.

As a result of our agreement with Smithfield Foods, Inc.

which expires in 2032, we expect that most of our license royalties will be earned from Smithfield Foods, Inc.

for the foreseeable future.

Accordingly, in the event that (i) Smithfield Foods, Inc.

experiences financial or operational difficulties, (ii) there is a disruption or termination of the Smithfield Foods, Inc.

agreement or (iii) there is a significant decrease in our license royalties from Smithfield Foods, Inc., it would have a material adverse effect on our business, results of operations and financial condition.

We cannot assure you that we will be able to renew the license agreement with Smithfield Foods, Inc.

Future price increases may deter customers from visiting our Company-owned and franchised restaurants, may decrease our ability to attract new customers, may decrease demand for our products at our Company-owned and franchised restaurants and may adversely affect our restaurant operations.

Our licensing revenue and overall profitability is substantially dependent on our agreement with Smithfield Foods and the loss or a significant reduction of this revenue would have a material adverse effect on our financial condition and results of operations.

We earned license royalties from Smithfield Foods of approximately $33,589,000 in fiscal 2026 representing 21% of total revenues.

As a result of our agreement with Smithfield Foods which expires in 2032, we expect that most of our license royalties will be earned from Smithfield Foods for the foreseeable future.

Accordingly, in the event that (i) Smithfield Foods experiences financial or operational difficulties, (ii) there is a disruption or termination of the Smithfield Foods agreement or (iii) there is a significant decrease in our license royalties from Smithfield Foods, it would have a material adverse effect on our business, results of operations and financial condition.

We cannot assure you that we will be able to renew the license agreement with Smithfield Foods.

A significant amount of our Branded Product Program revenue is from a small number of accounts.

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A small number of our Branded Product Program customers account for a significant portion of our Branded Product Program revenues.

Sales to our five largest Branded Product Program customers were 79% and 77% of our Branded Product Program revenues in fiscal 2025 and fiscal 2024, respectively.

Sales to our five largest Branded Product Program customers were approximately 80% of our Branded Product Program revenues in fiscal 2026.

In the event that any one of these Branded Product Program customers experience financial difficulties or, upon the expiration of their existing agreements, if applicable, are not willing to do business with us in the future on terms acceptable to the Company, there could be a material adverse effect on our business, results of operations and financial condition.

Smithfield Foods, Inc.

currently has two manufacturing facilities producing different Nathan ’ s products and a long-term significant interruption of a primary facility could potentially disrupt our operations.

Smithfield Foods, Inc.

currently has two manufacturing facilities producing different Nathan’s products.

Smithfield Foods currently has two manufacturing facilities producing different Nathan ’ s products and a long-term significant interruption of a primary facility could potentially disrupt our operations.

Smithfield Foods currently has two manufacturing facilities producing different Nathan’s products.

A temporary closure at either of these plants could potentially cause a short-term disruption to the production or distribution of certain products to customers.

determines how to make up for any lost production capabilities, during which time we may not be able to secure sufficient alternative sources of supply on acceptable terms, if at all.

A longer-term significant interruption at either of these production facilities, whether as a result of a natural disaster or other causes, could significantly impair our ability to operate our business on a day-to-day basis while Smithfield Foods determines how to make up for any lost production capabilities, during which time we may not be able to secure sufficient alternative sources of supply on acceptable terms, if at all.

In addition, a long-term disruption in supply to our customers could cause our customers to determine not to purchase some or all of their hot dogs from us in the future, which in turn would adversely affect our business, results of operations and financial condition.

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We have historically relied on one supplier for the majority of our hot dogs and another supplier for a majority of our supply of frozen crinkle-cut French fries for our restaurant system.

An interruption in the supply of product from either of these suppliers without our obtaining an alternative source of supply on comparable terms could lead to supply disruptions, increased costs and lower operating results.

An interruption in the supply of product from either of these suppliers without our obtaining an alternative source of supply on comparable terms and equivalent quality could lead to supply disruptions, increased costs and lower operating results.

We have an agreement with a secondary hot dog manufacturer that continues to also supply natural casing hot dogs for our restaurant business.

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Furthermore, any gap in supply to retail customers may damage our brand in the eyes of consumers and the retail trade, which might negatively impact our overall business in general and impair our ability to continue our retail licensing program.

Additionally, there is no assurance that any supplemental sources of supply would be capable of meeting our specifications and quality standards on a timely and consistent basis or that the financial terms of such supply arrangement will be comparable to our present terms.

Our earnings and business growth strategy depend in large part on the success of our product licensees and product manufacturers.

Our reputation and the reputation of our brand may be harmed by actions taken by our product licensees or product manufacturers that are otherwise outside of our control.

A significant portion of our earnings has come from royalties paid by our product licensees, such as Smithfield Foods, Inc., Saratoga Food Specialties, Inc., a wholly-owned subsidiary of Solina, and Lamb Weston Holdings, Inc.

A significant portion of our earnings has come from royalties paid by our product licensees, such as Smithfield Foods, Solina, and Lamb Weston, Inc.

Although our agreements with these licensees contain numerous controls and safeguards, and we monitor the operations of our product licensees, our licensees are independent contractors, and their employees are not our employees.

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The quick-service restaurant business is highly competitive, and that competition could lower revenues, margins and market share.

The quick-service restaurant business of the foodservice industry is intensely competitive with respect to taste preferences, price, service, location, brand reputation, advertising and promotional initiatives, personnel, and the type and quality of menu offerings.

The quick-service restaurant business of the foodservice industry is intensely competitive with respect to taste preferences, dietary preferences, price, service, location, brand reputation, advertising and promotional initiatives, personnel, and the type and quality of menu offerings.

We and our franchisees compete with international, national, regional and local restaurant chains.

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Changes in pricing or other marketing strategies by these competitors can have an adverse impact on our sales, earnings and growth.

For example, many of those competitors have adopted “value pricing” strategies intended to lure customers away from other companies, including our Company.

Consequently, these strategies could have the effect of drawing customers away from companies which do not engage in discount pricing and could also negatively impact the operating margins of competitors which attempt to match their competitors’ price reductions.

We may be unable to change our pricing strategies sufficiently to compete in such an environment.

In addition, if patrons have a poor experience at a Company-owned or a franchised restaurant, we may experience a decrease in customer counts which, in turn, may result in a decline in Company-owned restaurant sales or franchise royalties.

We and our franchisees compete within the foodservice market and the quick-service restaurant business not only for customers but also for management and hourly employees and qualified franchisees.

If we are unable to maintain our competitive position, we could experience downward pressure on prices, lower demand for products, reduced margins, the inability to take advantage of new business opportunities and the loss of market share.

All such competition may adversely affect our business, results of operations and financial condition.

If we are unable to continue to compete effectively on any of the factors mentioned above, our business, results of operations and financial condition could be adversely affected.

Changes in economic, market and other conditions could adversely affect us and our franchisees, and thereby our operating results.

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Negative publicity, including complaints on social media platforms and other internet-based communications, could damage our reputation and harm our guest traffic, and in turn, negatively impact our business, financial condition, results of operations and prospects.

There has been an increase in the use of social media platforms and other forms of internet-based communications, including video sharing, blogs, chat platforms and instant messaging platforms, that allow individuals to access a broad audience of consumers and other interested persons.

The use of social media platforms and other forms of internet-based communications, including video sharing, blogs, chat platforms and instant messaging platforms allow individuals to access a broad audience of consumers and other interested persons.

The availability of information on these social media platforms and internet-based communications is virtually immediate, as is its impact.

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These marketing initiatives may not be successful, resulting in expenses incurred without a corresponding increase in sales, increased customer awareness or engagement or brand awareness.

The laws and regulations governing the use of social media are evolving and changing.

If the Company, our employees, our franchisees or business partners do not adhere to the laws and regulations regarding the use of social media, it may adversely affect our business, results of operations, and financial condition and may subject the Company to litigation, fines or penalties.

Changing health or dietary preferences may cause consumers to avoid products offered by us in favor of alternative foods.

The foodservice industry is affected by consumer preferences and perceptions, including calories, sodium, carbohydrates or fat.

If prevailing health or dietary preferences, perceptions and governmental regulation cause consumers to avoid the products we offer in favor of alternative or healthier foods, demand for our products may be reduced and could materially adversely affect our business, results of operations and financial condition.

Should our marketing initiatives or marketing spend decrease, or should our marketing initiatives be less effective than those of our competitors, it may adversely affect our business, results of operations and financial condition.

We may not be able to adequately protect our intellectual property, which could decrease the value of our business or the value of our brands and products.

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We cannot ensure that all of the steps that we have taken to protect our intellectual property in the United States and foreign countries will be adequate.

Furthermore, intellectual property disputes and trademark infringement claims may result in a distraction for management and significant expense, which may not be recoverable regardless of whether we are successful.

We also license third party franchisees and other licensees to use our trademarks and service marks.

Furthermore, intellectual property disputes and trademark infringement claims may absorb significant management time and expense, which may not be recoverable regardless of whether we are successful.

We also license third party franchisees and licensees to use our trademarks and service marks.

We enter into franchise agreements with our franchisees and license agreements with our licensees which govern the use of our trademarks and service marks.

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In the event that our franchisees and licensees fail to do so, our trademark and service mark rights could be diluted.

Our earnings and business growth strategy depend in large part on the success of our restaurant franchisees and on new restaurant openings.

Our earnings and business growth strategy depend in part on the success of our restaurant franchisees and on new restaurant openings.

Our corporate reputation or brand reputation may be harmed by actions taken by restaurant franchisees that are otherwise outside of our control.

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We sell our products to retail outlets and wholesale distributors including traditional supermarkets, mass merchandisers, warehouse clubs, wholesalers, food service distributors and convenience stores.

The replacement by or poor performance of our major wholesalers, retailers or chains or our inability to collect accounts receivable from our customers could materially and adversely affect our business, results of operations and financial condition.

The replacement by or poor performance of our major wholesalers, retailers or chains could materially and adversely affect our business, results of operations and financial condition.

In addition, our customers offer branded and private label products that compete directly with our products for retail shelf space and consumer purchases.

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If the larger size of these customers results in additional negotiating strength and/or increased private label or store brand competition, our profitability could decline.

Consolidation also increases the risk that adverse changes in our customers’ business operations or financial performance will have a corresponding material adverse effect on us.

For example, if our customers cannot access sufficient funds or financing, then they may delay, decrease, or cancel purchases of our products, or delay or fail to pay us for previous purchases.

Our annual and quarterly financial results may fluctuate depending on various factors, many of which are beyond our control, and, if we fail to meet the expectations of investors, our share price may decline.

Our sales and operating results can vary from quarter to quarter and year to year depending on various factors, many of which are beyond our control.

These events and factors include:

changes in the cost or availability of commodities, including beef and beef trimmings, or labor and our inability to offset these higher costs with price increases;

variations in the price, availability and shipping costs of supplies;

These events and factors include changes in the cost or availability of commodities, including beef and beef trimmings, or labor and our inability to offset these higher costs with price increases;

changes in customer demand and customer visits;

increases in marketing or promotional expenses;

seasonal variations in the timing and volume of Company-owned restaurant sales, Branded Product Program sales, licensees’ sales and franchisees’ sales;

changes in the terms of our existing license/supply agreements and/or the replacement of existing licenses or suppliers;

tax expense, asset impairment charges and other non-operating costs;

unexpected slowdowns in new store development efforts;

changes in the number of franchises sold and franchise agreement renewals;

changes in competitive and macroeconomic conditions in the United States and in other regions of the world;

weather and acts of God.

and changes in general market and macroeconomic conditions in the United States and in other regions of the world.

Our operations are influenced by adverse weather conditions.

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Due to the concentration of our restaurants in particular geographic regions, our business results could be impacted by the adverse economic conditions prevailing in those regions regardless of the state of the national economy as a whole.

As of March 30, 2025, we and our franchisees (including locations operated pursuant to our Branded Menu Program) operated Nathan’s restaurants in 17 states and 12 foreign countries.

As of March 29, 2026, we and our franchisees (including locations operated pursuant to our Branded Menu Program and excluding virtual kitchen locations) operated Nathan’s restaurants in 19 states and 11 foreign countries.

As of March 29, 2026, the highest concentration of operating units was in the Northeast, principally in New York and New Jersey.

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A failure or interruption of computer systems, our point-of-sales system or information technology could result in the loss of data, business interruptions or delays in business operations.

While we undertake to keep all systems current, there can be no guarantee that we can update and maintain our systems at all times.

Many of these systems are provided and managed by third parties, and we are reliant on these third-party providers to implement protective measures that ensure the security, availability and integrity of their systems.

Despite our considerable efforts to secure our computer systems and these third-party systems, security breaches, such as unauthorized access and computer viruses, phishing attacks, introduction of malware or ransomware may occur resulting in system disruptions, shutdowns or unauthorized disclosure of confidential information.

Any security breach of our computer systems, and/or these third-party systems may result in adverse publicity, loss of sales and profits, penalties or loss resulting from misappropriation of information.

Any security breach of our computer systems, and/or these third-party systems may result in adverse publicity, loss of sales and profits, penalties, legal claims or proceedings resulting from misappropriation of information.

If any of our critical information technology systems were to become unreliable, unavailable, compromised or otherwise fail, and we were unable to recover in a timely manner, we could experience an interruption that could have a material adverse effect on our business, results of operations and financial condition.

Cyberattacks and breaches could cause operational disruptions, fraud or theft of sensitive information.

Aspects of our operations are reliant upon internet-based activities, such as ordering supplies and back-office functions such as accounting and transaction processing, making payments and accepting credit card payments in our restaurants, as well as at third party online ordering and delivery businesses, processing payroll and other administrative functions, etc.

For instance, if we fail to comply with applicable rules or requirements for the payment methods we accept, or if payment-related data is compromised due to a breach or misuse of data, we may be liable for costs incurred by payment card issuing banks and other third parties or subject to fines and higher transaction fees, or our ability to accept or facilitate certain types of payments may be impaired.

In addition, our customers could lose confidence in certain payment types, which may result in a shift to other payment types or potential changes to our payment systems that may result in higher costs.

We also use third-party vendors.

Aspects of our operations are reliant upon internet-based activities, including back-office functions such as accounting, processing payroll, making payments and transaction processing, including accepting credit card payments in our restaurants, as well as at third party online ordering and delivery businesses.

We use third-party vendors to support various aspects of our operations.

While we select third-party vendors carefully, we do not control their actions.

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A cyberattack or security breach could result in operational disruptions, theft or fraud, or exposure of sensitive information to unauthorized parties.

Such events could result in additional costs related to operational inefficiencies, damages, claims or fines and may adversely affect our business, results of operations and financial condition.

Such events could result in additional costs related to operational inefficiencies, damages, legal claims or proceedings or fines and may adversely affect our business, results of operations and financial condition.

For more information regarding the Company’s cybersecurity activities, see Item 1C.

of this Annual Report on Form 10-K.

Our international operations are subject to various factors of uncertainty.

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We and our franchisees have experienced and may continue to experience challenges in hiring and retaining restaurant employees which may result in decreased employee and customer satisfaction.

Anticipated changes in immigration laws and regulations may decrease the pool of candidates available for hire and may increase the costs, time and requirements to hire new employees.

Changes in immigration laws, work authorization laws and other regulations may decrease the pool of candidates available for hire and may increase the costs, time and requirements to hire new employees.

We face risks of litigation and pressure tactics, such as strikes, boycotts and negative publicity from customers, franchisees, suppliers, employees and others, which could divert our financial, and management resources and which may negatively impact our financial condition and results of operations.

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Increases in the minimum wage and labor regulations have increased our labor costs.

On January 1, 2025, the minimum wage increased from $16.00 to $16.50 in New York City, Long Island and Westchester which will be followed by an additional $0.50 increase in 2026.

On January 1, 2026, the minimum wage increased from $16.50 to $17.00 in New York City, Long Island and Westchester.

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

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As a result, we anticipate that our labor costs will continue to increase.

If we are unable to pass on these higher costs through price increases, our margins and profitability as well as the profitability and margins of our franchisees will be adversely impacted which could have a material adverse effect on our business, results of operations or financial condition.

If we are unable to pass on these higher labor costs through price increases, our margins and profitability as well as the profitability and margins of our franchisees will be adversely impacted which could have a material adverse effect on our business, results of operations or financial condition.

Changes in franchise regulations and laws could impact our ability to obtain or retain licenses or approvals and adversely affect our business, financial condition, results of operations and prospects.

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The failure to obtain or retain licenses, exemptions or approvals (as applicable) to offer and award franchises could have a material adverse effect on our business, financial condition, results of operations and prospects.

State authorities, including some attorneys general and state franchise regulators, have sought to impose restrictions on enforcement of covenants against competition and similar contractual arrangements between a business and its workers.

Such an initiative was adopted in 2026 by the Virginia legislature.

Similar undertakings have been proposed in the past at the federal level but have not been adopted.

We do not believe that these restrictions will have a significant impact on our operations.

We are subject to health, employment, environmental and other government regulations, and failure to comply with existing or future government regulations could expose us to litigation, damage our corporate reputation or the reputation of our brands and lower profits.

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Supply chain risk could increase our costs and limit the availability of ingredients and supplies that are critical to our operations.

The markets for some of our ingredients, such as beef and beef trimmings are particularly volatile due to factors beyond our control such as limited sources, seasonal shifts, climate conditions and industry demand, including as a result of animal disease outbreaks, food safety concerns, product recalls and government regulation.

The markets for some of our ingredients, such as beef and beef trimmings, are particularly volatile due to factors beyond our control such as shrinking cattle herds due, in part, to a multi-year drought and high input costs, as well as seasonal shifts, climate conditions and strong consumer demand.

In addition, we have a limited number of suppliers and distributors.

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

however, during fiscal 2025 the Company experienced increased costs for certain supplies and ingredients, such as packaging, beef and beef trimmings, and freight, which combined with inflationary pressures could continue.

however, during fiscal 2026 the Company experienced significant increased costs for certain supplies and ingredients, such as beef and beef trimmings, which combined with inflationary pressures could continue.

Such factors may have a material adverse effect on our business, results of operations and financial condition.

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California also adopted legislation to address data privacy.

The California Consumer Privacy Act (“CCPA”) imposes stringent data security standards which might apply more broadly than only within the borders of that state (for example, if a California resident buys products or has them shipped into the state and pays with a credit or debit card).

In total, 14 states have adopted laws that apply (or that will apply as of the effective date) to data and other biometric technology, which may be broadly interpreted.

The California Consumer Privacy Act (“CCPA”) imposes stringent data security standards which might apply more broadly than only within the borders of that state.

Additionally, other states have adopted laws that apply (or that will apply as of the effective date) to data and other biometric technology, which may be broadly interpreted.

It remains uncertain whether the CCPA and the data privacy laws adopted in other states will have a material impact on our operations or that of our franchisees.

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In recent years, there has been an increasing focus by investors, activists, the media, governmental and non-governmental organizations and stakeholders – including employees, franchisees, customers and suppliers on ESG matters.

A failure, whether real or perceived, to address ESG could adversely affect our business, including by heightening other risks disclosed in this Item 1A, “Risk Factors.” In the restaurant industry, concerns have been expressed regarding energy management, water management, food and packaging waste management, supply chain management and labor practices.

If we are perceived to have not responded appropriately to the growing concern of ESG issues, then our restaurant patrons and other customers may choose to patronize a competitor that they perceive to be more responsive, and this may adversely affect our business, results of operations and financial condition.

A failure, whether real or perceived, to address ESG could adversely affect our business.

In the restaurant industry, concerns have been expressed regarding energy management, water management, food and packaging waste management, supply chain management and labor practices.

If we are perceived to have not responded appropriately to the growing concern of ESG issues, then our brand image may suffer and this may adversely affect our business, results of operations and financial condition.

We may also face increased pressure to provide expanded disclosure and establish additional commitments, targets or goals, and take actions to meet them, which could expose us to additional market, operational, execution and reputational costs and risks.

We may also experience backlash from individuals and investors who do not support these initiatives, including those who support the enactment of “anti-ESG” legislation.

Changes in tax laws and unfavorable resolution of tax contingencies could adversely affect our tax expense.

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An unfavorable outcome to a tax audit could result in higher tax expense, thereby negatively impacting our results of operations.

In addition, the American Rescue Plan Act of 2021 (“ARPA”) provides for numerous tax and other stimulus measures, one of which will expand the limitation of compensation deductions for certain covered employees of publicly held corporations to also include the next five highly compensated employees.

This limitation will be effective for us beginning March 29, 2027.

Risks Related to Our Common Stock and Organizational Structure

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Due to the potential volatility of our stock price, we may be the target of securities litigation in the future.

Securities litigation could result in substantial costs and divert management's attention and resources from our business and could also require us to make substantial payments to satisfy judgments or to settle litigation.

Our certificate of incorporation and by-laws and other corporate documents include anti-takeover provisions which may deter or prevent a takeover attempt.

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Lorber will also receive a tax gross up payment to cover any excise tax.

While we have approved a quarterly dividend policy, there can be no assurance as to the declaration of future dividends or the amount of such dividends.

Our declaration and payment of future cash dividends are subject to the final determination by our Board of Directors that (i) the dividend will be made in compliance with laws applicable to the declaration and payment of cash dividends, including Section 170 of the Delaware General Business Corporation Law, (ii) the dividend complies with the terms of our Credit Agreement, and (iii) the payment of dividends remains in our best interests, which determination will be based on a number of factors, including the impact of changing laws and regulations, economic conditions, our results of operations and/or financial condition, capital resources, the ability to satisfy financial covenants and other factors considered relevant by the Board of Directors.

There can be no assurance our Board of Directors will approve the payment of cash dividends in the future or the amount of a cash dividend.

Any discontinuance of the payment of a dividend or changes to the amount of a dividend compared to prior dividends could cause our stock price to decline.

Risks Related to our Indebtedness

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If new debt is added to our existing debt levels, the related risks that we face would intensify and we may not be able to meet all our debt obligations, including the repayment of the Credit Agreement which matures in July 2029.

Specifically, our high level of indebtedness could have important potential consequences, including, but not limited to:

Specifically, our high level of indebtedness could have significant consequences, including, but not limited to:

increasing our vulnerability to, and reducing our flexibility to plan for and respond to, adverse economic and industry conditions and changes in our business and the competitive environment;

make it more difficult for us to satisfy our other financial obligations;

requiring the dedication of a substantial portion of our cash flow from operations to the payment of principal on, and interest on, indebtedness, which amount could increase if prevailing interest rates rise, thereby reducing the availability of such cash flow to fund working capital, capital expenditures, acquisitions, dividends, share repurchases or other corporate purposes;

place us at a competitive disadvantage compared to our competitors that have less debt or competitors with comparable debt levels at more favorable interest rates;

restricting us from making strategic acquisitions or causing us to make non-strategic divestitures;

increasing our exposure to the risk of increased interest rates insofar as current and future borrowings are subject to variable rates of interest;

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

What changed 10-K

Item 1A. Risk Factors